Home | Databases | WorldLII | Search | Feedback Laws of the Republic of Korea

FOREIGN INVESTMENT ZONE OPERATION GUIDELINE

FOREIGN INVESTMENT ZONE OPERATION GUIDELINE

[Ministry of Knowledge Economy Public Notice No. 2011-377, wholly amended on Jul.25, 2011]

Section 1 General Provisions

Article 1 (Purpose) The purpose of this guideline is to prescribe matters delegated by the Foreign Investment Promotion Act (hereinafter referred to as “Act”) and its Enforcement Decree (hereinafter referred to as “Enforcement Decree”) with respect to the designation, development, management, and cancellation of designation of a foreign investment zone and necessary matters for the enforcement thereof.

Article 2 (Definitions) The terms used in this guideline shall be defined as follows:

1. “Complex-type foreign investment zone” means the zone designated for the purpose of exclusively leasing or transferring land therein to foreign capital-invested companies pursuant to Subparagraph 1, Article 18 (1) of the Act.
2. “Individual-type foreign investment zone” refers to the zone wherein any foreign investor hopes to make an investment pursuant to
Subparagraph 2, Article 18 (1) of the Act.
3. “Service-type foreign investment zone” pertains to the zone designated for lease or transfer to foreign capital-invested companies that provide service pursuant to Subparagraphs 3 and 4, Article 18 (1) of the Act.
4. “Management agency” means the Mayor/Do Governor, etc., managing any foreign investment zone pursuant to Article 18 (4) of the Act.
5. “Business plan” under Article 20 details the amount of foreign investment and factory building area compared to restrictions on occupancy under Article 15.
6. In computing “the amount of foreign investment,” the portion corresponding to the holding ratio as calculated by the methods under Articles 116-2 (11) and 116-2 (12) of the Enforcement Decree of the Restriction on Special Taxation Act shall not be included in the amount of foreign investment in the case of a foreign corporation whose stocks or equity shares are directly or indirectly owned by nationals of the Republic of Korea (excluding persons falling under Article 3 of the Enforcement Decree) or Korean corporations.

Article 3 (Purchase and Registration of Land) (1) Purchase and registration of land in a foreign investment zone shall be made jointly by

the State and a local government; the purchase allotment ratio shall be prescribed by the fund concerning foreign investment inducement activities」.
「State’s supporting criteria for government
(2) When purchasing land in a foreign investment zone, the State and a local government shall pay the contract deposit on a fifty– fifty basis; the remaining land purchase amount shall be paid according to occupancy accomplishments in the case of a Complex-type foreign investment zone and according to the contracted date(s) in the case of an Individual-type foreign investment zone.
(3) The State and a local government shall enter ownership shares on the cadastral register and register of real estate according to the allotment ratio of the land purchase money.
(4) No private right shall be established in relation to the land owned by the State or a local government as prescribed by Article 11 of the State Property Act and Article 19 of the Public Property and Commodity Management Act.

Article 4 (Eviction from Leased Land and Building) (1) In case a lease contract for the land is completed due to the expiration of the contract period, termination of contract, or other causes, the occupant company shall give free of charge or return in their original state to the State or the local government the buildings and other facilities constructed on the leased land within the period prescribed by the management agency.

(2) No occupant company may request the State or the local government for the payment of damage incurred from the termination of contract as well as any and all expenses such as those necessary for the restoration to the original state, moving charges, etc., regardless of the nature of such.

Article 5 (Request for Sale of Leased Land and Foreign Investment Support Center) (1) Any company that leased a factory land during the contract period (upon completion of the business plan according to Article 20) or after the expiration of the contract period may submit to the Minister of Knowledge Economy and the Mayor/Do Governor a request for the sale of leased lands through the management agency. In such cases, the Minister of Knowledge Economy and the Mayor/Do Governor shall request for the evaluation of the leased lands to more than two appraisal corporations pursuant to the State Property Act and Public Property and Commodity Management Act and may sell the lands at a price that is not less than the arithmetic average of the appraised price.

(2) For the efficient management of the status of State or Public Property in foreign investment zones, the Foreign Investment Support Center (hereinafter referred to as “KISC”) shall be established in the Korea Industrial Complex Corp. (hereinafter referred to as “KICOX”). KISC is responsible for managing the status of all foreign investment zones. A local government shall submit a report on the status of management to KICOX by Mar. 15 each year, and KICOX shall report the comprehensive status of management to the Ministry of Knowledge Economy by Mar. 31 each year.

Section 2 Designation and Management of Complex-type Foreign Investment Zones

Article 6 (Procedure for the Designation of Complex-type Foreign Investment zone) (1) A designation plan according to Subparagraph 1, Article 18 (1) of the Act shall be prepared using Form No. 1 attached hereto.

(2) The Minister of Knowledge Economy shall examine whether the designation plan submitted by the Mayor/Do Governor meets the requirements for designation according to Article 7 and forward it to the Foreign Investment Working Committee.

Article 7 (Requirements for the Designation of Complex-type Foreign Investment Zone) (1) When intending to designate a complex-type foreign investment zone (hereinafter referred to as “Complex-type investment zone”), the balance between regions by city/Do shall be considered, and each of the following requirements shall be met:

1. With respect to a newly designated zone, the complex shall be prepared for companies’ immediate occupation, and the reported
demand of foreign capital-invested companies shall be no less than 60% of the complex area. Note, however, that the minimum zone area to be designated shall be no less than 330,000㎡, and new designation or alteration of designation shall be restricted in cases
wherein the occupancy ratio of an existing foreign investment zone in the same metropolitan local autonomous entity is below 80%.
2. In case of expanding an existing zone, an occupancy ratio of more than 80% compared to the existing designated area has been contracted for occupancy, the complex shall be prepared for companies’ immediate occupancy, and the reported demand of foreign capital-invested companies shall be no less than 60% of the complex area. Note, however, that the same shall not apply in case of explicit demand for a large-scale location exceeding the remaining area.
(2) When submitting a new/expansion designation plan in a complex-type investment zone in the region, the Mayor/Do Governor shall attach to the plan a feasibility examination report that comprehensively considers the effects on the national economy such as the feasibility of the foreign investment subject to inducement activities, effects on regional development, increase of employment, etc., as well as the effects of lending a financial fund, etc.

Article 8 (Entrustment of Management of Complex-type Investment Zone) (1) In principle, the business of managing a complex-type investment zone shall be operated by a management agency. In case of a need for the specialization and efficient management of any complex-type investment zone, however, the business of management may be entrusted to an institution with extensive ability and experience in the management of industrial complexes or KICOX established under Article 45-3 of the Industrial Cluster Development and Factory Establishment Act (hereinafter referred to as “Industrial Cluster Act”).

(2) The head of an entrusted institution shall prepare and operate detailed operation guidelines for the smooth performance of the business specified in Article 9.

Article 9 (Management of State or Public Property for Complex-type Investment Zone) (1) In case a management agency entrusts the business of managing any complex-type investment zone in accordance with Article 8, the Minister of Knowledge Economy and the Mayor/Do Governor shall entrust an entrusted institution with the following business relating to the management of State or public Property in the relevant investment zone pursuant to Article 29 of the State Property Act and Article 104 (3) of the Local Autonomy Act:

1. Selection of occupant companies that intend to move in to the complex-type investment zone
2. Business concerning concluding occupancy contracts with moving-in companies (including lease contracts in case of a lease complex; the same shall apply hereinafter)
3. Imposition and collection of rents and lease deposits from occupant companies and determination on granting reduction of or exemption from rental payments
4. Management of property in the complex-type investment zone
5. Other business matters related to the lease and operation of the complex-type investment zone
(2) For the management of State or public property, any entrusted institution shall establish and manage separate accounting. Revenues shall be the total revenue generated from the management of State or public property such as rents collected from occupant companies etc., and expenses shall be the entrustment fees according to the entrustment (distributed according to the ratio of entrusted property). (3) Entrustment fees under Paragraph (2) shall be preferentially used with regard to the expenses necessary for the proper management of State or public property. In the case of KICOX, however, a separate contract applies.
(4) Any entrusted institution shall report to the Minister of Knowledge Economy and the head of local government the status of annual management of State or public property by the end of February of the following year.
(5) Any agency entrusting the management of State or public property shall perform calculation of annual accounting by fiscal year. In case the revenues under Paragraph (2) exceed the expenses, the agency shall have the difference paid in; in the case the expenses exceed the revenues, however, the difference shall be paid to the entrusted institution.

