Ministry of Trade, Industry and Energy

USD 98 mil to be invested into stepping stone projects by 2017

The Ministry of Trade, Industry and Energy (MOTIE) announced on May 6 that it is investing 110 billion won ($98 million) in 12 stepping stone projects by 2017. A stepping stone project refers to the commercialization of interim R&D results in the form of technology and product.     For this year, a total of 31 billion won will be invested in plastic auto tuning parts, fishfinder drones for deep-sea fishing and logistics robots for hospitals and warehouses.     Plastic tuning parts can either be used on high-performance cars and but before the development is completed, they can be used on premium micro cars for children.     Fishfinder drones are a high-speed vertical take-over and landing aircraft that can be used to find schools of fish in the air. They can also be used in various areas, such as monitoring illegal fishing, military surveillance and disaster monitoring.     The logistics robots can be used both at the hospitals and warehouses for public health and safety. The plan is to employ the robots in domestic and overseas hospitals and nursing homes, before using them at hotels and large warehouses. The ultimate goal is to develop robot nurses and remote medical robots.     MOTIE expects to create 3 trillion won market by 2017 once the interim R&D results are commercialized through the stepping stone projects.     * Short version date2015-05-06

South Korea’s FDI Trends in the 1Q of 2015

      □ Foreign direct investmentFDI) to South Korea in the first quarter of 2015 decreased from a year earlier. The declared amount fell 29.8 percent to USD 3.55 billion and the received amount fell 16.4 percent to USD 3.15 billion from a year earlier. In spite of the YoY downturn, the numbers still exceeded the average number of first quarters for the past five years, which are USD 2.87 billion declared and USD 2.01 billion received.   □ - There are a number of positive factors such as the implementation of the Korea-China FTA, which will lead to increased demand in investing on businesses outbound to China, massive potential investments resulting from M&As that are soon to take place, and additional integrated resorts being planned.   - South Korea plans to achieve $ 20 billion in FDI for the first time in 2015. To this end, the country will make diversified efforts starting in May. They will include visits to China to host “CHINA WEEK” event which will attract potential investors to South Korea and result in investments through one-on-one consultation meetings between SMEs and overseas investors. Also, a joint task force, designed to exchange potential investors list and to seek new investments demands through customized attraction activities, will be sent to the Middle East. Lastly, measures to enhance the overall investment environment for overseas investors will be established in May.   date2015-04-29

Origin management

* Included in the Foreign Trade Act a provision against import or export of goods with false labeling * Identified goods subject to the labeling requirement (326 articles at HS 4-digit level under the bylaw announced by the Korea Customs Service) * Introduced the Act on Fosterage of Agricultural and Fishery Products Processing Industry and Control of their Quality * A good is considered as domestic 1) when its tariff sub-heading has been altered and the domestically added value is 51% or more; and 2) when the domestically added value is 85% or more. * Extended authority to supervise goods in circulation, which previously had belonged only to city/provincial governors, to the Customs Service as well (Enforcement Decree of the Foreign Trade Act, 4 Apr 2007) * After consulting the relevant organizations and the substantial transformation criterion (Article 85-3), the MOTIE Minister can designate a certain country as the origin of a product even when there has been no change in tariff subheading if that country has imparted an original characteristic to the product. The Foreign Trade Act and its bylaws specify the goods subject to the labeling requirement and stipulate basic principles, while the Customs Service's public announcements based on such laws elaborate on the labeling procedures and methods. The origin management of agricultural and fishery products is separatedly regulated by the Act on Origin Labeling of Agricultural and Fishery Products. date2014-12-29

Paperless Trade

Paperless trade refers to transactions that are wholly or partially based on electronic documents. In 1991, Korea began to build an EDI-based paperless trade system for commercial trade, foreign exchange, customs clearance and export-import logistics. The government subsequently established uTradeHub as part of the e-Government Support Project (2003-2012) in order to better respond to changes in the trade environment caused by the growth of IT technologies such as the internet in the early 2000s and ensure the continuous expansion of trade. It also introduced the Electronic Trade Facilitation Act to widen the use of paperless trade. The government now envisions a global trade information network through which all trading processes, including marketing, foreign exchange, commercial trade, customs clearance and logistics, are handled electronically on a real-time basis both at home and abroad. date2014-12-29

