South Korea

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Investing in South Korea

FDI in figures | Why you should choose to invest in South Korea | Procedures relative to foreign investment | Finding assistance for further information

FDI in figures

South Korea's appeal in terms of foreign direct investment (FDI) is the result of the country's fast economic development and the specialization of its industry in new information and communication technologies. However, because of the international financial crisis, FDI flow reduced in 2009 and went below the USD 10 billion threshold. Moreover, the South Korean banks were forced to record significant provisions against bad debts, a fact that scares foreign investors.

Foreign Direct Investment	2005	2006	2007
Performance Index*, ranking on 141 economies	115	123	130
Potential Index**, ranking on 141 economies	17	19	-
Number of Greenfield investments***	119	84	72
FDI inwards (in % of GFCF****)	3.0	1.9	0.9
FDI stock (in % of GDP)	13.3	13.4	12.3

Source:

Note: * The UNCTAD Inward FDI Performance index is based on a ratio of the country's share in global FDI inflows and its share in global GDP. ** The UNCTAD Inward FDI Potential index is based on 12 economic and structural variables such as GDP, foreign trade, FDI, infrastructures, energy use, R&D, education, country risk. *** Green field investments are a form of foreign direct investment where a parent company starts a new venture in a foreign country by constructing new operational facilities from the ground up. **** Gross fixed capital formation (GFCF) measures the value of additions to fixed assets purchased by business, government and households less disposals of fixed assets sold off or scrapped.

Why you should choose to invest in South Korea

Strong points: The Korean workforce is highly skilled. The R&D capabilities, as well as the quality of the infrastructures are deciding strong points for investors.
Weak points: The laws and national regulations are restrictive and the manpower cost is high. Private real estate, as well as renting office or shop premises is expensive. Lastly, competitiveness is relatively restrained.
Government measures to motivate or restrict FDI: Korea has implemented measures in order to protect Foreign Investment:
- External Remittance guarantees;
- Identical treatment to domestic firms with regard to business operations;
- Tax deductions provisions.

However, there are restrictions or prohibitions in terms of foreign investment in sectors of public administration, educational organizations, national defense, etc. For more information, see the Invest Korea website.
Bilateral investment conventions signed by South Korea: Korea is a signatory to many conventions.
UNCTAD allows you to visualize the list of conventions signed by Korea, and to download these conventions .

Procedures relative to foreign investment

Freedom of establishment: Guaranteed.
Acquisition of holdings: Possible.
Obligation to declare: Acquisition of the stocks or shares of a domestic enterprise:
-Minimum initial investment to qualify as foreign investment: 50 million won;
-Foreigner's investment hold 10% or more of the total shares along with voting rights or total equity investment.

Long-term loan provided by a foreign investor:
- A firm that owns 50% or more of the total issued shares or equity investment of its foreign parent firm;
- A firm that owns 10% or more of the total issued shares or equity investment of its foreign parent firm;
- A firm of which 50% or more of its total issued shares or equity investment is owned by its foreign parent firm; or -
- A firm of which 50% or more of its total issued shares or equity investment is owned by a firm that owns 50% or more of the foreign parent firm's total issued shares or equity investment.
Competent organization for the declaration: Invest Korea or KOTRA trade offices in Korea
Requests for specific authorizations: Government's approval is required in agriculture, forestry, fishing, power generation, publishing, Telephone and other communication services, broadcasting, air transportation, coastal transportation, etc.
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Finding assistance for further information

Investment aid agency: Invest Korea
Korea Trade Investment Promotion Agency (KOTRA)
Office of the Investment Ombudsman (OIO)
Invest Korea Plaza
Other useful resources: Hi Korea e-Government for foreigner
Seoul Global Center
Free Economic Zone Planning Office

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