In order to establish BusanㆍJinhae as an area that provides an optimal business environment, the Ministry of Finance and Economy designated these areas as the BusanㆍJinhae Free Economic Zone on October 30, 2003. The BusanㆍJinhae Free Economic Zone will have a transformed industrial structure that fosters globalized business conditions and living environments for foreign business people, thereby attracting foreign investment. The BusanㆍJinhae Free Economic Zone Authority and the Korean government will exert their utmost efforts toward making the zone a hub for free global business and business management.
■ Development Direction
● New Port Area : The New Port site (North·South·West side) and the hinterland site (North·South side) will be
developed as an area for logistics·distribution, internationl business and maritime affairs.
● Myeongji Area : The West Busan Distribution Complex, Myeongji District, Sinho Industrial Complex, and Hwajeon Regional Industrial Complex will be developed as the area for a supply base of air logistics, high-tech parts and materials, and a foreigners' residential complex.
● Jisa Area : The Busan Science Industrial Complex , Mieum District and Songjeong District will be developed as the area for the R&D Center, and as the high-tech industry for foreigners only.
● Dudong Area : The Gaju District, Dudong District, Macheon District and The Dong-A Institution Bobae Campus will be developed as the area for the mechatronics industry and the R&D Center.
● Ungdong Area : The Ungdong District, Nammun Distirct and Namyang District will be developed as the area for logistics·distribution, professional education, leisure and resort. (15,541㎡, PhaseⅠ 2,353.6㎡)
■ Object Area ●Location : A part of Gangseo-gu, Busan Metropolitan City, and a part of Jinhae City, Gyeongsangnam-do
● Size : 25,764 acres (Busan Metropolitan City 13,462 acres, Gyeongsangnam-do 10,816 acres, common 1,487acres).
■ Infrastructure Plan
● Road Expansion
Expressway : Construct and expand two expressways (199.5) between Daegu and Daedong.
Local road : Construct and expand 21 local roads (171.97), including the entry road into the New Port ( New Port east side ~ Gadeok I.C.).
● Railways Expansion
Metropolitan Railway : Construct and double-track the three Lines (196.1 ), including the Gadeok Line and the Gyeongjeon Line.
Local Railway : Construct the four Gimhae Light Electric Railways (79.6 ).
● Port Development
Construct New Port sized at 8,100,000 TEUs container cargo volume per annum with 30 berths (breakwater 1.49 , sea route dredging 68 million ㎥).
Complete the initial development of 6 berths and the initial development of 180 acres of hinterland by the end of 2006.
● Airport Facilities
Expansion of moorage : 56,771㎡
Passenger terminal : Domestic Line (979.8㎡), International airline
( PhaseⅠ 38,834㎡, PhaseⅡ 4,132㎡)
Cargo terminal: Domestic Line (PhaseⅠ 4,503.6㎡, PhaseⅡ 6,049.8㎡)
International Line (PhaseⅠ 15,541㎡, PhaseⅡ 2,353.6㎡)
○ Authorizations or permits required by various laws and regulations for development projects are taken care of by one-stop service system which provides a single point of contact for investors.
○ Tax benefits/financial supports are granted to foreign-invested firms.
- Foreign investors investing more than USD 100 million in manufacturing industries are entitled to a corporate tax deduction of 100% for 3 years and another 50% for the subsequent 2 years.
- The Central Government offers subsidy and grant matched to the performance of local autonomy in foreign investment attraction.
○ Special treatments are offered to foreign-invested firms to support their operation in Korea.
- Exception to statutory requirements in labor laws and regulations such as recruitment obligations, paid-leave requirement, or restriction on mobilization of temporary workers, etc. are offered.
- Restrictions on entry into small & medium enterprise-protected sectors or the Seoul metropolitan area are waived.
○ Privileges are allowed to foreigners for more convenience in their daily life.
- Current transaction in foreign currency worth up to USD 10,000 is allowed.
- Entry by foreign educational institutes and medical services (hospitals, pharmacies) is allowed.
- One-Stop administration service is offered in foreign language by an independent administrator (FEZ Authority).
- One-Stop administration service is offered
The BJFEZA and the Central Government of Korea will spare no effort in creating the most competent business infrastructure and provide the best service that can satisfy anyone to be a real partner with foreign investors.
■ Rationale Rationals for extending support for foreign investment is derived from applicable provisions in other laws and regulations pertaining to foreign investment.
○ Applicable laws & regulations
- The Act on Designation & Operation of Free Economic Zone
- The Act on Designation of Free Trade Zone
- The Act on Foreign Investment Promotion
- The Act on Tax Relief Restriction
- Local government ordinances pertaining to promotion of foreign investment
- Local government ordinances pertaining to management of shared properties
■ Scope of Support ○Tax Deduction & Relief, etc.
- National tax : Customs, corporate income tax, personal income tax
- Local tax : Acquisition tax, property tax, registration tax, aggregate land tax
- Subsidy in cash : from central or local governments
- Sales of national/public properties(by negotiated contract and sales price payment in installment, etc.), discount on rent
- Location subsidy, recruitment subsidy, training subsidy, facility subsidy and land acquisition subsidy, etc.
Waiver on other statutory obligations
- Waiver on recruitment privileges applicable to patriots, war veterans of the physically-challenged
- Waiver on restrictions on entry by big corporations into SME-protected industries
- Waiver on restrictions on commercial activities or urban congestion liabilities as defined in the Capital Region Readjustment Planning Act
- Waiver on paid leave or paid menstruation leave requirements
- Extension of national/public property lease arrangement or endorsement of permanent facility construction
The best place for you to custom-design your business and residence.
