gwangyang free economic zone authority 광양만권경제자유구역청 korea international...

광양만권경제자유구역청Gwangyang Free Economic Zone Authority

Korea International Logistics Council

Investing in Korea as the Investing in Korea as the Gateway to Northeast AsiaGateway to Northeast AsiaInvesting in Korea as the Investing in Korea as the Gateway to Northeast AsiaGateway to Northeast Asia

KILCKILC


2. Logistics Investment Opportunities

3. Investment Procedure

4. Foreign Investment Trends

Contents

1. Korea’s Strengths as a Logistics Hub

Gwangyang Free Economic Zone Authority

광양만권경제자유구역청

인프라 구축 -

Korea’s Strengths as a Logistics HubKorea’s Strengths as a Logistics Hub11

KILC Korea International Logistics Council



Starting and Ending Point of Starting and Ending Point of trans-continental railwaytrans-continental railway

Located at the center of NEA Located at the center of NEA between China and Japanbetween China and Japan

Located on the truck route connectingLocated on the truck route connectingEurope, Asia, North AmericaEurope, Asia, North America

인프라 구축인프라 구축 - - Geographical LocationGeographical Location



NEA is emerging as a NEA is emerging as a

major economic bloc major economic bloc

alongside EU and North alongside EU and North

AmericaAmerica

NEA is emerging as a NEA is emerging as a

major economic bloc major economic bloc

alongside EU and North alongside EU and North

AmericaAmerica

ChinaChina

JAPANJAPANKOREAKOREA

•Second largest economy in Second largest economy in GDPGDP

•Second largest economy in Second largest economy in GDPGDP

인프라 구축인프라 구축 - - Accessibility to the NEA Accessibility to the NEA MarketMarket

-25% -25% of World Populationof World Population

-20% of World GDP-20% of World GDP

-30% of World Cargo Volume-30% of World Cargo Volume

• World’s largest manufacturing baseWorld’s largest manufacturing base• Fastest growing consumer market in the worldFastest growing consumer market in the world

• World’s largest manufacturing baseWorld’s largest manufacturing base• Fastest growing consumer market in the worldFastest growing consumer market in the world



인프라 구축 - Excellent Logistics InfrastructureExcellent Logistics Infrastructure

1. Incheon International Airport

3rd Largest Cargo handler and 10th Largest passenger transporter in international traffic (2004)

2. Busan Port and Gwangyang Port

- Busan : world’s fifth largest port, handling 11.5 million TEU per year (2004)

- Gwangyang : second largest port in Korea, optimal trans-shipment port for cargo bound for Northeast Asia

3. Land Transportation90% of domestic transportation is handled by roads and railways

which link the Eurasian and Pacific Rim economies

-The high-speed Korea Train Express (KTX) network started service in 2004

connecting Seoul with Busan and Mokpo(world’s fifth high-speed).

-Road length : 97,252km, Paved road length : 74,640km (paved road rate:76.7% as of 2003)



Incheon International AirportIncheon International Airport

19,790

24,080

1,840

2,130

2003 2004 2003 2004

PassengerPassenger CargoCargo

Unit : Thousand Unit : Thousand tons



Busan PortBusan Port

Number of routes

Americas 36

Europe 13

Asia 141

Japan 45

China 23

Source : Ministry of Maritime Affairs and Fisheries



Gwangyang PortGwangyang Port

Number of routes

Americas 8

Europe 4

Asia 39

Japan 11

China 15

Source : Ministry of Maritime Affairs and Fisheries



인프라 구축 - Great Investment EnvironmentGreat Investment Environment

1. 1. Highly educated, highly skilled Highly educated, highly skilled workforceworkforce

22. . Huge Consumer Huge Consumer MarketMarket

3. Strong Industrial 3. Strong Industrial CompetitivenessCompetitiveness

4. FDI Friendly Policies4. FDI Friendly Policies



인프라 구축 -

Logistics Investment OpportunitiesLogistics Investment Opportunities22




1.1. Free Economic ZonesFree Economic Zones

2.2. Free Trade ZonesFree Trade Zones

3.3. Foreign Investment ZonesForeign Investment Zones


Logistics Investment OpportunitiesLogistics Investment Opportunities



Free Economic Zone (FEZ)

