The Korean government is going to add the IT services to the list of business categories for the individuation-type Foreign Investment Zone (FIZ). And it is expected that the requirements for foreign-capital invested companies’ free contract for national or public land will be tougher to keep over 30% investment ratio for more than 5 years.
The Ministry of Knowledge Economy said on February 12 that it has proposed to revise the enforcement ordinance and regulations of the Foreign Investment Promotion Act to contain these things.
According to the Ministry’s proposal, IT service businesses with US$30 million of foreign investment or more will be able to apply for designation of their business location as the individuation-type FIZ which provides many incentives such as special tax and rent exemptions or reductions. Among IT service businesses are computer programming, system integration and management, IT hosting, and the like.
The individuation-type FIZs are designed to induce large-scale foreign investments. They include a comprehensive package of location, timing and incentives customized for individual foreign investor. The categories of manufacturing, tourism, logistics and R&D only are now allowed to enter the individuation-type FIZ
The Ministry’s proposal also includes tougher requirements for foreign-capital invested companies’ free contract for national or public land. It says that prospective contractors must invest at least 300 million won and maintain an over 30% foreign investment ratio for more than five years.
The current requirements are to invest minimum 100 million won and to maintain at least a 10% foreign investment ratio. However, the government can offer an exception to those who are well qualified in terms of job creation capability, foreign investment amount and technology transfer.