Article 10 (Establishment of Basic Management Plan for Complex-type Investment Zone) (1) A management agency shall manage a zone by establishing a Basic Management Plan for a complex-type investment zone, which sets the following matters according to Article 33 of the Industrial Cluster Act (hereinafter referred to as “Basic Plan”), for approval by the Minister of Knowledge Economy:

1. Matters concerning the land area of a complex-type investment zone to be managed
2. Matters concerning zoning
3. Matters concerning the layout of factories according to business types
4. Matters concerning the types of businesses eligible to move in according to Article 11
5. Matters concerning qualification and priority for occupancy according to Article 12
6. Matters concerning restrictions on occupancy according to Article 15
7. Matters concerning the reduction of/exemption from rents according to Article 18 (Method of applying the rate of reduction/exemption by zone according to the ownership shares of the State and the local government)
8. Other matters necessary for the management of complex-type investment zones
(2) When granting approval under Paragraph (1), the Minister of Knowledge Economy shall make the corresponding public announcement. In cases wherein the management agency is the Mayor/Do Governor, however, the Mayor/Do Governor shall publish the approval.

Article 11 (Types of Businesses Eligible for Occupancy) The types of businesses eligible to move in to a complex-type investment zone shall be those falling under any of the following items, and the types of businesses eligible to move in by region shall be prescribed by the Basic Plan under Article 10:

1. Business (involving high technology) eligible for the reduction of or exemption from taxes in accordance with the Foreign
Investment Promotion Act
2. Types of businesses applying or developing advanced technologies and products that have been publicly announced in accordance with Article 5 of the Industrial Development Act
3. Other types of businesses set by a management agency considering the industrial characteristics in the region concerned
4. Any of the company-affiliated research institutes under Subparagraph 3 (c) of Article 2 of the Special Act on the Support of Science and Engineering Manpower for Strengthening National Science and Technology Competitiveness and research and development business under Subparagraph 4 (a) of Article 2 of the same Act
5. Businesses under Subparagraph 3 (a) and (b), Article 25 (1) of the Enforcement Decree of the Foreign Investment Promotion Act

Article 12 (Qualification and Priority for Occupancy) (1) Any foreign-invested company meeting each of the following requirements is qualified to move in to a complex-type investment zone:

1. For a wholly owned foreign capital-invested company or a joint venture company whose foreign-invested company’s shares exceed
30％
of the total voting stock or total investment amount (10% in case of a standard-type factory in the Daebul foreign investment
zone and 50% in case of businesses under Subparagraph 5 of Article 11), the amount of foreign capital investment shall be no less than KRW 100,000,000.
2. The registration of a foreign capital-invested company shall have been effected according to Article 21 of the Act by the contracted time limit for occupancy under Article 13 (1).
3. In cases corresponding to Subparagraphs 1 and 2, Article 23 (3), the existing factory facilities may not be transferred (excluding the case of transferring factory facilities to another foreign investment zone within a foreign investment zone, however).
(2) In case of leasing or selling complex-type investment zones, the priority of occupancy shall be as follows:
1. As for businesses prescribed by each subparagraph of Article 11, the priority shall be in the order prescribed by the Article.
2. Company with a larger scale of employment compared to the average employment in the same line of business
3. Company whose foreign invested amount is higher in case the type of business is the same
4. Company whose foreign investment ratio is higher in case the contents of each item above are the same

Article 13 (Occupancy Contract) (1) Any person intending to operate a business in a complex-type investment zone shall conclude a contract for occupancy with a management agency pursuant to Article 38 (1) of the Industrial Cluster Act. Even if the contents of the business plan submitted at the time of making an occupancy contract have been altered, the altered amount of investment and the building area of factory, etc., shall be completed within the initial performance period prescribed by Article 20 (2).

(2) In case a company requests for the conclusion of a contract for occupancy to move in to a complex-type investment zone, the management agency shall hear the review opinion of the project manager under Article 21-2 of the Enforcement Decree of the Act (limited to cases wherein the amount of foreign investment is USD 3,000,000 or more), judge the eligibility and conformance to
Articles 11 and 12, seek advice from outside experts, if necessary, and finally determine whether to make the contract.
(3) Contracts for occupancy regarding a lease-type complex among contracts under Paragraph (1) shall include lease contracts.
(4) Where a change of ownership is expected to occur with regard to an occupant company due to auction, etc., the management agency may restrict the alteration of business plan (extension of a new building, etc.).

Article 14 (Termination, Etc., of Contracts for Occupancy) (1) Under any of the following cases, a management agency may terminate a contract for occupancy:

1. An occupant company falls under each subparagraph of Article 42 (1) of the Industrial Cluster Act. In applying Subparagraph 1, Article 42 (1) of the Industrial Cluster Act, however, the period shall be one year, and the time period to complete the establishment of a factory pursuant to Article 15 of the Industrial Cluster Act shall be four years after the conclusion of a contract for occupancy.
2. An occupant company loses qualifications for occupancy under Article 12 (1).
3. An occupant company uses the land in violation of Articles 16 (3) and 16 (4).
4. An occupant company arbitrarily disposes of leased land or building, or it is not able to operate business as a matter of fact due to public auction or auction.
5. A petition to commence corporate reorganization procedure or a petition for bankruptcy with respect to an occupant company occurs.
6. An occupant company shuts down its business, or it has not done business for more than one year.
7. An occupant company has not performed its obligations as specified in the contract or has failed to pay rents for more than one year.
8. An occupant company has not fulfilled the terms and conditions of the contract or has violated the laws and subordinate regulations, ordinances, etc. (2) When terminating a contract for occupancy with an occupant company in accordance with the criteria of each subparagraph of Paragraph 1, a management agency shall order the occupant company to correct the situation within a period of six months pursuant to Article 54 of the Enforcement Decree of the Industrial Cluster Act and may terminate such contract for occupancy if the occupant company fails to comply with it. In the case of Subparagraphs 3 ~ 5 and 8, Paragraph (1), however, a management agency may terminate such contract for occupancy without delay. (3) When intending to terminate a contract for occupancy pursuant to Paragraph (1), a management agency shall conduct a hearing in advance.

Article 15 (Restrictions on Occupancy) Restrictions on the sale or lease of a complex-type investment zone shall be as follows:

1. The area of a factory building to be complied with by an occupant company shall be the site area calculated by applying the area ratio obtained by multiplying the standard factory area ratio by type of manufacturing business as publicly announced according to Subparagraph 2, Article 8 of the Industrial Cluster Act by 2 (as to a type of business whose doubled area ratio is 15% or less, apply
15% of area ratio). Where an occupant company hopes to occupy an area of a factory building less than the area calculated by the method above, occupancy may be granted based on the site area calculated according to the same provision. In this case, with respect to the land corresponding to the exceeded ratio of the occupancy-granted area ratio compared to the factory area ratio in the business plan, rent under Article 17 (2) shall be imposed from the time of occupancy.
2. Restrictions on the lease area by company in a complex-type investment zone shall be determined by the Basic Management Plan under Article 10 considering the characteristics of each complex within the scope of area corresponding to less than 50% of the amount of foreign investment. For any complex created according to the parenthesis in the latter part of Subparagraph 1 (a-2), Article
19 (4) of the Enforcement Decree, however, restrictions on the lease area by company may be determined within the scope of area corresponding to less than 100% of the amount of foreign investment made to an occupant company.
3. A management agency shall not lease an excessive area of land by calculating the proper area of land for an occupant company in the examination of a contract for occupancy.

Article 16 (Lease) (1) A management agency may conclude a contract for occupancy with an occupant company moving in to a lease complex within the scope of a total of fifty years. In this case, a renewal contract shall be concluded every ten years; the amount of foreign investment and area of factory building in the contents of the renewal contract mean the amount and area at the time of making the initial contract, respectively.

