Your wise and profitable choice

Korea - Home to an able and dedicated people who have successfully weathered five thousand
years of history, a place where passion and technology have merged to create an IT miracle. One
of the world’s top 15 largest economies (2008), now also an environmentally-aware society, is
leading the way in sustainable development. Korea always offers opportunities. Your success
story starts here.
KOREA at a glance
Country Profile (2008)
Official Name Republic of Korea
Capital Seoul
Area 100,032km2 (as of end-2007)
Population 48.6 million
Language Korean (official) / English widely used
Illiteracy 0% (between 20-40)
Religion Buddhism 24%, Protestant 23%, Catholic 8%, Other 0.8%, None
44.2% (Korea National Statistical Office, 2005)
Climate Continental with four seasons
Time 9 hours + GMT
Political System Democratic republic, presidential system
Economy 15th largest economy (based on GDP), OECD member
Currency South Korean won (KRW, ￦)
Competitive Industries IT, Electronics, Semiconductor, Automobiles, Shipbuilding, Steel,
Petrochemical

Key Economic Indicators

2003 2004 2005 2006 2007 2008
National GDP (US$ billion) 608 681 791 887 1,050 928
Real GDP Growth (%) 2.8 4.6 4.0 5.2 5.1 2.2
GNI per capita (US$) 13,460 15,082 17,531 19,722 21,695 19,231
Exports (US$ billion) 194 254 284 325 371 422
Imports (US$ billion) 179 224 261 309 357 435
Current Account (US$ billion) 12 28 15 5 6 -6
Unemployment Rate (%) 3.6 3.7 3.7 3.5 3.2 3.2
CPI Inflation (%) 3.5 3.6 2.8 2.2 2.5 4.7
Treasury Bond Yield (3 year, %) 4.6 4.1 4.3 4.8 5.2 5.3
ForeignExchangeReserves(US$billion) 155 199 210 239 262 201
Exchange Rates
won/US$ 1,192 1,145 1,024 956 929 1,103
won/yen100 1,030 1,059 931 821 790 1,077
won/euro 1,348 1,423 1,274 1,199 1,273 1,607
Source: Bank of Korea, Korea Customs Service
 INVESTMENT ENVIRONMENT
& BUSINESS OPPORTUNITIES
C o n t e n t s

Overview of FDI in Korea 03

Investment Environment
Government Policy and Incentives 06
Market 08
Human Resources 10
Infrastructure 12
Living Environment 14

Business Opportunities
Automotive Industry 16
Semiconductor Industry 18
Display Industry 20
IT Industry 22
Bio Industry 24
Environmental Industry 26
Photovoltaic Power Generation 28
Logistics Industry 31
Real Estate Development 33

Invest KOREA 35
Invest KOREA’s Global Network 36

OVERVIEW OF FDI IN KOREA
Trends from the 1997 Asian
Financial Crisis to 2008
Starting from 1998, one year following the
onset of the Asian Financial Crisis, Korea
adopted a more liberal economic policy which
included opening its capital and real estate
markets to foreign investors. The Foreign
Investment Promotion Act, passed in 1998,
enabled the government to launch a more
aggressive campaign to attract foreign direct
investment (FDI). The government’s efforts to
accelerate Korea’s recovery from the crisis
by inducing foreign capital paid off hand-
somely, although that recovery was partly
attributable to the buoyancy of the global
economy.
However, the September 11, 2001 attacks in
the United States and the burst of the Internet
bubble in the same year reduced global liq-
uidity and subsequently started a downward
trend in inward FDI into Korea. After a period
of trial and error, the government finalized its
comprehensive plan for foreign investment
attraction in 2003, and after FDI inflows into
Korea saw a strong resurgence in 2004, the
inbound FDI amount in terms of notifications
averaged over US$10 billion for five consecu-
tive years until 2008. Given that Korea’s total
inbound FDI from 1998 to 2008 is 5 times that
of 1962 to 1997, foreign direct investment has
now become one of the major economic pil-
lars driving the Korean economy. In addition,
as FDI to Korea expands into high-value
added areas such as R&D and logistics cen-
ters, its economic impact is getting larger.
Thus, the volume of annual FDI has stabilized
Foreign direct investment trends in Korea (Unit: US$ billion)
Notification Basis | A total of US$124 billion from 1998 to 2008
FDI from January to July 2009 jumped by
32.4 percent year on year to USD6.8 bil.,
posting a record high since 2000.
8.9
Source: Ministry of Knowledge Economy
02 03
at the level of US$11billion, while the quality
of FDI has also improved with a substantial
amount coming from greenfield investment,
accounting for 61.7 percent of total inbound
FDI in 2006, 76.4% in 2007, and 62.2% in 2008.
However, considering the large potential for
M&A-type investment in line with current
global trends, the need for an institutional
framework that can facilitate M&As is growing.
Meanwhile, the current administration which
entered office in February 2008 has been
putting into high gear preparation for a more
powerful and concrete system for FDI pro-
motion. Despite the deterioration of the global
investment climate including the recent
worldwide financial crisis, activities to attract
foreign investment have increased due in part
to business-friendly policies in Korea. As a
result, Korea witnessed an upward turn-
around in FDI in 2008 for the first time in four
years, reaching the highest level since 2000
both in terms of volume and the number of
notified investments. The decline in invest-
ment from the United States due to the finan-
cial crisis was offset by an increase in invest-
ment from the EU and Japan. Furthermore,
investments in the sectors of finance and
insurance have been significantly on the rise,
growing as a provision of the 'Financial
Investment Services and Capital Markets Act’
that came into effect on February 4, 2009, as
well as with the augmented investment activ-
ities of institutional investors seeking more
liquidity. Based on growing confidence in the
development potential of Korean industry,
investment in manufacturing is also steadily
on the rise.
15.5 15.2
12.8
11.3 11.6 11.2 11.7
10.5
9.1
6.5 6.8
Jan/July
OVERVIEW OF FDI IN KOREA

