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Foreign Direct Investment
- Foreign Direct Investment (FDI) refers to an investment made by a foreigner for the purpose of establishing a continued economic relationship with a corporation of the Republic of Korea or a business owned by a citizen of the Republic of Korea, and is based on the Foreign Investment Promotion Act (FIPA) and other related laws. FDI differs from a portfolio investment, whose purpose is to earn margins from stock transactions for short term profits.
FDI, as prescribed in the Foreign Investment Promotion Act (FIPA), includes acquisition of shares or equity of a domestic corporation or business, provision of long-term loans to invested domestic corporations, a contribution to a non-profit organization etc.
- Foreign Direct Investment (FDI) refers to an investment made by a foreigner for the purpose of establishing a continued economic relationship with a corporation of the Republic of Korea or a business owned by a citizen of the Republic of Korea, and is based on the Foreign Investment Promotion Act (FIPA) and other related laws. FDI differs from a portfolio investment, whose purpose is to earn margins from stock transactions for short term profits.
Foreign Investment Promotion Act (FIPA)
- The Foreign Investment Promotion Act (FIPA) has been enacted to facilitate foreign investment through support and provision of convenience for foreign investment. The Foreign Investment Promotion Act (FIPA) is the basic law for foreign investment, and its subordinate acts include the Foreign Investment Promotion Act (FIPA) Enforcement Promotion Act (FIPA) and Enforcement Regulations stipulating matters delegated by the Foreign Investment Promotion Act (FIPA) and matters required for enforcement, and regulations on foreign investment and technology import.
Also, unless stated otherwise in the Foreign Investment Promotion Act (FIPA), the Foreign Exchange Trade Act will apply to matters related to foreign exchange and external dealings related to foreign investments. The Tax Exemptions and Exceptions Act and its Enforcement Promotion Act (FIPA) and Enforcement Regulation, and regulations on tax reductions on foreign investments etc. will apply to tax reductions for foreign investments.
However, since foreign-invested companies are local corporations established under domestic law, the same laws that apply to purely domestic corporations will apply even if the foreign-invested company has gone through the processes as prescribed in the Foreign Investment Promotion Act (FIPA). Therefore, if approval and permission under each law are required, the relevant business may be conducted only after the required processes are completed.
- The Foreign Investment Promotion Act (FIPA) has been enacted to facilitate foreign investment through support and provision of convenience for foreign investment. The Foreign Investment Promotion Act (FIPA) is the basic law for foreign investment, and its subordinate acts include the Foreign Investment Promotion Act (FIPA) Enforcement Promotion Act (FIPA) and Enforcement Regulations stipulating matters delegated by the Foreign Investment Promotion Act (FIPA) and matters required for enforcement, and regulations on foreign investment and technology import.
Foreign Investment Promotion and Control
- Liberalization of Foreign Investment
- Unless otherwise stipulated by law, a foreigner may carry out foreign investment activities in Korea without restrictions. However, restrictions will be placed when the investment is deemed as harmful to national security, public order, the health and welfare of Korean nationals, and environment preservation, or goes against established social morals, customs, and/or the laws of the Republic of Korea.
- Protection of Foreign Investment
- Through the Foreign Investment Promotion Act (FIPA), foreign investments are provided with a higher level of investment protection than indirect investments such as investments through securities and bonds.
- Restrictions and Bans on Foreign Investment
- Out of a total of 1,145 categories under the Korean Standard Industrial Classification, the Foreign Investment Promotion Act (FIPA) protects 60 categories including public administration, diplomacy, national defense etc. from foreign investments (protected categories). Although foreign nationals can invest in all of the 1,085 investment categories, 29 categories have restrictions on the foreign investment ratio (restricted categories).
- Liberalization of Foreign Investment