(2) An occupant company intending to make a renewal contract according to Paragraph (1) shall request for the conclusion of a renewal contract no later than three months prior to the expiration of the occupant contract. The management agency shall then examine whether the occupant company has completed the business plan and conclude a renewal contract with the company except in case of
any special reason not to do so.
(3) An occupant company shall neither use the land for purposes other than those prescribed in the contract for occupancy nor perform any act of disposal such as sale, lease, exchange, etc., of buildings without the written approval of the management agency. (4) A management agency may perform each of the following acts with the approval of the Minister of Knowledge Economy if requested by an occupant company:
1. All kinds of changes to the right, such as sublease or transfer of leased land
2. Changes to the form and nature, etc., of the leased land

Article 17 (Rent and Collection) (1) Rent for a complex-type investment zone shall be the amount obtained by multiplying the rate of not less than 10/1000 by the acquisition value of the relevant investment zone (in case the officially assessed individual land price under the Public Notice of Values and Appraisal of Real Estate Act is higher than the acquisition value, the former price shall be adopted; the same shall apply hereinafter); note, however, that the Minister of Knowledge Economy shall determine the rent by consulting the Minister of Strategy and Finance and the Mayor/Do Governor. Lease deposit shall be the annual rent according to Paragraph (2) (amount obtained by multiplying the rate of not less than 50/1000 by the officially assessed land price etc.; in case the lease deposit exceeds 10,000,000 KRW, 50% of the amount may be reduced), and payment of such may be replaced by a guarantee insurance policy if there is a request from an occupant company. Note, however, that the lease deposit for the year when the renewal contract is concluded shall be the rent under Paragraph (2).

(2) Notwithstanding the provision of Article 20 (1), the rent for an occupant company that has not attained the foreign invested amount and area of a factory building as applied when determining the restrictions on occupancy under Article 15, or one that has become disqualified for occupancy under Article 12 (1) or has fallen under one of the grounds for terminating contracts for occupancy under Article 14 shall be the amount obtained by multiplying the rate of not less than 50/1000 by the acquisition value. Note, however, that the Minister of Knowledge Economy shall determine the rent by consulting the Minister of Strategy and Finance and the Mayor/Do Governor.
(3) An occupant company shall calculate the amount of rent and lease deposit to lease an exclusive complex on a per month basis (in case the number of days of use fall short of a month, calculate the amount on a per day basis) and pay by the contract date the rent for the current year and the lease deposit in accordance with Paragraph 1 and pay the rent for the following year by December 31 of the current year. To do this, a management agency shall serve a notice demanding the payment of rent by November 31 of the current year. (4) If rent has not been paid in full by the payment deadline, rent in arrears since the deadline shall be governed by Article 73 of the State Properties Act and Article 80 of the Public Property and Commodity Management Act.
(5) If assets on land in a foreign investment zone have been acquired through auction or public auction, rent shall not imposed on the person who has acquired the assets on land for the period to conclude an occupancy contract and for the transfer period under Articles
40 (1) and 40 (2), respectively, of the Enforcement of the Industrial Cluster Act. In case the acquired assets on land have been occupied and used, however, rent under Article 17 (2) shall be imposed.

Article 18 (Reduction or Exemption of Rents) (1) Rent for an occupant company may be reduced or waived in accordance with Articles 13 (6) and 13 (8) of the Act. In applying the reduction or exemption rate in this case to the amount of foreign investment, the amount that has already been paid in for investment in the corresponding factory etc., shall apply, and companies to which rent under Article 17 (2) applies shall be excluded from the reduction of or exemption from rent.

(2) A management agency shall establish the criteria for the reduction of or exemption from rent by complex according to Paragraph
1 and reflect it on the Basic Plan under Article 10.
(3) An occupant company wishing to qualify for the reduction of or exemption from rents in accordance with Paragraph 1 shall file an application for the reduction of or exemption from rents with the management agency by attaching evidentiary documents; the time for applying the reduction of or exemption from rents starts from the month where the date of determination thereof belongs.
(4) Even in cases wherein a management agency has made a determination on the reduction of or exemption from rents in accordance with Paragraph (1), the occupant company shall pay the rents before the reduction or exemption until the completion of factory construction, and the management agency shall return to the occupant company the amount of reduced or waived rents after
confirming completion of factory construction.
(5) The lease deposit collected by a management agency in accordance with Article 17 (1) shall be returned in accordance with
Article 4 (1) after confirming whether the contract-completed leased land has been restored to its original state.
(6) For the reduction of or exemption from rents in accordance with the first part of Paragraph (1), the reduction of or exemption from rents regarding a business project that has gotten such determination according to the Restriction of Special Taxation Act shall be limited to the business place only with such determination.

Article 19 (Recovery of Reduced or Waived Rents) Reduced or waived rents shall be recovered in accordance with Article 18 from an occupant company falling under any of the following:

1. In case the determination of reduction of or exemption from rents has been made by presenting false information as proof, pay back the reduced or waived rents retroactively from the date of application.
2. In case of falling short of the criteria for the reduction of or exemption from rents after its determination or falling under the provision of Article 17 (2), pay back reduced or waived rents retroactively from the date the grounds thereof occurred.

Article 20 (Performance of Business Plan) (1) An occupant company located in a complex-type investment zone shall faithfully perform the restrictions on occupancy under Article 15.

(2) The period for the performance of business plan shall be five years from the date of an occupancy contract.
(3) An occupant company shall not dispose of the land acquired with the support of the State or a local government within five years of the date of a sale contract. In case the company disposes of such within ten years of the contract date, the amount corresponding to the ratio of support by the State or a local government out of the proceeds of the sale shall be recovered.
(4) In case an occupant company that rented a complex-type investment zone fails to provide the amount of foreign investment under Paragraph (2) during the performance period, the management agency shall apply rents under Article 17 (2) from the date the grounds occurred for the amount of foreign investment to fall short vis-à-vis the restrictions on occupancy, and not the reduction or exemption rate under Article 18. Owing to inevitable circumstances, however, the management agency may -- through prior consultation with the
Minister of Knowledge Economy -- designate a period of one year or less from the expiration date of performance period and have the amount of foreign investment provided. With respect to the rents for this period, the rent under Article 17 (2) shall apply to the portion of excessive area from the date the grounds thereof occurred.
(5) In case an occupant company fails to meet the requirement regarding the area of a factory building, the management agency shall apply rent under Article 17 (2) retroactively from the date the grounds occurred to the excessive area of land only corresponding to the factory area ratio as compared to the area obtained by multiplying the standard factory area ratio by two pursuant to Subparagraph 1 of Article 15.
(6) An occupant company returning an industrial land without performing the business plan under Paragraph 2 within five years shall retroactively pay the rents under Article 17 (2) as calculated on a per day basis concerning the non-fulfilled portion from the date of the occupancy contract to the date of termination, and the reduced or waived rents in accordance with Article 18 shall be recovered in full. (7) If land through the calculation of restrictions on occupancy according to Article 15 was leased with a long-term loan included in the amount of foreign investment, and it falls short of the restrictions on occupancy through the repayment of the loan, rents under Article 17 (2) shall apply.
(8) A management agency shall check and confirm whether business plans have been performed pursuant to Paragraph (1) and submit
a comprehensive report to the Mayor/Do Governor and the Minister of Knowledge Economy by the end of February every year.

Article 21 (Maintenance of Qualifications of Occupancy) (1) In case an occupant company -- after moving in to a complex-type investment zone -- fails to meet the qualifications of occupancy owing to inevitable circumstances such as the withdrawal of the foreign investment share, the management agency may, through prior consultation with the Minister of Knowledge Economy, designate a period of two years or less and have the qualifications met. In this case, the management agency shall apply rent under Article 17 (2) from the date the company fails to meet the qualifications of occupancy but not the reduction or exemption rate under Article 18. In case an occupant company fails to maintain the qualifications of occupancy after performing the business plan under Article 20 (1) by increasing domestic capital only without any reduction of the amount of foreign investment to install factory facilities or machinery facility equipment (limited to cases wherein a foreign invested company’s

shares exceed 10％
of the total stock or total investment amount pursuant to Subparagraph 1 of Article 12 (1)), however, the
reduction or
exemption rate under Article 18 shall continuously apply.
(2) In case an occupant company fails to meet the qualifications of occupancy for the period prescribed by Paragraph (1), the management agency shall terminate the occupancy contract in accordance with Article 14. If an occupant company in operation falls under any of the following, however, the management agency shall permit continuous occupancy but apply rent under Article 17 (2) rather than the reduction or exemption rate under Article 18:
1. An occupant company loses the qualifications of occupancy owing to the withdrawal of the foreign investment share, and the management agency recognizes the necessity of continuously retaining the occupant company for the development of the regional economy and due to the impossibility of redemption of land/buildings.
2. Even if an occupant company’s foreign invested company’s shares have been changed by the increase of capital to less than the ratio for the qualifications of occupancy as prescribed by Article 12, the amount of foreign investment exceeds USD 500,000.
(3) In the case of an occupant company that acquired an allotted land at the price below the preparation cost (or purchase value), the amount under Article 20 (3) shall be recovered.