Undeterred by unfavorable investment condi-
tions created by the global economic down-
turn, it is expected that hard times will end in
the near future as Korea implements recov-
ery efforts in various directions. Those
include promoting the market for mergers
and acquisitions, taking full advantage of
opportunities created by the promulgation of
the Financial Investment Services and Capital
Markets Act, and strengthening activities to
attract investment not only from major eco-
nomic blocs such as the United States and
the EU, but also from those less affected by
the financial crisis including the Middle East
and China.
Status of inbound FDI by industry
In 2008, investment in the manufacturing
sector accounted for 25.6 percent of overall
inbound FDI notifications into Korea, while
service sector investment totaled 71.9 per-
cent and other business categories, the
remaining 2.7 percent. The distribution of
investment in the industrial sector is similar
to that of 2007. However, investment in the
service sector grew by 10.2 percent year-on-
year marking US$8.39 billion with the influx
of investment concentrated in the financial
and insurance sectors. Although it saw a
decline in 2006, investment in services has
continued its upward trend since 2007.
In the meantime, investment in foodstuffs,
nonmetallic minerals and chemicals increased
in the manufacturing sector in 2008.
Investment in parts and materials accounted
for 84.5 percent of manufacturing invest-
ment, totaling US$2.54 billion.
Status of inbound FDI by region
As of 2008, foreign direct investment from the
EU, the U.S., and Japan accounted for 77.6
percent of total inbound investment in Korea,
with the EU accounting for 54.1 percent of the
total, or US$6.3 billion. The European Union
stood collectively as the largest direct
investor in Korea representing 46.5 percent
and 43.9 percent of the total in 2006 and 2007,
respectively. Major European investor nations
in Korea are the United Kingdom, the

Inbound FDI by industry

(Unit: US$ billion) (Unit: US$ million)
0.01

3.9 0.9 0.6 0.5 1 3.1

2.3 0.9 2.4 0.4 0.8 1.1 2.9

3 1.8 1 1.1 0.8 0.7 2.8

3.9 1 1.2 1 3.9

0.3 0.3
Finance and Insurance Electrical and Electronics
Distribution and Logistics Restaurants and Hotels Source: Ministry of Knowledge Economy
Chemicals Business Services Other

Trend in the number of foreign-invested companies

in Korea since the Asian Financial Crisis
17,054

13,034

8,135
4,880
2,274
 04 05

Netherlands, Germany and France.
Meanwhile, in the first quarter of 2009, invest-
ment from Japan jumped by 162 percent
compared to the same period last year at
US$661 million. Japan's share in total inward
FDI grew markedly by 9.3 percent on the year
to 39.4 percent in total, driven by a surge in
investment in manufacturing, especially in
parts and materials. Investment from Japan
fell by 53% in 2007, but rebounded signifi-
cantly by 44 percent in 2008. The high yen and
the fall of Korean real estate prices steered
the increase in investment from the Japanese
financial sector in the first half of 2009, and
Korea's strategic efforts to attract investment
using the high yen and other incentives led to
a sharp increase in FDI from Japan, to the
tune of 82.6 percent.
Foreign direct investment notifications from
the United States totaled US$1.7 billion in
2006, a 37-percent year-on-year decrease. In
2007, FDI from the U.S. jumped by 37% to
US$2.3 billion, although the negative effects
of the financial crisis hit the United States the
hardest, thus having a profound effect on the
country’s outbound investment. The dramatic
drop started from the third quarter and the
volume of FDI from the U.S. recorded a mere
US$1.3 billion, including a 52.3-percent
decline in U.S. investment in the Korean ser-
vice sector.
Status of inbound FDI by type
By type, greenfield foreign direct investment
grew significantly between 2004 and 2006,
while M&A-type investment waned. However,
the upward trend in greenfield investment
until 2007 was halted in 2008, showing a 9.4-
percent decrease from the year before.
Meanwhile, M&A-type investment which had
been on the decline since 2004 amounted to
US$4.43 billion in 2008, a 78.2-percent year-
on-year increase, accounting for 37.8 of
Korea’s total inbound FDI.