■ The areas in need of developers ● Myeongji District (Phase 1-2 : 1,641 acres)
This site is for high-tech manufacturing and its related professional education and R&D functions, as well as a place to develop international business, maritime functions, and host a residential complex.
● Jisa District (Phase 2 : 286 acres)
A central place in the Free Economic Zone to handle commerce and business affairs and provide public services.
● Dudong District (Phase 1-2 : Dudong District 378 acres)
This site is for the adjacent office and residential space that support both high-tech manufacturing and a comfortable residential life.
● Dudong District (Phase 1-2 : Gaju District 286 acres)
Located in a central place in the Free Economic Zone, this site serves as a place for international business and maritime function and residential functions.
● Ungdong District (Phase 1-2 : Phase 2 : 1,168 acres)
- Will be developed as an area for leisure and resort on a global level with New Port reclaimed land.
- The west side pier and adjacent areas are for logistics and distribution.
※ The Busan- Jinhae Free Economic Zone will back up the developmental period adjustment and regional integration
development, according to the participation business purpose.
■ Development Conditions ● Developers must develop the are to fit the land use plan of business zoning and development direction from the Busan-Jinhae Free Economic Zone development plan.
● Establish must should not to be different from the metropolitan area plan and urban basic plan.
■ Considerations ● Developers can participate by changing the development plan on the stage of zoning development before the zoning preparation.
● They should take the intention of public development into consideration, and strive to cooperate with public corporations.
■ Administrative Support ● Administrative, system and financial support for the availability of the custom-made type development is offered.
● One- Stop administrative support from investment consulting to construction is available.
It has not been long since the BusanㆍJinhae Free Economic Zone was added to the list of free economic zones in Korea, but many foreign investors are already showing a great deal of interest in the FEZ
* Gale Company one of the top-tier real estate investors from the USA has signed an agreement to invest USD 12.7 Billion in Songdo New Town on the condition that the area is designated as a free economic zone. VaxGen has also agreed to invest USD 150 Million and DHL has procured about 22,479 square meters of land to build a cargo terminal.
Within the Free Economic Zone, business/living conditions compliant with global standard in terms of labor, education or medical service, etc. are ensured.
In addition, one-stop & one-man service that provides a single point of contact for the 34 different laws and regulations of Korea is available along with various tax benefits and credits.
○ The Central Government of Korea is launching a large scale IR roadshow for high profile foreign investors and contacting them on a one-to-one basis to explain opportunities waiting for them in the free economic zones of Korea.
Foreigners and foreign investment as defined in the Act on Foreign Investment Promotion are applied mutatis mutandis to the laws and regulations applicable to free economic zone or a free trade zone.
○ Definition of Foreigner
(Article 2 of the Act on Foreign Investment Promotion, Article 2 of the Enforcement Decree thereto)
ㆍIndividuals with foreign nationality
ㆍJudicial entities incorporated in accordance with laws of other countries
ㆍAgencies representing foreign governments in international economic cooperation
ㆍInternational organizations extending development financing or foreign investment (IBRD, ADB, IFC, etc.)
○ Definition of Foreign Investment
ㆍPurchase by foreigners of shares or equities of Korean companies worth KRW 50 million or more (share purchase price or per capital investment in case of joint investment involving more than 2 entities)
- Possession of 10/100 or more of issued stocks or equities of corporations
- Appointment or dispatch of executives by foreigners holding shares of Korean companies, 1 year or longer material or product supply (procurement) agreements, or technology transfer or joint research arrangements (applicable to entities with less than 10/100 equity ownership)
ㆍLoan due in 5 years or longer extended by parent companies overseas or other companies who have more than 50/100 of the shares or equities of the parent companies to foreign-invested firms
○ Definition of Foreign-Invested Company
ㆍCompanies invested by foreign investors
○ Definition of Persons operating facilities intended to improve foreign investment environment
ㆍPersons operating facilities intended to improve foreign investment environment such as schools or hospitals for foreigners, or startup business incubation centers for foreign investors.
○ Foreign Investment Categories
ㆍForeign investment by acquisition of newly-issued shares (Article 5 of the Act on Foreign Investment Promotion)
ㆍForeign investment by acquisition of existing shares (Article 6 of the Act on Foreign Investment Promotion)
ㆍAcquisition of shares by merger (Article 7 of the Act on Foreign Investment Promotion)
ㆍForeign investment by long-term loan (Article 8 of the Act on Foreign Investment Promotion)
○ Advance Reporting/Registration of Foreign Investment
ㆍPotential foreign investor is required to report size and ratio of foreign investment to the Minister of Commerce, Industry & Energy in advance (Article 5~8 of the Act on Foreign Investment Promotion)
- The aforementioned provision is also applicable to changes thereof
ㆍA Foreign-invested firm is required to register itself with the Minister of Commerce, Industry & Energy after complying with certain requirements such as full payment of investment, etc. (Article 21 of the Act on Foreign Investment Promotion)
ㆍThe Minister of Commerce, Industry & Energy empowers relevant ministersㆍNTS CommissionerㆍCustoms Service Commissioner to examine compliance with reporting requirements by foreign-invested companies and rectify any non-compliance therewith and the chiefs of KOTRA & KEB to accept reporting of foreign investment (Article 9 of the Act on Foreign Investment Promotion, Article 40 of the Enforcement Decree thereto)
○ Restriction on Foreign Investment
ㆍSectors where investment by a foreigner is banned (as specified in Schedule 1 to the Regulation on Foreign Investment & Technology Transfer)
- Public administration services or religious organizations
ㆍSectors where investment by a foreigner is restricted (as specified in Schedule 2 to the Regulation on Foreign Investment & Technology Transfer)
- The Ratio of the foreign investment portion is regulated by statutory standards in 29 industries including agriculture, fishery, power generation, airborne transportation or broadcasting service.