Article 22 (Subcontractor Occupancy System) (1) In case an occupant company (a company whose foreign investment ratio exceeds 30%) requests that its subcontractor without any foreign invested company’s shares use part of the occupant company’s factory for the purpose of streamlining processes or reducing cost, the management agency may permit occupancy following an evaluation by the Evaluation Committee with the approval of the Minister of Knowledge Economy in accordance with Article 16 (4).

(2) A management agency may -- at the request of the relevant occupant company -- conclude an occupancy contract with the subcontractor whose occupancy is permitted according to Paragraph 1 within the remaining lease period and a renewal contract every five years. (3) The area of occupancy permitted to a subcontractor shall not exceed 30% of the total factory floor area of the relevant occupant company, and rents shall be imposed on the subcontractor within the scope of land corresponding to the ratio of the total factory floor area intended for use.
(4) With respect to rent, rent in the same level as the industrial complex lands in its surrounding areas shall be imposed, and rent under
Articles 17 (1) and 17 (2) shall not apply (details regarding the imposition of rent shall be determined by the Evaluation Committee).
(5) The Evaluation Committee consisting of not more than ten experts concerned shall be established and operated under a management agency. In case a management agency has a separate investment inducement-related Committee, the latter Committee may assume the functions of the former Committee.

Article 22-2 (Conclusion of Renewal Contract) An occupant company shall conclude a renewal contract with the management agency to continue occupancy in a complex-type investment zone according to Article 16 (1) by applying the contents prescribed by the Act, Enforcement Decree, guideline, etc.

Section 3 Individual-type Foreign Investment Zone

Article 23 (Designating the Criteria for Individual-type Foreign Investment Zone) (1) The amount of foreign investment under any subparagraph of Article 25 (1) of the Enforcement Decree means the amount corresponding to foreign investment under Article 2 (1)

4 of the Act. Note, however, that the amount of foreign investment that has been paid in before the application for designation of an individual-type foreign investment zone (hereinafter referred to as “Individual-type investment zone”) is filed shall be excluded.
(2) Notwithstanding the proviso of Paragraph (1), if the amount of paid-in foreign investment is deemed to have been used for the purpose of obtaining designation of a foreign investment zone such as purchase of real estate in the individual investment zone whose designation is expected, the paid-in amount shall be included in the amount of foreign investment.
(3) “If plant facilities are newly installed” and “if facilities are newly installed” as prescribed by Subparagraphs 1, 2, and 3, Article 25 (1) of the Enforcement Decree refer to any of the following:
1. If factory facilities (referring to a workplace in case of any business other than a manufacturing industry on the Korean Standard
Industrial Classification; the same shall apply hereinafter) are newly constructed, or machine/facility equipment is newly installed
2. If the same corporation installs factory facilities or machine/facility equipment that can be accounted for separately from the existing factory facilities
3. When taking over a building whose construction has not been completed and carrying out business operations with approval for the use of the building in accordance with Article 22 of the Building Act; note, however, that the Foreign Investment Commission may not acknowledge such according to the progress of the building under construction
(4) “The scale of regular employment of human resources” under Item (b), Article 25 (1) 4 of the Enforcement Decree means the number of employees who have paid monthly tax on the earned income under the Income Tax Law. The same criteria for applying the scale of regular employment of human resources shall apply hereinafter in this section.
(5) If two or more foreign investors intend to obtain designation of individual-type zone from the Mayor/Do Governor in accordance with Article 18 (2) of the Act, contract(s) concerning the obligation of execution and performance of the investment plan shall be concluded between the corresponding foreign investors.
(6) The identification of requirements under each subparagraph of Article 25 (1) of the Enforcement Decree shall be governed by the resolution of the Commission.
(7) In case of falling short of the designation criteria through the repayment of the long-term loan included in the amount of foreign investment that has satisfied the requirement of each subparagraph of Article 25 (1) of the Enforcement Decree, the Mayor/Do Governor shall request the Commission to deliberate on the cancellation of the individual-type foreign investment zone. If foreign investment that meets the designation criteria within six months is made, however, the designation shall be maintained.

Article 24 (Procedure for the Designation of Individual-type Foreign Investment Zone) (1) A designation plan according to Subparagraph 2, Article 18 (1) of the Act shall be prepared using Form No. 2 attached hereto.

(2) Article 11 of the Enforcement Decree of the Industrial Sites Development Act shall apply mutatis mutandis to the procedures for hearing opinions under Article 25 (8) of the Enforcement Decree. If the procedure for hearing opinions has been completed during the designation and development of an industrial complex, and foreign capital-invested companies are moving in to the complex according to the
development plan, however, the hearing of opinions shall be deemed to have been made.
(3) The hearing of opinions shall be made before a designation plan is submitted to the Minister of Knowledge Economy.
(4) The Minister of Knowledge Economy shall submit to the Foreign Investment Working Committee (hereinafter referred to as “Working Committee”) an Evaluation report together with the designation plan that comprehensively considers -- based on the designation plan submitted by the Mayor/Do Governor -- effects on the national economy such as the feasibility of foreign investment subject to inducement activities, effects on regional development, and increase of employment etc., and effects of lending financial fund, etc.
(5) The Minister of Knowledge Economy may request -- if necessary -- the Mayor/Do Governor to complement the designation plan and the relevant Mayor/Do Governor and foreign investors for the supply of data necessary to formulate the Evaluation report on the designation plan. (6) The Foreign Investment Inducement Subcommittee under Article 35 (4) of the Enforcement Decree may support the necessary matters such as prior consultation with the competent authorities related to the designation of an individual-type investment zone.
(7) If the Foreign Investment Commission has made a resolution that there is a need to designate an individual-type investment zone as a result of deliberation under Article 25 (9) of the Enforcement Decree, the Mayor/Do Governor shall make a corresponding public announcement in an official Gazette or Report in accordance with Article 18 (3) of the Act and send a copy of related documents to the Mayor/Head of Gun or Gu concerned.
(8) If the Foreign Investment Commission has rejected a designation plan as a result of deliberation under Article 25 (9) of the
Enforcement Decree, the Mayor/Do Governor shall notify the relevant foreign investors of the grounds thereof.
(9) When intending to lease land after an individual-type investment zone has been designated and publicly announced, the Mayor/Do Governor shall conclude a land lease contract (occupancy contract) with a foreign capital-invested company that has reflected the contents of the resolution of the Foreign Investment Commission and send a copy of the contract to the Minister of Knowledge Economy.

Article 25 (Designation and Development of Individual-type Investment Zone in Areas Other than Industrial Complexes) (1) When intending to develop a foreign investment zone into a general industrial complex and urban hi-tech complex (hereinafter referred to as “general industrial complex, etc.”) in accordance with Article 18 (6) of the Act, the Mayor/Do Governor may appoint a development project operator from

among persons falling under any of the subparagraphs of Article 16 (1) of the Industrial Sites Development Act, and Articles 40 ~ 44 of the Industrial Sites Development Act shall apply mutatis mutandis to the necessary matters for development.
(2) The Mayor/Do Governor -- when intending to designate any facility or business under Items (b) and (c), Article 25 (1) 2 of the Enforcement Decree as an individual-type investment zone -- may do so after obtaining approval for the business plan under Article 15 of the Tourism Promotion Act.

Article 26 (Management) (1) A foreign capital-invested company located in an individual-type investment zone shall report to the competent Mayor/Do Governor the current status of the amount of foreign investment of the previous year using Form No. 4 attached hereto by the end of February each year.

(2) A foreign capital-invested company designated as an individual-type investment zone owing to the scale of regular employment of human resources shall report to the competent Mayor/Do Governor the details of regular employment of human resources of the previous year using Form No. 5 attached hereto by the end of February each year.
(3) The Mayor/Do Governor having jurisdiction over individual-type investment zones shall check and confirm whether foreign investments have been made according to the designation plans and submit a comprehensive report to KICOX by March 15 each year. KICOX shall then report such to the Minister of Knowledge Economy by the end of March.
(4) If an occupant company has failed to fulfill the obligation under Article 25 (12) of the Enforcement Decree, the Mayor/Do Governor having jurisdiction over the individual-type investment zone shall report such fact to the Minister of Knowledge Economy within ten days of the date of non-fulfillment.
(5) Any foreign capital-invested company located in an individual-type investment zone but failing to satisfy the designation criteria under Articles 25 (1) and 25 (5) of the Enforcement Decree due to a change of circumstances after having completed the designation plan shall report such fact to the Mayor/Do Governor within ten days of the date of no fulfillment, and the Mayor/Do Governor shall report such to the Minister of Knowledge Economy without delay.
(6) With respect to the management of individual-type investment zones, Articles 30 ~ 45-2 of the Industrial Cluster Act shall apply mutatis
mutandis except matters prescribed by the Act, the Enforcement Decree, and this guideline.
(7) When having leased land designated as an individual-type investment zone to a foreign capital-invested company, the Mayor/Do Governor shall apply the provisions of Section 2, which are to be applied to an occupant company located in a complex-type investment zone concerning matters other than those specified in the contract concluded in accordance with Article 24 (9).