Inbound FDI by region (Unit: US$ billion) (1962~2008, %)

5.4 1.2 1.1 2.3 Japan Netherlands

14.7% 11.3% Germany 5.6%

4.4 0.9 2.2 2.8 UK 5.0%

U.S.A.
27.0% France 3.8%
5 2.1 1.7 2.4

Others
4.8 1.9 2.7 2.2 32.6%

E.U. Japan U.S.A. Rest of the World Source: Ministry of Knowledge Economy

Inbound FDI by type

(Unit: US$ billion) (Unit: US$ million)

7.3 4.4

8 2.5

6.9 4.3

6.3 5.3

Greenfield M&A
Source: Ministry of Knowledge Economy
GOVERNMENT POLICY AND INCENTIVES

Policy direction for inbound FDI on a large-scale basis, as well as increasing

After the foreign exchange crisis in 1997, the
Foreign Investment Promotion Act was
enacted into law in 2008. Supported by active
market liberalization as well as a system to
encourage foreign direct investment, inbound
FDI into Korea saw a rapid increase in the fol-
lowing decade, becoming an important pillar
of the Korean economy.
In 2009, with the paradigm shift in the global
industry including an increased focus on
green growth, and in preparation for a global
economic recovery, the Korean government
has established a plan to expand inbound FDI
into Korea as follows. First, among all industrial
sectors, areas with a focus on green growth
were selected and 17 new industrial growth
engines have been given full government
support, substantially raising the competitive-
ness of Korea as an attractive destination for
FDI. Furthermore, the Prime Minister has
been named the Chairman of the Foreign
Investment Committee, and an accountability
system placing responsibility on Korea’s min-
istries and foreign investment-related agencies
was adopted so as to focus the full capacity of
the government on FDI attraction. A high-
level team has been organized to improve the
investment environment for foreign capital in
order to address issues that deterred invest-
ment on the spot. Furthermore, in order to
facilitate investment into Korea’s Free
Economic Zones at an earlier point, the gov-
ernment has eased regulations on develop-
ment procedures, provided assistance for
early construction of infrastructure, and
allowed early development of available land
the acceptable proportion of students of
Korean nationality in foreign educational
institutions.
Incentives for foreign companies
investing in Korea
The purpose of offering FDI incentives is to
compensate foreign companies which decide
to invest in Korea for their economic contri-
butions and to assist them with costs related
to establishing new business operations in
the country. The government currently offers
tax relief to foreign companies with the
potential to make major contributions to the
Korean economy, provides them with indus-
trial sites or assists them with site location
and acquisition, and provides cash grants and
other types of financial support. Cash grants
have been available from 2009 for foreign
investment in high-tech industries and in sec-
tors that are likely to create new jobs. Land
within Foreign Investment Zones designated to
the parts and material industries can be
rented with a higher level of discount.
Financial support for the construction and
extension of international schools are avail-
able in the acquisition of sites and construc-
tion costs according to ordinances set by local
governments.
⇢ Tax relief
Industrial support services and businesses
deemed as “high-tech” by the Ministry of
Strategy and Finance or foreign investors
who have contributed in excess of a minimum
level within Foreign Investment Zones or
Free Economic Zones for businesses includ-

| Supply of industrial sites | (as of June 2009)

Individual-type Foreign Investment Zones (FIZ, 33 zones) When foreign companies invest more than a predetermined amount by industry (manufacturing:
US$30m; tourism: US$20m; logistics: US$10m; and R&D: US$2m), the foreign company in point becomes eligible for a variety of government subsidies. Those
include a 7-year period of tax relief (5-year full exemption, 2-year 50 percent reduction), rent-free real estate, and a 3-year full exemption of tariff on capital
goods through the acquisition of land by the government as state or common property for the operation of the foreign company in advance.

