The government will ease regulations on foreign direct investment
(FDI) in order to improve business conditions in Korea, lessening the
number of procedures required for foreign investors to invest in Korea,
and it will simplify regulations in Free Economic Zones (FEZs) and Free
Trade Zones (FTZs).
The Ministry of Trade, Industry and Energy
(MOTIE) held its third hearing on deregulation, in Seoul on May 19,
focused on regulations in FEZs and FTZs. The hearing was attended by
staff from related public and private organizations and representatives
from academia. Hearing participants agreed to abolish up to 17
regulations and to improve 11 of them, out of the total of 58
regulations that oversee foreign direct investors, FEZs and FTZs.
Earlier, on May 11, the ministry decided to abolish 19 regulations and
to improve 10 of them, among the total of 62 regulations that oversee
trade and foreign investment.
Vice Minister for Industry and
Technology Kim Jae-hong (second from right, back row) leads the third
hearing on deregulation held in Seoul on May 19. (photo courtesy of the
MOTIE)
The third hearing on deregulation
is attended by representatives from related public and private
organizations and academia, on May 19. (photo courtesy of the MOTIE)
Fewer documents needed to register FDI Thanks
to the cut in red tape, existing notification and registration
procedures for FDI will be shortened, requiring fewer documents. In the
past, when foreign investors hoped to invest in Korea, they were
required to report their investment to the Korean government beforehand.
When they received tax favors or incentives from the government, they
again were required to report to the government, undergoing the
registration procedure twice.
The trade ministry further decided
to automatically cancel business registrations when an FDI firm shuts
down its business and reports the closure to the tax office, shortening
the existing cancellation time. The ministry will reduce the number of
existing reports and change the registration procedure when an FDI firm
transfers stock from its business.
The ministry also agreed to
abolish the capital goods registration system, which, under the special
tax treatment control law and customs law, entitled a tax reduction for
ex post facto management. It will also abolish its "technology
introduction notification system" as it has almost no benefit in
reducing taxes. Under the current system, FDI firms are required to
report when they dispose of such capital goods within five years.
The
government also decided to ease the current notification and reporting
procedures related to new technologies by removing the notification
process when businesses sign a contract on new technologies in the
aerospace or defense sectors.
Gov’t to ease regulations in FEZs The
ministry decided to adopt a so-called “negative system” in regard to
regulations at eight FEZs, including the one in Incheon. In the past,
FDI businesses were required to get specific permission from the
ministry whenever they wanted to change their development plan or start a
new project, unless it was some minor issue. Thanks to the newest
decision, however, such firms will be able to receive permission from
the mayor or governor of the related city or province, instead of from
the ministry directly, except on some crucial projects that require
government funding.
To turn Korea's FEZs into hubs that create
high added-value services, the MOTIE said it will improve regulations
and limitations concerning education, tourism, medical services and
other sectors related to FDI firms, by consulting with related
government organizations, if said sectors prohibit a foreign investor’s
entry into this market.
To promote trade, the government decided
to abolish the "move-in permit system" in 13 FTZs built around
industrial complexes, airports or container terminals. Businesses that
wish to move into the zones can now sign contracts with the FTZ
authority, as long as it meets certain requirements. In the past, such
businesses were required to receive permission from the government,
which first screened and approved each applicant.
By Yoon Sojung
Korea.net Staff Writer
arete@korea.kr