Ministry of Trade, Industry and Energy

South Korea to Step Up Efforts to Attract More Global HQs and R&D centers

The revision is a follow-up measure to「Foreign Investment Promotion Measures」 announced in the meeting among foreign investment companies held by President Park Geun-hye on Jan 9, 2014. The purpose of the promotion drive is to attract global company HQs and R&D centers that can increase the growth potential of our economy and create good jobs by cultivating high-quality talents, advanced business management techniques and technology acquisition. To this end, specific incentive support plans have been announced, including an income tax cut, a simplified taxation process, and a convenient entry and departure process. * The same income tax rate applicable to foreign directors and employees (currently, 17%), an income tax cut for foreign researchers (50%), expansion of the exception list for tax data submission upon service contract, 5-year increase of foreign investor visa stay * In November 2012, Japan enacted the 「Asia Base Promotion Act」, and as a result, major companies have come up with various incentive systems and actively attracted foreign money. To be certified as a global company HQ or R&D under the revised Act, the following conditions must be met. * (Global company HQ) must be for a foreign investment company acknowledged as such by Foreign Investment Committee considering revenues (no less than KRW 3 trillion) or industry representativeness. * It must provide support and coordination to no less than two foreign companies. * The number of personnel working at the HQ should be no less than 10 and the ratio of foreign investments shall be no less than 50%. * (R&D Center) It must retain no less than 5 researchers whose qualifications include a master’s degree, or no less than 3 years of professional research. * No less than KRW 100 mil must be invested in the newly expanded R&D facility, and the foreign investment ratio shall be no less than 30%. date2014-06-17

Korea’s ICT Exports Reach USD 14 Billion in May

- Export: USD 14 billion (-7.5%), Import: USD 6.75 billion (-1.8%), Trade Balance: Surplus of USD 7.25 billion ICT exports for May 2014 reached USD 14 billion, a year-on-year decrease of 7.5%. Daily average ICT exports* for May were USD 0.651 billion, which was just slightly lower than the USD 0.658 billion reached in the previous year, but the year-on-year decrease** was attributable to there being less business days. * Based on the number of business days for May 2014: 21.5 ** Number of business days for May 2013: 23 (6 public holidays and 4 Saturdays) Number of business days for May 2014: Between 20.5 and 21.5 (7 public holidays and 5 Saturdays, voluntary business operation on May 2 (Fri)) By nation, exports to major trading partners including China (including Hong Kong) and the US were weak, while exports to EU and Taiwan grew thanks to robust exports of parts, including semiconductors. * Exports by region: China (Hong Kong) was USD 7.04 billion, -6.3%, US was USD 1.57 billion, -10.6%, EU was USD 0.96 billion, 8.3%↑, and Taiwan was USD 0.53 billion, up 27.7% ICT exports from January to May were recorded as USD 69.9 billion, continuing the historichigh accumulated exports in 2014. * Yearly ICT exports from January to May: 2012 was USD 60.34 billion → 2013 was USD 67.96 billion → 2014 is USD 69.9 billion The ICT industry recorded a surplus of USD 7.25 billion in May 2014, contributing to the national trade surplus of USD 5.35 billion. Imports of PCs and peripherals (USD 0.71 billion, up 2.8%), mobile phones (USD 0.58 billion, up 155.9%) and display panels (USD 0.5 billion, up 2.6%) grew, while imports of semiconductor (USD 2.64 billion, down 14.9%) and D-TV (USD 0.03 billion, down 6.0%) declined. By region, imports from advanced economies including the US (USD 0.55 billion, down 11.3%) and EU (USD 0.5 billion, down 1.7%) declined, while imports from emerging regions including China (including Hong Kong, USD 2.5 billion, up 6.0%) and Latin America (USD 0.05 billion, up 9.8%) grew. date2014-06-11