인프라 구축인프라 구축 - - Concepts of the FEZ and FTZConcepts of the FEZ and FTZFEZ : Free Economic ZoneFEZ : Free Economic ZoneFTZ : Free Trade Zone FTZ : Free Trade Zone

DistriparDistripar

kk PORTPORT

Industrial Industrial ParkPark

AA


AA

……

Support Support

FunctionFunction

ss


BB


BB


NN


NN

……

Free Trade Zone (FTZ)



인프라 구축인프라 구축 - - Locations of FEZs and FTZsLocations of FEZs and FTZs

IksanIksan

GunsanGunsan

Incheon FEZIncheon FEZ

Incheon International AirportIncheon International AirportIncheon PortIncheon Port

MasanMasanGwangyang Bay Area FEZGwangyang Bay Area FEZ

Gwangyang PortGwangyang Port

Busan-Jinhae FEZBusan-Jinhae FEZ

Free Economic Zone Free Economic Zone

Free Trade Zone Free Trade Zone



Gwangyang

Gwangyang FEZGwangyang FEZGwangyang FEZGwangyang FEZ

• NEA maritime transshipment hub NEA maritime transshipment hub • NEA maritime transshipment hub NEA maritime transshipment hub

• Industrial clusters for oil and steel businesses Industrial clusters for oil and steel businesses • Industrial clusters for oil and steel businesses Industrial clusters for oil and steel businesses

Busan

Busan-Jinhae FEZBusan-Jinhae FEZBusan-Jinhae FEZBusan-Jinhae FEZ

• maritime logistics hub maritime logistics hub • maritime logistics hub maritime logistics hub

• manufacturing & industrial parks, R&D manufacturing & industrial parks, R&D • manufacturing & industrial parks, R&D manufacturing & industrial parks, R&D

IncheonIncheon

Incheon FEZIncheon FEZIncheon FEZIncheon FEZ

Songdo Songdo Songdo Songdo

YeongjongYeongjongYeongjongYeongjong

Cheongna Cheongna Cheongna Cheongna

IT, BT, international businessIT, BT, international businessIT, BT, international businessIT, BT, international business

air logistics, tourismair logistics, tourism, , IBCIBCair logistics, tourismair logistics, tourism, , IBCIBC

leisure, int’l financeleisure, int’l financeleisure, int’l financeleisure, int’l finance

인프라 구축인프라 구축 - - Development Plans of the FEZs Development Plans of the FEZs



인프라 구축인프라 구축 - - Tax Incentives

Type of TaxType of Tax Exemption Period Exemption Period RateRate

RequirementsRequirements

(minimum amount of (minimum amount of investment)investment)

National National TaxTax

Tariff, Tariff,

Value-added Value-added TaxTax

100% 100% for 3 yearsfor 3 years All imported capital goodsAll imported capital goods

Corporate tax,Corporate tax,

Income taxIncome tax100% 100% for 3 years,for 3 years,

50% for the 50% for the following 2 following 2 yearsyears

US$ 5 million for LogisticsUS$ 5 million for Logistics US$ 10 million for US$ 10 million for ManufacturingManufacturing

Local TaxLocal Tax Acquisition tax,Acquisition tax,

Property tax,Property tax,

Registration Registration tax,tax,

Aggregate land Aggregate land taxtax

100% 100% for 3 yeas, for 3 yeas,

50% for the 50% for the following 2 years following 2 years (Incheon)(Incheon)

100% for 7 years,100% for 7 years,

50% for the 50% for the following 3 years following 3 years (Busan-Jinhae)(Busan-Jinhae)

100% for 15 years100% for 15 years

(Gwangyang)(Gwangyang)



▶ Rental reductions for using land

▶ Financial support for establishing

facilities for the convenience of foreigners

인프라 구축인프라 구축 - - Employment, Employment, Labor ManagementLabor Management

▶ Initiating unpaid weekly holidays

▶ Not applying compulsory hiring system

(I.e. employing national war heroes,

the disabled, and the aged)

인프라 구축인프라 구축 - - Other Incentives



인프라 구축 -

Investment Procedures33




Investment Procedure

One-Stop Service

KILC Korea International Logistics CouncilKILC Korea International Logistics Council