Support for exhibit industry

The Korean Government began to provide support for domestic exhibitions in 2000. Exhibitions are now classified into three different types - Global Top, Promising, and Integrated - and receive differentiated support depending on which category they fall into. Created in 2000, the Promising category includes exhibitions that, with government support, can contribute to export growth and the development of the domestic exhibit industry. The Korean Government is making various efforts to advance the domestic exhibit industry, such as increasing international cooperation, promoting domestic exhibitions and developing human resources. Enhancing international cooperation: The government is increasing international cooperation and exchange by participating in the general assemblies of exhibition-related global organizations such as UFI and AFECA, as well as by hosting the Asia Exhibit Forum every year. Promotion of domestic exhibitions: The government supports domestic exhibit-related promotional activities carried out at the overseas roadshows of renowned exhibitions or at global exhibitions in order to increase the domestic exhibit industry's competitiveness and facilitate its globalization. date2014-12-29

OECD Guidelines for Multinational Enterprises

The OECD established the "OECD Guidelines for Multinational Enterprises" as principles and standards for corporate social responsibility to ensure that multinational enterprises operate in a manner that is harmonious with societal needs and host countries' polices. The OECD Guidelines are internationally recognized recommendations for social responsibility addressed to multinational enterprises by adhering governments. The Guidelines cover a wide range of business ethics, including labor relations, environment, information disclosure, competition, taxation, science and technology, anti-corruption and comsumer protection. The Korea National Contact Point (KNCP) was established in 2000 in accordance with the Guidelines. To ensure the effectiveness of the Guidelines, the OECD Council adopted the "Decision of the Council on the OECD Guidelines for Multinational Enterprises," according to which adhering countries must establish National Contact Points (NCPs) to deal with tasks related to the implementation of the Guidelines. The KNCP is operated as an organization in which the government and civilians jointly participate. It is chaired by Director General for Cross-Border Investment of MOTIE and consists of seven non-permanent commissioners including the chair. The secretariat is the Korean Commercial Arbitration Board (KCAB), which delegates to MOTIE and the OECD the following particulars: 1) inquiries on the Guidelines; 2) promotion of and education on the Guidelines; 3) preliminary investigation; and 4) reports on the implementation status of the Guidelines. The KNCP promotes and implements the Guidelines, pursues a proactive agenda, provides means to resolve differences of opinion regarding corporate social responsibility, and maintains cooperation with NCPs of other countries. Parties concerned with the Guidelines, such as multinational enterprises, workers and NGOs, can submit complaints regarding the activities of multinational enterprises. The KNCP will then make an initial assessment of whether the issues raised merit further examination and will offer good offices to help the parties involved to resolve the issue. Operating Regulation (Domestic Liaison Office) “OECD Guidelines for Multinational Enterprises” [Korean] [English] date2014-12-29

Korea Trade Insurance Corporation (K-sure)

In 2014, the advanced economies are expected to recover thanks to the implementation of favorable monetary policies whereas emerging ones will grow somewhat slowly as their cyclical growth has peaked. On the other hand, the Korean economy is expected to recover thanks to an improved global economy along with increased consumption and investment. The role of trade insurance will therefore be more important in 2014 due to the need for an expanded support platform suitable for growing trade amid the global economic recovery and a greater need for support for SMEs to boost domestic consumption and create jobs. The key words for K-sure in 2014 will be “internal stability," "on-site," and "promoting competitiveness” with a target business volume of KRW 210 trillion for a KRW 6 trillion increase year on year. In particular, the magnification of the SME support volume to KRW 40 trillion will contribute to economic recovery and quality job creation by enhancing the export competitiveness of SME exporters suffering from external and internal difficulties due to tough competition in the global market. On the other hand, the business volume for medium- and long-term financing will be expanded by KRW 5 trillion to KRW 20 trillion to assist Korean firms in winning bids on overseas projects in the plant construction and shipbuilding sectors as well as to cope with the current trend of financing prior to contract award and projects of enormous scale. Firs date2014-12-29

Foreign Investment Incentives

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FTZ (Free Trade Zones)

There are 13 FTZs in Korea, including seven industrial complexes, five seaports and one airport. * Responsible authorities: MOTIE fo Masan Gunsan Daebul Donghae Yulchon Ulsan Gimjae Busan Port Gwangyang Port No. of firms (foreign) : 34 date2014-12-29

FEZ (Free Economic Zone)

On the ten-year anniversary of the FEZ system, the Korean Government evaluated the past achievements and introduced a Master Plan for Free Economic Zones (Jul 2013), which presents a blueprint for the development of FEZs over the next decade based on an analysis of internal and external environment changes. This plan is expected to enable more systematic and efficient development of FEZs an date2014-12-29