Export & Import Trends for May 2014

As advanced economies recovered, exports to the EU (growth of capital goods including IT parts) and the US (robust exports of durable goods including cars and raw materials including steel and oil products) grew, while exports to China (weak exports of raw materials including oil products and general machinery) and ASEAN (weak exports of capital goods including ships and general machinery, and the political uncertainty in Thailand) began to decline. Exports to Japan, which had grown for two consecutive months thanks to the base effect, began to decline due to weak exports of capital goods. Of the five raw materials, imports of oil products (increase of heavy oil import due to operation of the advanced equipment) and steel increased, while imports of crude oil (regular maintenance of facilities) and gases decreased. Deputy Director Song Jeong-hun, Export & Import Division ( date2014-06-03

South Korea’s Information and Communications Technology (ICT) Industry Records Highest Monthly Exports and Trade Balance in April

South Korea’s exports of information and communications technology (ICT) products rose 4.5 percent in April from a year earlier, recording USD 14.76 billion. Despite external challenges including low consumption by emerging economies and low exchange rates, shipments to major trade partners such as China (including Hong Kong), the US and Japan have grown. By region, China (including Hong Kong) was USD 7.36 billion, up 5.5%; the US was USD 1.73 billion, up 12.9% and Japan was USD 0.57 billion, up 32.1%. By products, semiconductors was USD 4.84 billion, up 12.4%; mobile phones was USD 2.45 billion, up 11.8%; D-TV was USD 0.65 billion, up 14.7%. Most notably, system memory*, which has seen a low export trend since the second half of last year, showed export growth for the first time in 2014. * Export growth rate (%): December 2013, up 6.7 → January 2014, up 18.6 → February 2014, up 13.7 → March 2014, up 6.0 → April 2014, up 4.5 Prompted by the recent ICT export growth, monthly exports for April and accumulated exports for April recorded historic highs of USD 14.76 billion and USD 55.91 billion, respectively. Imports of semiconductors (USD 2.96 billion, up 0.7%), PCs and peripherals (USD 0.82 billion, up 8.7%) and display panels (USD 0.47 billion, up 2.4%) increased, while imports from Japan (USD 0.92 billion, down 15.4%) the US (0.65 billion, down 5.0%) and the Middle East (USD 0.04 billion, down 14.9%) declined. - Imports of parts for connectivity (PCB, etc., USD 0.41 billion, down 9.0%) and D-TV (USD 0.03 billion, down 0.1%) declined. - Imports from China (including Hong Kong, USD 2.53 billion, up 9.1%), ASEAN (USD 1.16 billion, up 13.2%) and EU (USD 0.52 billion, up 1.7%) grew date2014-05-14

Export & Import Trends for April 2014

* Monthly export growth rate (year-on-year, %): (January 2014) +0.2 → (February) 1.4 → (March) 5.1 → (April) 9.0 * The highest monthly exports: USD 50.48 billion recorded in October 2013 ① Rapid export growth to the US thanks to the economic recovery of the US, and robust exports to ASEAN countries ② Early customs clearance of export businesses due to the long holiday in early May (1st through 6th) ③ Base effect caused by poor export performance in April 2013 Deputy Director Song Jeong-hun, Export & Import Division (044-203-4042) date2014-05-02

Korea’s 2014 ICT product exports exceed USD 40Billion

Last March, Korea’s ICT product exports reached USD 14.98billion, up by 8.9% compared to the same month in the previous year. In the wake of expanded exports to major trading countries such as China (Hong Kong included) • the U.S. and remarkable performance of export by items including mobile phones • semiconductors • D-TVs, the export growth rate continues to be expanded. * By region: USD 7.39 billion (China), 9.9%↑, USD 2.08 billion (ASEAN), 11.0%↑, USD 1.47 billion (US), 15.1%↑, USD 840 million (Central America) 10.2%↑ * By item: USD 5.24 billion (Semiconductors), 14%↑, USD 2.4 billion, 30.3%↑(mobile phones), USD 630million (D-TV), 23.8%↑ * By monthly export growth rate (over the same month in the previous year): (’14.January) 1.6 → (February) 8.6 → (March) 8.9 In conclusion, exports in the first quarter were recorded as USD 41.2 billion while trade balance as USD 20.5, reaching the largest achievement (exports and trade balance) in history. Last March, ICT trade balances were in the black, recording a surplus of USD 7.55 billion which was a significant contribution to the nation’s overall trade surplus. By item, semiconductors (USD 3.05 billion, up 3.2%), Display panels (USD 490 million, up 10.3%), D-TV (USD 30 million, up 30.6%) were increased while parts for connection (PCB, USD 410 million, up 6.1%), accessories (USD 330 million, up 2.7%) are on the decline. date2014-04-11