Complex-type Foreign Investment Zones (FIZ, 13 zones) Certain areas within an industrial complex designated as Foreign Investment Zones are
transformed into state or common property. The land is then leased to foreign companies where 30 percent or more of its shares are held by foreign nationals.
When more than a minimum level of investment is made by industry type (manufacturing: US$10m; logistics: US$5m), a 5-year tax break (3-year full exemption,
2-year 50 percent reduction) becomes available, as well as a redemption of tariff on capital goods for 3 years and land with an affordable rent at less than 1
percent of its market value for 50 years for the tenant.
 Investment Environment 06 07

ing manufacturing, logistics, R&D, and
hotel/leisure are given tax relief including a 5-
or 7-year reduction on corporate, income,
and local taxes, as well as on dividends
received. If a business that has been
acknowledged to receive tax relief acquires
capital goods, imports that have completed
declaration within 3 years after the invest-
ment was registered will be subject to a
lower tariff. The ex-ante verification system
for tax relief, which checks whether a busi-
ness falls into the category of the industrial
support service sector and high-tech indus-
try, is currently in operation in order to assist
investors in making their decision to invest
earlier on. Apart from the tax incentives avail-
able to foreign investors, various tax benefits
are provided including tax credit for invest-
ment and tax relief for small and medium
enterprises (SMEs).
⇢ Cash grants
Under the cash grant program which is
aimed at attracting foreign investment with
potentially high economic effects, eligible
companies receive from the government a
grant corresponding to 5 percent or more of
their total investment in Korea. The exact
amount of the cash grant is determined
through negotiations between the investor
and the government. To be eligible for cash
grants, a foreign company must invest at
least US$10 million in a Korea-based firm
engaged in an industry support service or
high-tech business, or in a greenfield investment
project in parts and materials manufacturing.
The percentage of foreign equity, further-
more, must be no less than 30 percent.
Laboratories for R&D and construction or
expansion projects for nonprofit R&D corpo-
rations are also eligible for the grant program.
Foreign investment regarding the establishment
of the regional headquarters of a multination-
al corporation or a business pertaining to a
regionally strategic industry with the potential
to make a significant contribution to the local
economy may be considered for such a grant,
even if the total amount of investment is less
than the minimum set under this program.
In order to strengthen Korean policies in
favor of foreign investors, the government will
concentrate its cash grants on major focal
areas that come under the categories of
green growth and new growth engines, shifting
from a more dispersed approach in the past
where grants were provided for industrial
support service sectors and high-tech industries.
Such cash grants will be available according
to an evaluation of the expected economic
ripple effect, regardless of the size of the
investment. Grant limits shall be increased in
a flexible manner (the 13th meeting of the
Presidential Council on National Compe-
titiveness, May 27, 2009).
⇢ Supply of industrial sites
The Korean government makes available
industrial sites within specially-designated
zones to all foreign-invested firms meeting a
certain minimum set of requirements. Land
within these zones is provided either free of
charge or at low cost. Individual-type foreign
investment zones, complex-type foreign
investment zones, free trade zones and free
economic zones make up the four main cate-
gories of such zones (see below).
⇢ Financial support
Financial support refers to financial aid which
is applied toward the cost of staff education
and training, the cost of hiring staff, and pro-
jects to build infrastructure within a foreign
investment zone, or to enhance the living
environment within it. Aid under this program
is currently extended to companies in which
the foreign equity stake is at least 30 percent
or in which a foreign company or individual
investor is the largest shareholder.
⇢ Other incentives
Invest KOREA has been holding the Job Fair
for Foreign-Invested Companies in Korea, for
the past four years. Through this initiative,
Invest KOREA aids in resolving the recruiting
efforts of foreign companies while promoting
promising job opportunities to Korean job
seekers, thus raising the public awareness of
foreign investors’ contribution to the national
economy. The team incharge in Investment
Korea is ‘Investment Aftercare Team’
(jobfair@kotra.or.kr / Tel. 82-2-3460-7647/7655)
Ministry of Knowledge Economy
www.mke.go.kr
Ministry of Strategy and Finance
www.mosf.go.kr
Free Economic Zone Planning Office
www.fez.go.kr

Free Trade Zones (FTZ, 14 zones) Free Trade Zones refer to areas where manufacturing, logistics, distribution, and trade activities are carried out with tariff
benefits. In general, airports, harbors, and their adjacent areas, as well as distribution and cargo terminals, are designated as Free Trade Zones. Many benefits
are provided including affordable lease, a 5-year tax break, and customs deferral.

