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Investment Guide

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Investment Policies
Investment Procedures
Establishment of Corporations

Investment Policies

Foreign Direct Investment System

Foreign Direct Investment (FDI) refers to the investment made by a foreigner with a view to establishing continuous economic relations with and participating in the management of a Korean corporation or a company run by a national of the Republic of Korea. FDI differs from ordinary investment, in that it is designed to exercise substantial influence over management of a company. FDI also means an investment made to create wealth via the transfer of tangible or intangible assets, such as intellectual property rights and real estate; and where a foreigner purchases stocks or shares of a domestic company for the purpose of participating in the management.

Foreign Investment Promotion Act

The Foreign Investment Promotion Act was enacted in Korea in 1998 for the purpose of courting foreign direct investment, after the 1997 Asian financial crisis swept the country. The Korean government also opened its market and liberalized foreign direct investment as part of the effort. Recently, the Foreign Investment Promotion Act was amended in order to improve the existing foreign investment system and promote foreign investment in the service sector. (Act No.10232 promulgated on April 5, enforced on Oct. 6, 2010). Foreign investment zone, which refers to the zone designated exclusively for the purpose of leasing or transferring lands to foreign-invested companies, has been expanded to allow foreign-invested companies in the high value-added service industries to move into the zone. The amended Act also stipulates high value-added industries which are allowed to move into a foreign investment zone.

Foreign Investment Promotion and Control

Foreign investors may face various difficulties, caused by political and economic situations of a country in which they operate, besides normal business risks. Given the risk factors, Korea has implemented regimes to protect foreign investors. Meanwhile, Regulations on Foreign Investment and Technology Introduction prescribes the restraints and restrictions on businesses.