Export & Import Trends for March 2014

Thanks to robust exports to advanced nations, the monthly exports for March 2014 were the second highest in Korea’s history, with increasingly higher export growth witnessed in 2014. - Highest monthly exports: USD 50.48 billion in October 2013 - Export growth rate (year-on-year, %): (January 2014) -0.2 → (February) 1.5 → (March) 5.2 More specifically, exports of IT products rose, particularly wireless devices thanks to the growth of the Chinese LTE market and semiconductors as a result of DRAM price hikes, and exports of automobiles and ships grew as well. Meanwhile, exports of LCDs decreased as a result of a drop in panel prices, while petroleum products suffered due to a decrease in demand from major export partners and petrochemical products declined as a result of lowered unit prices of exported goods due to NAPHTHA price declines. - Export growth rate by item (%): Wireless devices 32.1, ships 18.7, automobiles 15.9, semiconductors 14.0, steel 6.7, general machinery -0.1, petroleum products -3.5, petrochemical products -5.0 and LCDs -10.4 Exports to the US, which have shown a temporary decline due to the cold weather and other factors, showed double-digit growth, fueled by robust exports of consumer products (automobiles, wireless devices, etc.) and machinery. In addition, exports to the EU have shown double-digit growth for three consecutive months thanks to robust exports of IT products and petroleum products, while the exports to ASEAN and China have increased thanks to export growth in the area of capital goods. Exports to Japan, prompted by export growth of steel and general machinery and base effects, showed growth for the first time since January 2013. Looking at the imports side, imports grew mainly in the areas of capital goods and consumer products. There was growth in imports of gases thanks to unit price hikes and in crude oil thanks to a rise in import amount growth, while imports of steel and coals declined. - Import growth rate of five major items (%): Gases 4.9, crude oil 0.4, petroleum products 0.0, steel - 1.9 and coal -14.6 Among capital goods, imports of semiconductor manufacturing equipment doubled, and imports of the IT sector, including parts of wireless devices, memories and LCD devices, grew. Among consumer products, imports of automobiles, clothes and shoes dramatically grew. Deputy Director Song Jeong-hun, Exp date2014-04-04

South Korea Achieves No. 2 Global Market Share for Semiconductors

According to the international semiconductor market research group HIS Technology (US), in 2013 South Korea reached the No. 2 position in its global share of the semiconductor market, trailing the US and surpassing Japan for the first time in history. This was attributable to the strong memory market and Korea’s strengthened competitiveness in the area of semiconductors for mobile devices. According to the final data released, South Korea’s global market share was up slightly from date2014-03-25

