Foreign-invested rules are tightened

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Foreign-invested rules are tightened

Korea plans to toughen requirements for companies aiming to be designated foreign-invested firms, the government said yesterday, in an apparent move to attract more foreign investment and also improve competitiveness of such firms here.

According to the Ministry of Knowledge Economy, a company will be designated a foreign-invested firm, and thus be entitled to various incentives such as tax breaks, only if the amount of foreign investment in the firm exceeds 300 million won ($274,000) and over 30 percent of the total investment.

Currently, a firm with only 100 million won or more in foreign investment that accounts for 10 percent of total investment can be designated as a foreign-invested firm.

Revisions to the Foreign Investment Promotion Act will be announced today for public review. They may take effect on June 12 following approval by the cabinet, the ministry said.

Along with changes in required conditions for individual firms, the government plans to add a new type of foreign investment zone, which, upon designation, can allow foreign-invested firms to enter private contracts with the country’s regional or district governments and also allow access to state-owned or public land at the discretion of regional governments.

Currently, the heads of regional or district governments may designate a foreign investment zone as long as the combined total of foreign investment in any specific area exceeds $30 million for manufacturing companies, $20 million for tourism businesses and $10 million for logistics firms.

Once the revision takes effect, provincial or regional governments may designate a special area for information-technologies companies whose combined total foreign investment exceeds $30 million.

There were 60 foreign investment zones as of the end of 2012, according to the ministry.

Yonhap

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