Article 27 (Cancellation of Designation) (1) If the Commission makes a resolution to cancel the designation of an individual-type investment zone, the Mayor/Do Governor shall cancel the designation thereof within fifteen days of the date of the resolution.

(2) When canceling the designation of an individual-type investment zone in accordance with Paragraph (1), the Mayor/Do Governor shall make a corresponding public announcement in an official Gazette or Report and send a notice to the Minister of Knowledge Economy, Director of the National Tax Service, Commissioner of Customs, and relevant Mayor/head of Gun or Gu within ten days of the date of cancellation.
(3) An individual-type investment zone developed as a general industrial complex, etc., according to Article 18 (6) of the Act shall be deemed to have been designated continuously as a general industrial complex, etc. even if the designation of an individual-type investment zone has been canceled.
(4) If the designation of an individual-type investment zone to be developed as a general industrial complex, etc., in accordance with Article 18 (6) of the Act has been canceled before the development starts, the relevant Mayor/Do Governor shall determine as soon as possible whether to develop or cancel its designation by reviewing the necessity of developing into a general industrial complex, etc., feasibility of sales, etc.
(5) If any foreign capital-invested company located in an individual-type investment zone according to Articles 18 (1) 2 and (2) of the Act fails to satisfy the designation criteria under Articles 25 (1) and 25 (5) of the Enforcement Decree, a newly induced foreign capital-invested company may satisfy the designation criteria.
(6) In intending to have the designation criteria satisfied in accordance with Paragraph (5), prior deliberation on the designation plan shall be made by the Foreign Investment Commission.
(7) The Mayor/Do Governor shall publicly announce the altered designation plan according to Article 18 (4) of the Act.
(8) If the designation of an individual-type investment zone is canceled, the qualification of an occupant company in the individual-type investment zone as the requirements for the reduction of or exemption from rents or taxes prescribed by the Act and Enforcement Decree thereof and Chapter 5 of the Restriction on Special Taxation Act, respectively, shall be deemed to have been lost.

Section 4 Designation and Management of Service-type Foreign Investment Zones

Article 28 (Procedure for the Designation of Service-type Foreign Investment Zone) (1) The designation plan of a service-type foreign investment zone (hereinafter referred to as “service-type investment zone”) according to Subparagraphs 3 and 4, Article 18 (1) of the Act shall be prepared using Form No. 3 attached hereto.

(2) The Minister of Knowledge Economy shall examine whether the designation plan submitted by the Mayor/Do Governor meets the requirements for designation according to Article 29 and submit such to the Foreign Investment Working Committee.

Article 29 (Requirements for the Designation of a Service-type Foreign Investment Zone) (1) When intending to designate a service-type foreign investment zone, the balance between regions by city/Do shall be taken into account, and each of the following requirements shall be met:

1. Newly and additionally designated zone (land) or buildings shall be prepared for companies’ immediate occupation, with the reported demand of foreign capital-invested companies explicitly suggested.
2. If prior designation of a certain space is to be made with respect to State or public Property (including buildings), the reported demand of no less than two foreign capital-invested companies shall be secured at no less than 60% of the designated area.
(2) When submitting a new or an expanded designation plan in a service-type investment zone in the region, the Mayor/Do Governor shall attach to the submitted plan a feasibility study report that comprehensively considers the effects on the national economy such as the feasibility of the foreign investment subject to inducement activities, effects on regional development, and increase of employment etc., and effects of lending financial fund, etc.

Article 30 (Management of Service-type Investment Zone) (1) If any foreign capital-invested company located in an individual-type investment zone fails to satisfy the qualification for occupancy under Article 34 and performance criteria for business plan under Article 44 due to a change of circumstances after occupancy, the Mayor/Do Governor shall report such fact to the Minister of Knowledge Economy within ten days of the date of no fulfillment.

(2) When having leased land and building designated as a service-type investment zone to a foreign capital-invested company, the Mayor/Do Governor shall apply the provisions of Section 2 or 3, which are to be applied to an occupant company located in a complex/Individual-type investment zone concerning matters other than those specified in the contract concluded in accordance with Article 35.

Article 31 (Entrustment of Management of Service-type Investment Zone) (1) In principle, the business of managing a service-type investment zone shall be performed by the Mayor/Do Governor as a management agency. In case of a need for the specialization and efficient management of any service-type investment zone, however, the business of management may be entrusted to an institution with extensive ability and experience in the management of industrial complex.

(2) The head of an entrusted institution shall prepare and implement detailed operation guidelines to perform smoothly the business under Article 32.

Article 32 (Management of State or Public Property for Service-type Investment Zone) (1) In case the Mayor/Do Governor entrusts the business of managing any service-type investment zone in accordance with Article 31, the Minister of Knowledge Economy and the Mayor/Do Governor shall entrust an entrusted institution with the following business relating to the management of State or Public Property in the relevant investment zone pursuant to Article 29 of the State Property Act and Article 104 (3) of the Local Autonomy Act:

1. Evaluation related to the selection of occupant companies intending to move in to the service-type investment zone
2. Business concerning the conclusion of occupancy contracts with moving-in companies (including lease contracts in case of a lease complex; the same shall apply hereinafter)
3. Imposition and collection of rents and lease deposits on/from occupant companies and determination on granting reduction of or exemption from rental payments
4. Management of property in the service-type investment zone
5. Other business matters accompanying the lease and operation of the service-type investment zone
(2) For the management of State or public property, any entrusted institution shall establish and manage separate accounting. Revenue shall be the total revenue generated from the management of State or public property such as rent collected from occupant companies, etc., and expense shall be the entrustment fees according to the entrustment (distributed according to the ratio of entrusted property). (3) The entrustment fees under Paragraph (2) shall be preferentially used in the expenses necessary for the proper management of State or public property.
(4) An entrusted institution shall report the status of annual management of State or public property and submit the audit report of an external specialist agency to the Minister of Knowledge Economy and the Mayor/Do Governor by the end of February of the following year. (5) An agency entrusting the management of State or public property shall perform the calculation of annual accounting by fiscal year. In case the revenue under Paragraph (2) exceeds the expenses, the agency shall have the difference paid in; if the expense exceeds the revenue, the difference shall be paid to the entrusted institution.

Article 33 (Types of Businesses Eligible to Move in to a Service-type Investment Zone) The types of businesses eligible to move in to a complex-type investment zone shall be as follows:

1. The scope of research and development business according to Subparagraphs 3 and 4, Article 18 (1) of the Act shall be natural sciences and engineering research and development business (Classification No.: 7011, 7012) according to the Korean Standard Industrial Classification (hereinafter referred to as “Korean Standard Industrial Classification”) prepared and publicly announced by the Commissioner of Statistic Korea.
2. Subparagraphs 1 ~ 3, Article 25 (3) of the Enforcement Decree
3. The scope of cultural industry under Subparagraph 4, Article 25 (3) of the Enforcement Decree shall be the industries prescribed by attached Table 1.
4. The scope of tourism industry under Subparagraph 5, Article 25 (3) of the Enforcement Decree shall be the industries prescribed by attached Table 2.

Article 34 (Qualification for Occupancy and Priority) (1) A foreign capital-invested company that meets all the requirements in the following subparagraphs may move in to a service-type investment zone:

1. For a wholly owned foreign capital-invested company or a joint venture company whose foreign capital-invested company’s shares exceed
30％
of the total voting stock or total investment amount, the amount of foreign investment shall be no less than KRW 100,000,000.
2. The registration of a foreign capital-invested company shall have been effected according to Article 21 of the Act by the contracted time limit for occupancy under Article 35 (1).
3. A business place is newly installed, or the same corporation installs a business place that can be accounted for separately from an existing business place. Note, however, that an existing business place may not be transferred, and the case of transferring into another service-type investment zone within a service-type investment zone is excluded.
(2) In the case of occupancy in a service-type investment zone, the number of minimum employment by industry shall be that specified in attached Table 3.
(3) The Mayor/Do Governor may set forth separate guidelines for the purpose of designation of service-type investment zones and evaluation and selection of occupant companies and establish an examination committee for the selection in accordance with the regional characteristics.
(4) In the case of a foreign investment zone designated in accordance with Subparagraph 2, Article 29 (1), the priority of occupancy shall be in the following order: company with larger scale of employment, company whose foreign invested amount is higher, and company whose foreign investment ratio is higher than foreign investment.