Free Economic Zones (FEZs, 6 zones) In 2003, Incheon, Busan-Jinhae, and Gwangyang were designated as Free Economic Zones with Yellow Sea,
Saemangeum, as well as Daegu-Gyeongbuk joining the list in 2008. Free Economic Zones are areas that are larger than lower level local governments, and given
authority for autonomy by the local government. Aside from the business activities of foreign companies, a variety of exceptional and distinct benefits are offered
within Korea’s FEZs including those related to education and medical services, the residential environment, administrative support, as well as discounts for tax,
tariffs, and rent.
MARKET

A vast domestic market with to a sharp expansion in Korea’s domestic

sophisticated consumers driving
demand
Home to a population of 48.6 million and
ranked 15th globally in terms of GDP (2008),
Korea offers an attractive marketplace for
businesses from around the world. Along
with its large, fast-growing economy (average
annual GDP growth of 5 percent*), the coun-
try’s broad segment of sophisticated con-
sumers with high buying power is another
*Economic Growth Rate (%) decisive factor in favor of Korea for compa-
nies looking for an overseas business base.
7.2 Nearly half of the Global Fortune 500 firms
5.2 5.1 (245 as of 2008) have established a business
4.6
presence in Korea.
4.0
Korean consumers, constantly demanding
2.8
2.2 more advanced technologies and the latest in
retail goods, are very familiar with the products
manufactured by the world’s leading corpo-
Source: Bank of Korea rations, a reality which has consequently led
market. As a matter of fact, Korean manufac-
turers of the mobile phones and consumer
electronics that are currently so highly valued
worldwide as top quality products owe much
to the discerning and difficult-to-please con-
sumers who continuously push the industry
to raise the bar. This also explains just one of
the reasons why consumer goods companies
like P&G and L’Oreal, and tech firms like
Microsoft, Motorola, eBay, Olympus and
Siemens, are using Korea as a test market
for their new products.
A big trading nation
As of 2008, Korea was the world’s 11th largest
trading country with exports of US$422 billion
and imports of US$435 billion, which
amounted to 45 percent and 47 percent of the
country’s GDP, respectively, and over 90 per-
cent when combined. Korea’s exports ranked
9th, with approximately US$165.4 billion in