Investment Inquiry

Defining your investment requirements

Confirm foreign investment

Legal procedures for corporation establishment

FDI corporation established



인프라 구축 - Process for Establishing a Corporation

FDI FDI NotificationNotification

Registration ofRegistration of IncorporationIncorporation

Carrying-in ofCarrying-in ofFDI CapitalFDI Capital

FDI Company FDI Company RegistrationRegistration

Business Business RegistrationRegistration

Account Transfer Account Transfer Of Investment Of Investment

CapitalCapital



1. 1. FDI NotificationFDI Notification

Notification by the foreign investor or proxy

Notification at Korea Trade Centers at home and abroad, foreign exchange banks designated to accept notification

Required Documents : FDI notification form (provided) and documents verifying the nationality of investors (Individual investors shall submit a copy of passport)

Processing Period : On-the-Spot



2. 2. Carrying-in of FDI CaptialCarrying-in of FDI Captial

Ways to carry in investment capital

- FDI capital may be remitted to domestic banks from overseas

- FDI capital may be hand-carried through the customs

After Investment capital is remitted from overseas to a foreign exchange bank in Korea, the capital shall be converted into Korean won and be deposited into a temporary account

Later, the capital will be transferred to a “share subscription account”



3. 3. Registration of IncorporationRegistration of Incorporation

Types of Business Establishment

- By promotion : the promoters subscribe for all shares issued at the time of establishment

- By public offering : the promoters subscribe for part of the shares issued at the time of incorporation and the remaining shares publicly offered

Categories of companies as stipulated in the Commercial Law

- Unlimited partnership company

- Limited partnership company

- Limited Liability company

- Corporation ← the most commonly selected form



Procedures for Incorporation

• Organizing Promoters

• Holding inaugural meeting of promoters and preparing minutes

• Preparing and notarizing the articles of incorporation

• Deciding matters concerning the issuance of shares

• Subscription of shares by promoters of company (for incorporation through promotion) / Subscription of shares by promoters; joining of shareholders; and distribution of shares (for incorporation through subscription)

• Capital contribution

• Reporting the inspection on the incorporation process by directors and auditors

• Inaugural general meeting (not inquired in incorporation through promotion)

• Meeting of the board of directors

• Registration of incorporation

• Notification of incorporation and business registration

Registration of IncorporationRegistration of Incorporation



Place of registration : Commercial Registry Office, Local District Court

Period of registration

- By promotion : within 2 weeks after completing the inspection

on incorporation process

- By public offering : within 2 weeks after closing

the inaugural general meeting

Pre-registration decisions

- Organizing promoters

- Checking up similar trade names




Documents required for registration

6. Urban rail bond

7. Supreme Court revenue stamp

8. Registration tax receipt; issued by the ward office exercising jurisdiction over the head office

9. Seal of each officer and promoter

10. Corporate Statue : notarized

11. Share subscription certificate

12. Application for shares

13. Organization report

14. Consent to shortening the inaugural meeting period

15. Minutes of the inaugural meeting : notarized

16. Minutes of the board of directors’ meeting : notarized

17. Common seal notification and application for common seal card

18. Register of shareholders

19. Consent to issuance of shares

1. Foreign investment notification form

2. Power of attorney

▶If applied for by the representative director:

The representative director must be the appointee in all powers of attorney

▶If applied for by a judicial scrivener:

The scrivener must be the appointee in the powers of attorney regardless of promoters or officers

3. Acceptance of appointment of officer

▶Korean nationals : Each acceptance must be sealed, to which a seal impression certificate and a resident registration certificate must be attached.

▶Foreign nationals : Each acceptance must be signed to which an original copy of signature notarization and a photocopy of the passport must be attached.

4. Custody certificate of paid-in capital

5. Common seal of the company

AssistancePrepared by applicant




Business establishing expenses

Approximate amount

(Korean won)Items to be paid

935,000Total

150,000Notarization fee (Corporate Statute, etc.)