Article 35 (Occupancy Contract) (1) Any person intending to do business in a service-type investment zone shall conclude a contract for occupancy with a management agency. Even if the contents of a business plan submitted at the time of making a moving–in contract have been altered, the altered amount of investment and status of employment, etc., shall be completed within the initial performance period prescribed by Article 44 (2).

(2) If a company requests for the conclusion of a contract for occupancy to move in to a service-type investment zone, the
management agency shall determine whether to make the contract based on self-deliberation procedures.
(3) Contracts for occupancy according to Paragraph (1) shall be deemed to include a lease contract for land and buildings in the case of State and public property.
(4) If change of the right of lease is expected to occur with regard to an occupant company due to business suspension, auction, etc., the management agency may restrict the alteration of the business plan.

Article 36 (Termination, Etc., of Contracts for Occupancy) (1) If an occupant company falls under any of the following, a management agency may terminate a contract for occupancy:

1. An occupant company in the case of renting a building (or part thereof) neither starts business without justifiable reason nor commences construction within one year in case of renting land.
2. An occupant company loses qualifications for occupancy under Articles 34 (1) and 34 (2).
3. An occupant company uses the land in violation of Articles 38 (2) and 38 (3).
4. An occupant company arbitrarily disposes of leased land or building, or it is not able to do business as a matter of fact due to public auction or auction.
5. A petition to commence corporate reorganization procedure or a petition for bankruptcy occurs with respect to an occupant company.
6. An occupant company shuts down its business, or it has not done business for more than six months.
7. An occupant company has not performed its obligations as specified in the contract, or it has failed to pay rent for more than six months.
8. An occupant company has not fulfilled the terms of the contract, or it has violated laws and subordinate regulations, ordinances, etc. (2) A management agency -- when terminating a contract for occupancy with an occupant company in accordance with the criteria for each subparagraph of Paragraph (1) -- shall order the occupant company to correct the situation within a period of six months and may terminate such contract for occupancy if the occupant company fails to comply. For Subparagraphs 3, 4, and 7, Paragraph (1), however, a management agency may terminate such contract for occupancy without delay.
(3)) When intending to terminate a contract for occupancy pursuant to Paragraph (1), a management agency shall conduct a hearing in advance.

Article 37 (Restrictions on Occupancy) Restrictions on the lease of land and building in a service-type investment zone shall be as follows:

1. The area of a building to be used by an occupant company shall be the site area calculated by applying the area ratio of 40%, which is obtained by multiplying the maximum standard factory area ratio publicly announced according to Article 8 of the Industrial Cluster Act by 2. If an occupant company hopes to occupy a building area less than the area calculated by the aforesaid method, occupancy may be granted based on the site area calculated according to the same provision. In this case, with respect to the land corresponding to the exceeded ratio of occupancy-granted area ratio compared to the construction area ratio in the business plan, rent under Article 39 (2) shall be imposed from the time of occupancy.
2. An occupant company located in a service-type investment zone shall comply with the criteria for the amount of foreign investment compared to the leased area by type of business in attached Table 4.
3. A management agency shall not lease an excessive area by calculating the proper leased area of land or building for an occupant company in the examination of a contract for occupancy.

Article 38 (Lease) (1) If a service-type investment zone is land to be leased, the Mayor/Do Governor may conclude a contract for occupancy with an occupant company within a scope of a total of ten years or with a research and development business within a scope of a total of fifty years similar to a manufacturing business. If a service-type investment zone is a building to be leased, the Mayor/Do Governor may conclude a contract for occupancy with a foreign capital-invested company intending to move in within a scope of a total of five years. In the case of a service-type investment zone, a contract for occupancy may be renewed within the scope of the same contract period and only once.

(2) An occupant company shall neither use the land and building for purposes other than those prescribed in the contract for occupancy nor perform any act of disposal such as sale, renting (subleasing), or exchange, etc., of the land and building without the written approval of the Mayor/Do Governor.
(3)The Mayor/Do Governor may perform each of the following acts with the approval of the Minister of Knowledge Economy if requested by an occupant company:
1. All kinds of changes to the right -- such as sublease or transfer -- of the leased land and building
2. Changes to the form and nature of leased land, structure and use, etc., of the leased building

Article 39 (Rent for leased Land) (1) If a service-type investment zone is land to be leased, Article 17 (1) shall apply mutatis mutandis to the rent and lease deposit.

(2) Notwithstanding the provision of Article 44 (2), the rent for an occupant company falling under any of the subparagraphs below shall be the amount obtained by multiplying the rate of not less than 50/1000 by the acquisition value of the relevant investment zone (in case the officially assessed individual land price under the Public Notice of Values and Appraisal of Real Estate Act is higher than the acquisition value, the former price shall be adopted; the same shall apply hereinafter). Note, however, that the Minister of Knowledge Economy shall determine the rent by consulting the Minister of Strategy and Finance and the Mayor/Do Governor:
1. Occupant company that has not met the requirement regarding the amount of foreign investment and the construction area applied for the prescription of restrictions on occupancy under Article 37
2. Occupant company that has fallen short of the qualifications for occupancy under Article 34
3. Occupant company that has fallen under the grounds for the termination of a contract for occupancy under Article 36
(3) An occupant company shall calculate the amount of rent and lease deposit to lease land of State and public property on a per month basis (in case the number of days used fall short of a month, calculate the amount on a per day basis) and pay by the contract date the rent for the current year and the lease deposit in accordance with Paragraph 1 and the rent for the following year by December 31 of the current year. To do this, the Mayor/Do Governor shall serve a notice demanding the payment of rent by November 31 of the current year.
(4) If rent has not been paid in full by the payment deadline, rent in arrears since the deadline shall be governed by Article 73 of the State Properties Act and Article 80 of the Public Property and Commodity Management.
(5) If any asset on land in a service-type investment zone has been acquired through auction or public auction, rent shall not be imposed on the person who has acquired assets on land for the period to conclude an occupancy contract and for the transfer period.
In case the acquired assets on land have been occupied and used, however, rent under Paragraph (2) shall be imposed.

Article 40 (Reduction of or Exemption from Rent for Leased Land) (1) Rent for an occupant company may be reduced or waived in accordance with Articles 13 (6) and 13 (8) of the Act. In applying the reduction or exemption rate in this case, concerning the amount of foreign investment, the amount that has already been paid in for investment in the corresponding business place shall apply, and companies to which rent under Article 39 (2) applies shall be excluded from the reduction of or exemption from rent.

(2) An occupant company wishing to qualify for reduction of or exemption from rents in accordance with Paragraph (1) shall file an application attaching evidentiary documents for the reduction of or exemption from rents with the management agency; the time for applying the reduction of or exemption from rents starts from the month where the date of determination thereof belongs.
(3) Even in cases wherein a management agency has made a determination on the reduction of or exemption from rents in accordance with Paragraph (1), the occupant company shall pay the rent before reduction or exemption until it starts the business, and the management agency shall return to the occupant company the amount of reduced or waived rent after confirming the start of the business.
(4) The lease deposit collected by a management agency in accordance with Article 39 (1) shall be returned in accordance with
Article 4 (1) after confirming whether the contract-completed leased land and building have been restored to their original state.
(5) With regard to the reduction of or exemption from rents in accordance with the former part of Paragraph (1), the reduction of or exemption from rents regarding a business project that has gotten such determination according to the Restriction of Special Taxation Act shall be limited to the business place that has gotten such determination.

Article 41 (Recovery of Reduced or Waived Rents for Land) Reduced or waived rents shall be recovered in accordance with Article 40 from an occupant company falling under any of the following subparagraphs:

1. In case determination of reduction of or exemption from rents has been made by presenting false information as evidence, pay back the reduced or exempted rents retroactively from the date applied.
2. In case of falling short of the criteria for the reduction of or exemption from rents after determination or falling under the provision of Article 39 (2), pay back the reduced or exempted rents retroactively from the date the grounds thereof occurred.