Shinsegae Department Store’s flagship

branch in downtown Seoul
2008 Export Partners 2008 Import Partners
Japan 7%

Rest of Asia Rest of Asia

18% 14%

Japan 14%
EU Middle East
18% 23%

China 22% China 18%

U.S.A.
U.S.A. 9%
11% EU
Other Other
18% 12%
10%
Middle East 6%

Source: Korea International Trade Association


accumulated exports during the first half of
2009. With China, the United States and
Japan as her major trading partners, Korea
trades with almost every country around the
globe. Korea’s trade with its Asian neighbors
is particularly active, representing over half of
the country’s total trade volume. Korea’s top
five exported goods are ships, semiconductors,
displays, automobiles, wireless communica-
tions equipment, while crude oil, semicon-
ductors, natural gas, naphtha and soft coal
make up the major imports (Aug. 2009, Korea
International Trade Association).
Gateway to Northeast Asia
Strategically poised between China and
Japan - two of the world’s largest markets -
Korea is located within an average air travel
time of three hours from nearly 60 cities with
a population of 1 million or more. Meanwhile,
the conclusion and signing of the Korea-US
FTA in April and June 2008, respectively, has
set the stage for further improvements in
access by Korea-based businesses to the
world’s largest consumer market. In June
2009, the Korea-ASEAN FTA covering all sec-
tors was signed and in August 2009, Korea
and India signed a Comprehensive Economic
Partnership Agreement. Free trade agree-
ment negotiations with the EU were also con-
cluded in July 2009, and FTA talks are cur-
rently under way with other major economies
including Canada, Mexico, the GCC, Australia,
New Zealand, and Peru, and are due to begin
with China, Japan, MERCOSUR, Turkey, and
Russia in the near future. Once these FTA
negotiations arrive at a successful outcome,
any remaining regulatory obstacles to busi-
“Korea’s advanced electronics and automotive industries pro-
vide 3M with a solid customer base. Our strategy at 3M is to
be as near as possible to the customers we serve, and Korea
precisely occupies a very strategic location within Northeast
Asia.”
Michael F. Roman, former CEO, 3M Korea
Investment Environment 08 09
ness activities will be eliminated, thereby further
enhancing the openness and competitiveness
of the Korean market and making it even
more attractive to global business.
Dynamic and competitive market
players
The competitiveness of Korea-based firms on
the global scene ranks high in terms of
Korea’s attractiveness to international busi-
ness. Korean companies have achieved the
top global market share in shipbuilding,
DRAM semiconductors and TFT-LCD dis-
plays, and count themselves among the top
five in automobiles, steel, petrochemicals,
textiles and consumer electronics. Fourteen
Korean firms made the 2007 Fortune
Magazine Global 500: Samsung Electronics,
LG, Hyundai-Kia Motor, SK, Samsung Life
Insurance, POSCO, Korea Electric Power
Corporation, Kookmin Bank, Hanwha, KT,
Samsung, Hyundai Heavy Industries, SK
Networks, and S-Oil. The presence of globally
competitive firms certainly has a powerful
influence on the prospect of a company
investing in Korea. Industrial Complex Zones
- home to major Korean corporations - are
tremendous sources of competition and
cooperation and make it easy to create strong
forward and backward linkages. Joint ven-
tures between Samsung and SONY and LG
and Philips are two representative instances
of productive industrial partnerships which
have emerged from the LCD sector, while the
takeover of Daewoo Motors by General
Motors and that of Samsung Motors by
Renault can be considered success stories in
the automotive sector.
HUMAN RESOURCES
Robocon Korea 2007, an annual robot-making contest
sponsored by Korean Broadcasting System (KBS)
High educational zeal and achievement
Koreans have earned a global reputation for
their educational fervor. The strong commit-
ment to learning has often been cited as the
secret behind Korea’s surprising overnight
transformation into the world’s 11th largest
trading nation. According to the IMD World
Competitiveness Yearbook 2009, the percent-
age of the Korean population aged 25-34 that
has attained at least tertiary education is as
high as 56 percent. This is above the corre-
sponding figures for most OECD nations,
excluding Singapore, which tend to hover in
the 40 percent or lower range, effectively tes-
tifying to the never-ending desire for higher
education among Koreans.
The widespread pursuit to attain higher edu-
cation has resulted in active early education
in Korea, thus explaining the high scholastic
achievement of Korean students even in pri-
mary school. According to a 2006 survey by
the OECD Programme for International
Student Assessment (PISA), which assessed
math performances of 15-year old students
in OECD member countries, Korean students
showed much higher levels of performance
than the OECD average, along with their
peers in the Netherlands.
Koreans’ educational fervor is well reflected
in their spending on education. Results found
in the 2008 report by Statistics Korea, a gov-
ernment statistics body, said 13.8 percent of
average Korean household budgets was
devoted to education. Koreans’ zeal for learn-
ing has also driven up the number of students
leaving Korea for overseas educational insti-
“Korea has excellent universities and outstanding research
human resources emerge from those universities. R&D espe-
cially needs passion and I believe Koreans are the best in this
respect.”
Josef Winter, former CEO, Siemens Korea
tutions. From 2001 to 2005, the number of
students in primary and secondary school
who left Korea to study abroad increased at
an annual rate of 27 percent. Official reports
from 2007 released in China and the U.S.
indicated that, out of the total number of
international students in the two countries,
Koreans accounted for 36 percent and 20
percent, respectively, coming in at the top of
both rankings. The increasing trend toward
the pursuit of education in overseas institu-
tions is expected to have a beneficial long-
term effect, as it expands the pool of Korean
human resources with global training while
simultaneously stimulating the domestic
educational system.
Investment in learning continues in Korea
beyond the school years. Many working
adults are avid students, known nowadays
under the newly-coined term “saladent,” a
juxtaposition of the words “salaried worker”
and “student”. A survey conducted by a pri-
vate sector job information agency found that
70 percent of all working adults in Korea
were enrolled in some form of study for their
own self-development.
Efficiency in work
Industriousness is a feature nearly as distinc-
tively Korean as educational fervor. Korea is
among the top OECD economies in labor pro-
ductivity. According to the Dec. 2007 edition of
the OECD Productivity Database, the growth
in GDP per hour worked in Korea during the
period 2001-2006 ranked second only to the
Slovak Republic. Additionally, Korea’s labor
productivity growth recorded rose 4 percent