Voice of Industry Leads the Way for Next Steps in Trade Policy

The Ministry of Trade, Industry and Energy (MOTIE, Minister: YOON Sang-jick) and the Korea International Trade Association (KITA, Chairman & CEO: HAN Duck-soo) held the Trade & Industry Forum* at COEX on the afternoon of Tuesday March 18. Participants in the forum, which was co-chaired by the heads MOTIE and KITA, included Korea Federation of Textile Industries Chairman Ro Hee-Chan, Korea Automobile Association President Kim YongGeun, INNO BIZ CEO SeongMyung-gi, Korean Advanced Farmers Federation CEO Kim Jun-bong, Korea Food Research Institute Chairman Park In-gu, Korea Fisheries Association Chairman Jae-Young Park, Korean Bar Association President We Chul-Whan, Korea Federation of Banks Chairman BahkByongWon, and Korea Association for ICT Promotion Vice President Rho Young-Gyu. * Trade & Industry Forum: Led by the Minister of Trade, Industry and Energy and the CEO of KITA as co-chairmen, the forum included leaders in the industries of manufacturing, agriculture & fisheries, and services, and established 22 subcommittees to support the development of countermeasures related to negotiations, analyze the impact of negotiations on each industry, and form complementary measures in the domestic market. At the forum, the participants discussed ①the direction of Korea’s trade policies, ②overall trends and possible response options for the Trans-Pacific Partnership(TPP) and overview of the ROK-Canada FTA, and ③ways to utilize the achievements made in Korea's summit diplomacy. There was also a report on ④the outcomes of subcommittee meetings of the Trade & Industry forum Recently, Korea concluded bilateral free trade negotiations with Australia and Canada, both of which are outstanding achievements. However, there are numerous challenges left ahead, such as the Korea-China FTA, the Trans-Pacific Partnership (TPP) and the impending expiry of the special treatment for rice under the Agreement on Agriculture of the World Trade Organization. Korea plans to pursue the Korea-China FTA with highest priority with expectations to offer more opportunities to Korea's corporations. In parallel, the government will work towards mitigating the negative impacts on vulnerable industries such as agricultural and fisheries goods. When it comes to joining the TPP, there will be a thorough review of the TPP's impact on our industries based upon the results of the preliminary bilateral talks. At the forum, high-level government officials provided information on policies aimed at reducing non-tariff barriers(NTBs) along with an introduction of cases in which NTBs were reduced. There was also an emphasis on the importance of cooperation with the industry. In terms of the TPP's impact on each industry, the government and industry reached a consensus on the need to mutually strengthen dialogue and cooperation. In particular, both sides stressed the need to analyze not only the short term but also the mid-to-long-term impact of the TPP, to monitor the progress of the pact and to review and prepare for the impact of supply chain in the TPP region on corporations and industries. To help businesses enjoy the benefits of achievements made through summit diplomacy initiated by President Park Geun-hye, the government launched a special web portal. There was a demonstration of the portal during the forum, showing how businesses can find real business deals that can be made based on the agreements made between heads of States. The government unveiled plans to maximize the mid-to-long-term results of summit diplomacy by establishing systems to provide customized support to companies that can benefit from the achievemen date2014-03-20

Korea’s trade surplus in ICT is on the rise thanks to advanced · emerging economies’ increase in ICT product exports

Korea’s ICT product exports in February 2014 were recorded as USD 12.84 billion, up by 8.4% compared to the same period in the previous year. Korea’s ICT product exports increased evenly in the advanced and emerging countries based on export restoration in the U.S., European countries and Japan, as well as export expansion to ASEAN 〮 Latin American countries. By region, ITC product exports to the U.S. increased to USD 1.12 billion, up by 7.9%, while those to EU countries, Japan, ASEAN countries, and Latin American countries were recorded as USD 1.34 billion (up 1.9%), USD 0.53 billion (up by 19.7%), USD 1.65 billion (up 5.4%), and USD 0.76 billion (up 8.3%), respectively. By item, mobile phones (USD 2.05 billion, up 37.7%), semiconductors (USD 4.47 billion, up 14.6%) and D-TVs (USD 0.53 billion, up 8.6%) all continued to lead the increase in exports. Korea's ICT industry was in the black, recording a surplus of USD 6.63 billion, which served as a driving force to reach the nation’s trade surplus of USD 0.93 billion for the month. ICT product export performance and trade balance in February in recent years are shown in the figure below. By region, imports from most countries such as China (including Hong Kong, USD 2.16 billion, up 15.6%), ASEAN countries (USD 1.01 billion, up 27.2%), the U.S. (USD 0.6 billion, up by 5.4%) and EU countries (USD 0.46, up by 9.7%) increased. As well, it is expected that ICT product exports will remain strong mainly with restoration in the world ICT markets and growth of major items such as Smartphones, and semiconductors. date2014-03-12