Article 42 (Subsidy of Rents for Building) (1) The State or a local government may subsidize the rent for building in a service-type investment zone. In this case, the State or a local government may subsidize the amount corresponding to 50/100 or less of the standard rents under Paragraph (2) (rent for building in a service-type investment zone).

(2) The standard rents shall be the arithmetic average of the prices appraised by more than two appraisal corporations under the Public
Notice of Values and Appraisal of Real Estate Act. Note, however, that the standard rents shall not include the lease deposit.
(3) The subsidy for rent for building shall be paid by year based on the concept of ex-post setup, and the payable amount for the current year shall be subsidized the following year. Note, however, that the period for subsidizing rent for building shall be the contract period for occupancy in accordance with Article 38 (1).
(4) Any occupant company intending to obtain a subsidy of rent for building according to Paragraph (1) shall submit to the management agency an application by attaching evidentiary documents such as certificate of payment of rents, etc., for subsidy. The amount of subsidy shall be calculated from the date a contract for occupancy was concluded.
(5) When requesting for the portion of expense by the State with regard to the subsidy of rent for building, the Mayor/Do Governor shall attach the written resolution that the local government decided to subsidize the rent and a certificate of payment of rents by the occupant company. (6) In calculating the amount of subsidy of rent for building, if an occupant company falls under any of the following, the days after the date such grounds occurred shall be excluded from the payment period of subsidy:
1. Occupant company that has not fulfilled the requirement with regard to the amount of foreign investment and construction area applied for the prescription of restrictions on occupancy under Article 37
2. Occupant company that has fallen short of the qualifications for occupancy under Article 34
3. Occupant company that has fallen under the grounds for termination of a contract for occupancy under Article 36

Article 43 (Recovery of Subsidy of Rents for Building) The subsidy provided in accordance with Article 42 shall be recovered in the amount calculated on a per day basis and retroactively from the date the grounds thereof occurred from an occupant company falling under any of the following:

1. In case determination of subsidy has been made by presenting false information as evidence
2. In case of falling short of the criteria for subsidy after its determination

Article 44 (Performance of Business Plan) (1) An occupant company located in a service-type investment zone shall faithfully perform the restrictions on occupancy under Article 37.

(2) The period for the performance of business plan (amount of foreign investment, construction area of building, and minimum number of employment) shall be three years from the date of an occupancy contract.
(3) In case an occupant company that rented a service-type investment zone fails to provide the amount of foreign investment under
Paragraph (2) during the performance period, the management agency shall apply the following matters:
1. In case of land, the management agency shall apply rent under Article 39 (2) but not the reduction or exemption rate under Article
40. Owing to inevitable circumstances, however, the management agency may -- through prior consultation with the Minister of Knowledge Economy -- designate a period of six months or less from the expiration date of the performance period and have the amount of foreign investment provided. Regarding the rent for this period, rent under Article 39 (2) hall be imposed with respect to the portion of excessive area compared to the amount of foreign investment pursuant to Subparagraph 1 of Article 37.
2. In case of land, rents under Article 39 (2) shall be paid retroactively, and reduced or waived rents in accordance with Article 40 shall be recovered in full.
3. In case of a building, rents subsidized for a company in accordance with Article 42 shall be recovered in full.
(4) In the case of land, if an occupant company fails to use the construction area, the management agency shall apply rent under Article 39 (2) with respect to the area of land only exceeding 40% corresponding to the area obtained by multiplying the maximum standard factory area ratio under Subparagraph 1 of Article 37 by 2.
(5) In the case of land, if land through the calculation of restrictions on occupancy as per Article 37 was leased with a long-term loan included in the amount of foreign investment but falls short of the restrictions on occupancy through repayment of the loan, rent under Article 39 (2) shall apply.

Article 45 (Maintenance of Qualifications of Occupancy) (1) In case an occupant company -- after moving in to a service-type investment zone -- fails to meet the qualifications of occupancy under Articles 34 (1) and 34 (2) owing to inevitable circumstances such as withdrawal of foreign investment share, the management agency may, through prior consultation with the Minister of Knowledge Economy, designate a period of six months or less and have the qualifications met.

(2) In the case of land, the management agency shall apply rent under Article 39 (2) from the date the company fails to meet the qualifications of occupancy under Article 34 but not the reduction or exemption rate under Article 40.
(3) In the case of a building, subsidy under Article 42 shall not apply from the date an occupant company fails to meet the qualifications of occupancy.
(4) If an occupant company fails to maintain the qualifications of occupancy after performing the business plan under Article 44 (2) by
increasing domestic capital only without a reduction of the amount of foreign investment to expand domestic investment (limited to cases
wherein the foreign capital-invested company’s shares exceed 10％
of the total stock or total investment amount under Subparagraph 1,
Article 34 (1)), the qualifications of occupancy shall be deemed to have been maintained.

Article 46 (Occupancy by a Company Other Than a Foreign Capital-invested Company) In a service-type investment zone designated in land type in accordance with Subparagraph 2, Article 29 (1), if occupancy by a foreign capital-invested company has not been completed and the requirements under Article 34 are met, the Mayor/Do Governor may permit occupancy by a company falling under any one of the following cases:

1. The business type of the foreign capital-invested company is the same as that of an existing occupant company.
2. It is necessary for a subcontractor of an existing occupant company to move in to the zone to reduce cost and establish collaboration
(2) The Mayor/Do Governor may -- at the request of the relevant occupant company -- conclude an occupancy contract with the subcontractor whose occupancy is permitted according to Paragraph (1) within the remaining lease period.
(3) Rents under Article 39 (2) shall apply to the subcontractor.
(4) The Occupancy Evaluation Committee consisting of not more than ten related experts shall be established and operated by a
management agency. In case there is a separate Deliberation Committee by city/Do, the latter Committee may assume the functions of the
Occupancy Evaluation Committee.

Section 5 Supplementary Provisions

Article 47 (Time Limit for Reexamination) The time limit for taking measures such as abolition or amendment of this guideline shall be

July 31, 2012 by reexamining the change of Laws and Regulations and the present circumstances after the issuance of this guideline in
accordance with the
「Regulations on the issuance and management of instructions․established rules」(Presidential Decree No. 248).

Addenda <No. 2011- 377, July 25, 2011>

Article 1 (Enforcement Date) This guideline shall enter into force on the date of their resolution.

Article 2 (Transitional Measures) (1) Only in case an occupant company located in a complex-type investment zone, has invested -- at the time of concluding a renewal contract with a management agency -- an amount no less than the restrictions on occupancy as prescribed by Article 15 although it falls short of the amount of investment for the initial occupancy contract shall the management agency apply the reduction or exemption rate under Article 18.

(2) If an occupant company located in a foreign investment zone falls under Article 20 (5) although it has provided the planned amount of foreign investment during the performance period under Article 20 (2), the reduction or exemption rate under Article 18 shall be applied temporarily until December 31, 2011.

Attached Table 1: Scope of Cultural Industry Under Subparagraph 4, Article 25 (3) of the Enforcement Decree

Attached Table 2: Scope of the Tourism Industry Under Subparagraph 5, Article 25 (3) of the Enforcement Decree

Attached Table 3: Number of Minimum Employment in Service-type Investment

Zone by Industry

* The number of employment shall be calculated based on the scale of the regular employment of human resources; it refers to the number of employees who has paid monthly tax on earned income under the Income Tax Act.

* The logistics business among the Tourism business and Industry support

business duplicated with individual types under Article 25 (1) of the

Enforcement Decree shall be excluded.

Attached Table 4: Compliance Criteria for the Amount of Foreign Investment vs.

Leased Area by Business Type in Service-type Investment Zone

* Note, however, that the Logistics business among the Tourism business and Industry support business shall meet the investment requirements in excess of the criteria for foreign investment amount for an individual-type foreign investment zone under Article 25 (1) of the Enforcement Decree.