and 5.4 percent in 2006 and 2007, respective-
ly, much higher than the OECD average (1.6
and 1.4) and ranked in the top three (OECD
Factbook 2009).
Technological competitiveness
Korean rankings in patent related indices, as
reported in the IMD World Competitiveness
Yearbook 2009, were impressive to say the
least. Korea ranked 1st globally in patent pro-
ductivity as of 2007, which corresponds to the
ratio of the number of patents granted to res-
idents to R&D personnel in business. In
terms of information technology skills, Korea
came in third position after Iceland and Israel.
The skill level of Korean workers is just as
high in fields that are not scientific or IT-relat-
ed. Korea’s globally top-ranked shipbuilding
and electronics industry and the country’s
fast-growing automotive industry are all
skills-intensive manufacturing sectors.
Notably, the stunning strides made in the
Korean shipbuilding industry in recent years
have been the result of bold facilities invest-
ment coupled with a highly-skilled labor force
and an extended period free of labor disputes.
To maximize the contribution of skilled tech-
nicians, Korean companies have recently
introduced a peak wage system. Under this
system, the wages of workers who are past a
certain age are progressively reduced annually,
in exchange for the guarantee of lifetime
employment or an extension of the retire-
ment age. Since introduced in 2006, the
system has been continuously making indus-
try-wide implications.
Information Technology Skills (2007)
Based on a scale of ten
Source: IMD World Competitiveness Yearbook 2009
Growing female workforce
participation
In the past, the presence of women in the
workforce compared to that of their male
counterparts was disproportionately low in
Korea. This has changed of late, however,
helped by related government policies. The
Department of Education, Science and
Technology reported in a recent study that for
the last decade, about 50 percent of 4-year
university graduates were women, and that
the proportion of females attaining Master’s
degrees had been on the rise after surpass-
ing the 40-percent mark in 2006 (42% as of
2008). According to data released by Statistics
Korea in July 2009, women outnumbered
men in passing major state exams in Korea
that select diplomats and senior-level gov-
ernment officials, representing 65.7 percent
in the foreign service exam (up from 10 per-
cent in 1992) and 51.2 percent in the civil ser-
vice exam (up from 3.2 percent in 1992).
Women also accounted for 38.0 percent of
successful candidates in the rigorous state
bar exam (up from 8.8 percent in 1995).
Women also represented over 10 percent of
high-ranking government officials (over class
5) as of 2008, and 36 percent of corporate
CEOs, almost the levels as high as their coun-
terparts in advanced countries.
Female participation is fast expanding in the
media, in academia, and in politics. As more
initiatives are under way to remove any barri-
ers that may hinder women’s progress to
becoming leaders of Korean society, the role
of women in Korea’s industrial workforce is
likely to increase in the future.
Patents Granted to Residents (Average 2005-2007)
Source: IMD World Competitiveness Yearbook 2009
Investment Environment 10 11
Improving labor-management
relations
Based on a common understanding of the
crucial importance of labor-management
harmony as part of Korea’s FDI environment,
the country’s labor and management circles
along with the government have come
together to launch joint efforts toward more
stable labor-management relations resulting
in more cooperative workplaces across
Korea. A growing number of the negotiations
which take place between labor and manage-
ment concerning wages and other types of
collective bargaining are now being success-
fully concluded without strikes or other dis-
ruptions ensuing. Many companies have also
begun issuing a “labor-management cooper-
ation declaration,” a commitment between
employers and employees, in order to pursue
mutually beneficial relations. The number of
such declarations has reached 2,689 as of the
end of 2008, which is a dramatic increase of
278.5 percent, over the 749 declarations
made the year before.
Meanwhile, the Korea Federation of Labor
Unions is actively joining efforts to make
improvements in Korea’s labor-management
environment better known to foreign
investors, taking part, for instance, in invest-
ment promotion sessions both in the U.S. and
Japan, an initiative which promises a brighter
outlook for this sector.
INFRASTRUCTURE
Incheon International Airport, the
transportation hub of Northeast Asia
Incheon International Airport, which first
opened in 2001, handles 63 airlines which
flew to 161 cities and 49 countries, and served
a total of 30 million international passengers
in 2008. In just 6 years, the airport has risen to
the position of 2nd largest in the world in
terms of air freight volume, processing 2.42
million tons of cargo in 2008.
The airport was awarded the ‘World Best
Airport’ in the assessment of Airport Service
Quality by the Airports Council International
for 4 consecutive years from 2005 to 2008.
With the completion of its 2nd phase of con-
struction in June 2008, Korea’s representa-
tive airport opened a 3rd 4,000-meter long
runway that is capable of accommodating
super-large aircraft like the Airbus 380.
In addition, in order to meet growing demand
for air travel and provide high quality services,
the Korean government announced the basic
plan for the 3rd phase of construction that will
increase airport capacity, set to begin in June
2009. The design will be decided upon from
late this year and will be completed in 2015.
Incheon International Airport
Upon completion, the airport will be able to
handle 62 million passengers and 5.8 million
tons of cargo per year, up from the current
capacity of 44 million passengers and 4.5 mil-
lion tons.
The cargo terminal complex in the airport’s
free trade zone, which opened for business in
2006, is used by global cargo and warehouse
companies such as DHL, FedEx, TNT, UPS,
Polar Air, Schenker, KWE and AMB Property.
In 2007, Incheon International Airport newly
developed the Sea and Air Inter-Modal
Transportation System using the Road
Feeder Service, with an aim to attract greater
volumes of cargo from China, and thus accel-
erating its move towards becoming a logistics
hub in Northeast Asia.
The Incheon International Railroad was
brought into service in March 2007, connect-
ing the 40-kilometer long distance to Gimpo
Airport. When the extension to Seoul Station
is completed in 2010, passengers will be able
to transfer to the KTX, Korea’s high-speed
bullet train, which will serve to improve public
access to major cities throughout the country.
Strategically located ports and harbors
As of 2008, Busan Port located in Busan,
Korea’s 2nd largest city, was the world’s 5th
largest container port with an annual
throughput of 13.45 million TEUs (twenty-foot
equivalent unit). The Port is placed at the
artery of the world’s major sea routes, linking
Europe, Asia and North America. If the inter-
Korean railroad is launched, the port is
expected to serve as a global logistics center
“Korea’s well-developed network infrastructure, advanced
mobile technologies and excellent IT manpower make it one
of AMD’s most strategic markets for development of innova-
tive computing platforms.”
Hector de J. Ruiz, former Chairman and CEO, Advanced Micro Devices
by catering to the shipping demands of China,
Russia, Mongolia, Central Asia and Europe.
As Busan New Port, situated 25 km away
from Busan Airport and Gwangyang Port in
the southeastern part of the Korean peninsu-
la, evolves into a super-large container port
complete with a fully automatic system, these
two ports that have been designated as Free
Trade Zones with a wide range of tax benefits
for foreign companies, are being nurtured as
a global logistics and business hub.
Korea has a global network for marine trans-
portation and ports, which include among
others Incheon Port, Pyeongtaek・Dangjin
Port and Ulsan Port, not to mention large-
scale logistics complexes. Foreign-invested
companies which are taking advantage of the
outstanding facilities include Steinweg,
COSTCO and Sanyo Maritime in Busan Newport,
Tesco and Mevius in Ulsan Port, and Stolt
Haven, Vopak and Odfjell in Ulsan Port.
High-speed rail system and
Trans-Korean Railway
With the completion of high-speed railroad
construction between Seoul and Busan and
Seoul and Gwangju in 2004, Korea has
become the world’s 5th country with a high-
speed railroad system, following Japan,
France, Germany and Spain. The two-phase
project for the Seoul-Busan and Seoul-
Mokpo railroads, projected to be completed
in 2010 and 2017, respectively, will improve
east-west movement, thus reducing traveling
time across the nation to just several hours.
In addition, the intergovernmental agreement
on the Trans-Asia Railway (TAR) Network

