Foreign Direct Investment (FDI) is defined as an investment with an investment threshold contributed by foreigners amounting to at least KRW 100 million and being 10% or more of the total amount. Foreigners are able to do business in Korea without restraint, except as otherwise prescribed by regulations.

Types of FDI include the acquisition of stocks of domestic companies, long-term loans (five or more years) from parent companies outside Korea, and investments in non-profit corporations in the fields of science and technology.

Cases in which a foreign company uses unappropriated earned surpluses for building new or additional factories are now also considered FDI (to be enforced by 2020). Objects of investment to acquire stocks or shares include foreign currency, capital goods, proceeds from acquired stocks, etc., and industrial property rights.

Definition

FDI refers to an investment of not less than KRW 100 million made by foreigners. To be recognized as such, at least 10% of the voting stocks issued by a domestic corporation or business should be foreign-owned, or at least 10% of the total investment amount should be made by foreign investors. Alternatively, foreigners may acquire less than 10% of stocks issued by a domestic corporation or business or invest less than 10% of the total investment amount but should dispatch or appoint an executive member who holds the authority to participate in the major decision-making and management processes of the corporation or company.

  • Foreigner: An individual with a foreign nationality, a corporation established in accordance with foreign law, or an international economic cooperative organization as prescribed by Presidential Decree
  • Foreign investor: A foreigner who holds stocks, etc., or has contributed as prescribed by the Foreign Investment Promotion Act

※ Related law: Articles 2.1.1 and 2.1.5 of the Foreign Investment Promotion Act

Types of Investable business

A foreigner may engage in various business activities in Korea without restraint, except as otherwise prescribed by the Acts of Korea.

Restricted Cases

  • Where an investment is deemed to threaten national security and public order
  • Where an investment is deemed to have harmful effects on public health and sanitation or environmental preservation or acts against Korean morals and customs
  • Where an investment violates any act or statute of Korea

Categories of Business that Exclude Foreign Investment

  • Postal service, central banking, individual mutual aid, pension fund, financial market administration, and other activities auxiliary to financial service activities
  • Legislative, judiciary, and administrative bodies, foreign official residences in Korea, and other international and foreign bodies
  • Educational institutions (kindergartens, elementary, middle, and high schools, universities, graduate schools, special-education schools, etc.)
  • Artists, religious groups, industry, professionals, environmental movement groups, political or labor movement groups, etc.

※ Related law: Attached is Table 1 of the Rules on Foreign Investment (Public Notice No. 2018-137 of the Ministry of Trade, Industry and Energy)

Categories of Business that Prohibit or Restrict Foreign Investment

  • Prohibited: Nuclear power generation, radio broadcasting, terrestrial broadcasting
  • Permitted where the foreign investment ratio is less than 50%: Livestock farming, meat wholesale, transmission, distribution, and trade of electrical power, coastal water/air passenger and cargo transport, publication of newspapers, magazines, and periodicals
  • Permitted where the foreign investment ratio is 49% or less: Program distribution, cable networks, satellite or other forms of broadcasting, wired, wireless, and satellite telecommunications, and other electronic communications
  • Permitted where the foreign investment ratio does not surpass 30% of the total domestic power plant facilities : Hydroelectric, firepower, solar, and other power generation
  • Permitted where the foreign investment ratio is less than 25%: News agencies
  • Other categories that are permitted with exceptions: Growing of cereal crops and other food crops, manufacturing of other basic inorganic chemicals, smelting, refining, or manufacturing of alloys with non-ferrous metals, collection, transport, and disposal of radioactive waste, domestic banking except the National Agricultural Cooperative Federation and the National Federation of Fisheries Cooperatives

※ Related law: Attached is Table 2 of the Rules on Foreign Investment (Public Notice No. 2018-137 of the Ministry of Trade, Industry and Energy)

Investment Target Business (Unit: pcs)

※ Related law: the Rules on Foreign Investment (Public Notice No. 2018-137 of the Ministry of Trade, Industry, and Energy)