[Attached Form No. 1]

1. Purport of Resolution

The designation plan for

○○○

foreign investment zone (Plan) has been

Matters for resolution

Designation Plan for ○○○

Foreign Investment Zone (Complex-type) (Plan)

Foreign Investment

Commission Agenda

deliberated on and resolved as attached in accordance with Subparagraph 1, Article 18 (1) of the Foreign Investment Promotion Act

2. Grounds for Proposal

3. Details

4. References

Designation Plan for ○○○

Foreign Investment Zone (Plan)

1. Title of a foreign investment zone

2. Objectives of designating a foreign investment zone

3. Location and area

4. Development project operator of industrial complex, period of development, and development plan

5. Qualifications for an occupant company and Type of businesses to be induced

6. Project expenses raising plan

7. Plan for inducement of enterprises

8. Management agency and methods of management of industrial complex

9. Land utilization plan and principal infrastructure installation plan (complex layout plan)

10. Means to peruse the relevant drawings and papers

[Attached Form No. 2]

1. Purport of Resolution

The designation plan for

○○○

foreign investment zone (Plan) has been

Matters for resolution

deliberated on and resolved as attached in accordance with Subparagraph 2, Article 18 (1) of the Foreign Investment Promotion Act

2. Grounds for Proposal

Designation Plan for ○○○

Foreign Investment Zone(Individual-type) (Plan)

Foreign Investment

Commission Agenda

3. Details

4. References

Designation Plan for ○○○

Foreign Investment Zone (Plan)

1. Title, location, and area of a foreign investment zone

2. Status of foreign capital-invested companies to move in to a foreign investment zone:

o Foreign investor

- Trade name or title

- Address

- Nationality

- Main businesses to be operated

o Domestic investors (in case of joint investment)

o Foreign capital-invested company

- Trade name or title (including personal data of representative)

- Financial structure (Status, Etc., of Capital, Liabilities, and Assets)

- Business Registration No.

- Address

- Business content and sub-classes in accordance with the Korea

Standard Industrial Classification

- Scale of production and employment

- Foreign investment plan (amount, methods of investment, etc.) and its ratio

3. Plan to meet the designation criteria of a foreign investment zone

o Feasibility of foreign investment subject to inducement activities

- Fund-raising plan

- Other evidentiary material, etc., confirming the performance of a foreign investment plan

o Plan to meet the requirement regarding the scale of employment:

- Employment plan by time period

- Methods of employment, etc.

4. Development of a foreign investment zone (omissible when designating the entire or a part of the already developed industrial complex as a foreign investment zone)

o Operator of the development project

o Method and period of the development project

o Land utilization plan : Includes a plan to allocate production space , production support space , public facility space, green space , etc ., and use zoning plan there of

o Principal infrastructure installation plan : Plan for

transportation fac ility , water supply , sewage treatment, park green , waste disposal facility , energy supply , communication facility

o Detailed items in case there is any land, building, or other assets or rights to be used or expropriated

o Environment-related review material such as environmental

status, expected environmental effects, measures to reduce environmental effects and effectiveness, etc., concerning the reserved land to be designated

5 . Method of management

6 . Support for a foreign investment zone

o Support plan by a local government, etc .

capital-invested company

- If a local go vernm ent and th e operator of an industrial com plex develo pm ent pro ject reduce or waive the rents for lan d, etc., or low er the sale price, the am ount of rents reduced/waived or the difference between the sale price and the land preparation cost

- P rep aratio n and development cost of a foreign investment zone, and the amount of support by a local government

- If employment subsidy, education/training subsidy , etc., is paid, the amount of subsidy

- Plan for the support of principal facilities such as medical

facility, education facility , housing , etc.o Support plan by the central government

- Amount of support by the central government with respect to each item above

7 . Costs according to the designation of a foreign investment zone and expected effects

o Costs

- Amount of support, expected tax reduction/exemption by the central government or a local government

- Whether any damage is sustained by the neighboring residents , competitive companies , and environments

o Expected effects

- Income , employment, effects of regional development, inter-industry effects , technology transfer effects , etc .

8 . Details of hearing of opinions

o Mayor / head of Gun/head of Guo Residents

o Experts concerned

9 . Other matters

[Attached Form No. 3]

1. Purport of Resolution

The designation plan for

○○○

foreign investment zone (Plan) has been

Matters for resolution

deliberated on and resolved as attached in accordance with Subparagraph 3,

4, Article 18 (1) of the Foreign Investment Promotion Act

2. Grounds for Proposal

Designation Plan for ○○○

Foreign Investment Zone (Service-type) (Plan)

Foreign Investment

Commission Agenda

3. Details

4. References

Designation Plan for ○○○

Foreign Investment Zone (Plan)

1. Title, location, and area of a foreign investment zone

2. Status of foreign capital-invested companies to move in to a foreign investment zone (in the case of Subparagraph 1, Article 29 (1)):

o Foreign investor

- Trade name or title

- Address

- Nationality

- Main businesses to be operated

o Domestic investors (in case of joint investment)

o Foreign capital-invested company

o Method and period of the development project

o Land utilization plan : Includes a plan for space layout and use zoning plan there of

o Principal infrastructure installation plan : Plan for transportation facility , water supply , sewage treatment, park green , waste disposal fa c ility, energy supply, communication facility

o Detailed items in case there is any land , building , or other assets or rights to be used or expropriated

o Environment-related review material such as environmental status , expected environmental effects , measures to reduce environmental effects , effectiveness , etc ., concerning the reserved land to be designated

(2) In case of leasing a building

o Status of a building to be leased (area, type of building, proprietor, etc.)

Standard Industrial Classification

- Scale of employment (regular employment of human resources, human resources in full charge of research in the case of research and development business)

- Scale of sales turn-over

- Foreign investment plan (amount, methods of investment, etc.) and its ratio

3. Types of main businesses to be induced and qualifications for an occupant company (in the case of Subparagraph 2, Article 29 (1))

4. Development of a foreign investment zone

(1) In case of leasing land

o Operator of a development project

case of Subparagraph 1, Article 29 (1))

o F easibility of foreign investment subject to inducement activities

- Fund-raising plan

- Other evidentiary material etc., confirming the performance of a foreign investment plan

o P lan to m eet the requirem en t reg arding th e scale of em plo ym ent

- Employment plan by time period

- Methods of employment, etc.

7. Plan for the inducement of enterprises (this is the case of Subparagraph 2, Article 29 (1); the status of the concluded MOU citing the investment shall be attached)

8. Measures to stabilize the prices of real estate in a service-type investment zone and its surrounding areas after designation

9. Measures to prevent overpopulation (in case the zone is located in an Overconcentration Control Region under Subparagraph 1, Article 6 (1) of the Seoul Metropolitan Area Readjustment Plan Act)

10. Support for a foreign investment zone

(1) In case of leasing land

o Support plan by a local government, etc.

- Details of land purchase expenses in case a local government purchases land to be leased to a foreign capital-invested company

- If a local government and the operator of an industrial complex development project reduce or waive the rents for land, etc., or lower the sale price, the amount of rents reduced/waived or the difference between the sale price and the land preparation cost

- Preparation/development cost of a foreign investment zone and amount of support by a local government

- If employment subsidy, education/training subsidy, etc., is paid, the amount of subsidy

- Plan for the support of principal facilities such as medical facility, education facility, housing, etc.

o Support plan by the central government

- Necessary amount of support by the central government with respect to each item above

(2) In case of leasing a building

o Support plan by a local government, e tc.

- If a local government subsidizes rents, the details of rents

(appraised value) to be paid by the occupant company and the amount supported

- If employment subsidy, education/training subsidy, etc., is paid, the

amount of subsidy

- Plan for the support of principal facilities such as medical facility, education facility, housing, etc.

o S u p p o r t p la n b y th e c en tra l g o v e rn m e n t

- Necessary amount of support by the central government with respect to each item above

11. Costs according to the designation of a foreign investment zone and expected effects

o Costs

- Amount of support, etc., by the central government or a local government

- Whether any damage is sustained by the neighboring residents, competitive companies, and environments

o Expected effects

- Income, employment, effects of regional development, inter-industry effects, technology transfer effects, etc.

12. Details of hearing of opinions

o Mayor/head of Gun/head of Guo Residents

o Experts concerned

13. Result of consultations with the relevant central administrative agencies

14. Other matters

[Attached Form No. 4]

Status of Amount of Foreign Investment

[Attached Form No. 5]

Report on the Status of Regular Employment

[Guide to Preparation]

⑥The Number of Total Employees by month shall be the number of employees to be entered in the Total Payment field of the “Report on the Status of Withholding” in accordance with Article 185 of the Enforcement Decree of the Income Tax Act; this number excludes the number of Temporary Workers.

- In case of new designation as an Individual-type investment zone, this Report shall be prepared from the following month after the date of designation.

⑦The Scale of Average Regular Employment shall be the number obtained by dividing the sum of the monthly total number of Employees by 12.

- In case of new designation as an Individual-type investment zone, the sum of the monthly total number of Employees shall be divided by the number of months from the month of designation to December in the calculation process.