Incentive of foreign investment

Cash support

  • To satisfy the demands of foreign investment, the government and local government should consider high technology involvement, effect of technology transfer, creation of employment scale, overlapping of national investment, and appropriateness of location to support consumed funds in cash.
  • Subjects for Cash support
  • Subjects for Cash support should be a foreign investment of 30% or more to be in accordance with the following terms.
    • Foreign investment amount over ten million dollars in industry support service, business leading high technology, manufacturing business of products and materials, or company facility with new and extension investment on creating new large employment scale
    • investment. Industry support service business, R&C research facility in business leading high technology, or new and extension of research facility in nonprofit R&D foreign corporate (10 or more persons of employment scale in research professionals).
    • Unable to fulfill standards of investment amount but when there is great effect of national economy, cash support is possible through deliberation from foreign investment committee.
      -In case of establishing headquarter of multinational corporation (multinational corporation controlling 2 or more locations in management of 3 or more countries)
      -contributing on regional economic development as regional strategic industry
      -Supplying goods and service that are not produced nationally or increasing competitiveness in national industry through introduction of advanced technology
  • Support regulation
  • Cash support regulation pass through negotiation to support more than 5% of foreign direct investment (FDI), but this is determined by closed ceiling formula.
  • For R&D center, the foreign direct investment (FDI) is calculated by including standards using payment of foreign research development financing. (excluding national financing)
  • Legal usage
  • Foreign investment business should only use cash support for the following usage.
    • Subsidy of employment and education training
    • Rent and land purchase
    • Construction cost
    • Cost of infrastructure
    • Purchase price of capital goods and research equipment
  • Land lease purchase price of Foreign investment business include limit of cash support. Cash support can be given by overlapping of financial funds support (excluding item of overlapping support). However, cannot exceed the standard range of financial funds support.

Follow-up control of cash support
  • Obligation of subscriber
  • Subscriber should manage foreign investment industry directly or indirectly to perform duty of cash support by contract and plan of investment expenditure.
  • Satisfy all standards of building, facility, equipment, and others(including construction capital) of restoration and replacement to take measures of third-party insurance registration or other related measures. The contract in acquisition of property for Cash support should be done with efficient method of open tender, official assessment, confirmation of 2 or more estimate sheet, and others.
  • To use the received cash support for other purposes, transfer, exchange, rent, and provide security, the consent from knowledge and economy minister is required. Also, should not leak information of distribution and loyalty on cash support, and the Foreign investment business cannot guarantee obligations other than the purpose of business.
  • Subscriber should provide needed information during contracting period to examine performance of contract, and should submit statement of accounts with external audit every year to knowledge and economy minister.
  • Management of Cash support amount
  • Form of purchase received from support of local government for the use of land purchase fee and rent cannot be suspended within 5 years after contract of land in lots. If it is suspended after 10 years of contract, payment of national and local government support ratio in sale payment will be acquired.
  • Cash support used for education training and employment subsidy should hire workers for more than 3 years for payment support, and if discharged within 3 years, subsidy charge will be according to proportional period. (excluding interns of natural sciences and engineering)
  • If amount of support in construction cost, purchase cost of equipment, and installation cost of infrastructure related to cash support contract is less than the stated foreign investment cost, cash support will be adjusted for reduction as the relevant ratio.
  • Cash support cancellation, withdrawal , reduction, redemption, etc
  • If false and illegal method of registration, non-performance of duty by contract, and impossible business management due to bankruptcy during period of contract is detected, cancellation, withdrawal, or reduction, redemption of cash support will be done. Demand performance of contract to request chance of summon to pass deliberation and decision of practices committee and receive the measures of cash support contract and support payment.
  • If impossible business management occurs due to bankruptcy during period of contract, instead of returning cash support amount of the subscriber, request for extension of contract period to receive approval of extension with no other reasons. If one should return, larger amount of the following should be returned. At this time, the returning duty of cash support should be individually burdened by the foreign investor or foreign investment business.
    • Total amount of given cash support for impossible management of business before investment expenditure plan
    • shortfall of agreed business period in contract given cash support with added amount of 1/60 (maximum 60/60) in 1 month for impossible business management of business after investment expenditure plan
    • Amount multiplied by cancellation charge in the contract with number of each persons of non-employment for not fulfilling the least employment duty agreed during period of contract (possible performance of least employment duty through extension of business period)
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