15,000Supreme Court revenue stamp (registration application fee)

50,000Purchase of urban rail bond : 0.1% of the paid-in capital

120,000Local education tax : 20% of the registration tax

600,000Registration Tax : 0.4% of the paid-in capital

(3 times as much if the company is to locate in a large city)

※ Approximate cost of establishing a corporation(with the capital of 50 million won)




4. 4. Notification of Incorporation Notification of Incorporation and Business Registrationand Business Registration

Place of Notification / Registration

- the competent tax office which has jurisdiction over the company headquarter

Notification / Registration Period - within 20 days from business commencement for business registration - within 2 months from the date on which incorporation registration was made for notification of incorporation

Required Documents • Application form (available at tax office) • Articles of incorporation • Copy of business permit (if the business requires a permission from the government authority) • Copy of lease contract • Notification of designating a tax manager (in case where a company representative is a foreign national and where there is no resident employee to received document delivery) • Copy of FDI notification • Certificate of foreign currency exchange • Certificate of foreigner registration (where a representative of company is not a resident of Korea)



5. 5. Account Transfer of Investment Account Transfer of Investment CapitalCapital

After procedures for the registration of incorporation and business registration, the remitted capital, which is deposited in a temporary account, will be transferred to the company account.



6. 6. FDI Company FDI Company RegistrationRegistration

Registration Period

Within 30 days from the date on which the payment required was completed

Place

Institution where the FDI notification was filed

Required Documents

• Application form for FDI company registration

• Certificate of exchange / deposit of foreign currency

• Transcript of incorporation registration

※A certificate of FDI notification shall be issued on the spot, and this certificate is required in following cases:

- When making an overseas remittance of the profits made by an FDI company

- When making an application for D-8 visa



인프라 구축 -

Foreign Investment Trends44




인프라 구축 - Foreign Investment by Country

Country Year 2002 2003 2004USA 4,500 1,240 4,725Japan 1,404 541 2,249EU 1,680 3,062 3,005China 249 50 1,165Others 1,269 1,575 1,626Total 9,102 6,848 12,770

unit : USD 1 millionunit : USD 1 million

Source : Ministry of Commerce, Industry and EnergySource : Ministry of Commerce, Industry and Energy



인프라 구축 - Foreign Investment Proportion by Country (2004)

USA 37%

Japan 17.6%

EU 23.5%

China 9.1%

Others 12.7%




19980

2000

4000

6000

8000

10000

12000

14000

16000

18000

FDI Accumuation(USD 1 milllion)Year(USD 1 million)

0

20000

40000

60000

80000

100000

120000

1962 2004

신고(연도별) 신고(누적)Yearly Amount Accumulated

인프라 구축 - FDI Amount by Year and Accumulated FDI




인프라 구축 - Current Status of Foreign Investment in the FEZs

As of June As of June 2005, investment MOUs of over $18.9 billion established

Investor Business Agreed Investment amount

Investment Project

Incheon Gale(US) FEZ developer

$12.7 billion -Songdo International Business District Development-Convention center(05.5)

AMEC(UK) Engineering,

FEZ developer

Second Incheon bridge $1.2billion

IIA IBC-2 $2billion

-Second Incheon bridge construction

(09’)

- IIA IBC-II development(04.4 MOU)

Pyne(US) Port facilities

$1.5 billion Songdo New Port Construction

DHL(US) LSP $ 20million IIA freight terminal construction

TNT(Netherlands)

LSP

$ 10million

IIA freight terminal construction

Source: Ministry of Finance and EconomicsSource: Ministry of Finance and Economics



Investor Business Agreed Investment

Investment Project

Busan Jinhae

Dubai port Int’l( UAE)

Port facilities

$300 million -Busan New Port phase 1 development

Renault-Samsung(France)

Automobile $600 million -Engine manufacturing plant

Gwang-yang

Hutcheson(HK)

Port facilities

$100 million -Gwangyang Port operation

Mitchui(JP))

Logistics TBA -MOU to construct logistics center in Gwangyang port(04’.10)

Major Foreign Investment in the FEZsMajor Foreign Investment in the FEZs

Source: Ministry of Finance and EconomicsSource: Ministry of Finance and Economics


2. Excellent Location as a Logistics Hub

3. Ideal investment Spots

4. Attractive Incentives

Conclusion

1. Strong Economy

5. FDI Friendly Environment

Korea, the Ticket for Your SuccessKorea, the Ticket for Your Success



Korea International Logistics Council (KILC)Korea International Logistics Council (KILC)Korea International Trade Association (KITA)Korea International Trade Association (KITA)

Republic of KoreaRepublic of Korea

Tel: Tel: +82-2-6000-5451~8+82-2-6000-5451~8Fax: Fax: +82-2-6000-5460+82-2-6000-5460

http://http://kita.kilc.kita.kilc.orgorg

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