that links Asia and Europe was concluded in
the 3rd UN EXCAP Ministerial Conference on
Transport in November 2006, while in May of
2007, trial operations were conducted on
some parts of the Gyeongui and Donghae
(East Sea) lines that constitute the Trans-
Korea Railway (TKR), part of the TAR
Network.
If the TKR is constructed, the line will be con-
nected to the Trans-Siberia Railway (TSR),
the Trans-China Railway (TCR), the Trans-
Manchuria Railway (TMR) and the Trans-
Mongolia Railway (TMR) which themselves
are linked to the TAR. Through this plan,
Korea will have an on-the-ground logistical
network that reaches Asia and Europe, going
beyond her existing network which is based
on marine transportation and ports.
IT wonderland
In the Digital Opportunity Index (DOI) released
by the International Telecommunications
Union (ITU), Korea has ranked first in the
world from 2005 to 2007 (as of the time when
the index was released). The DOI is an index
that comprehensively measures Internet
penetration rates, price relative to average
income, and Internet usage rates to show
countries’ ICT performance.
After focusing on establishing and advancing
the country’s ICT infrastructure like xDSL and
Broadband from 1995, Korea has gained a
foothold as one of the world’s Internet super-
powers. At the present time, Korea is striving to
establish the Ultra Broadband Convergence
Network (uBcN), required for the future
Digital Opportunity – Top 5 Economies (2007)
Source: International Telecommunication Union
broadcasting and communications services,
with features for convergence, realization,
intellectualization and personalization. With
the completion of these efforts, the realistic
Rich Media service, featuring 4 to 16 times
higher definition compared to full HDTV, will
be rejuvenated thus creating a ubiquitous
environment, which will enable both wired
and wireless convergent services for voice
calling, the Internet and broadcasting at any
time anywhere.
In terms of ICT technology, Korea has diverse
new technologies among which are WiBro
(Mobile WiMAX), WCDMA HSPA, T-DMB (ter-
restrial DMB), FTTH WDM-PON, Embedded
SW Integrated Solutions, Digital Actors, and
low-power SoC for interactive DMB and
voice-recognizing navigation. In the same
light that CDMA has brought an economic
impact estimated at KRW 56 trillion to Korea,
these technologies will be used as new dri-
ving forces for Korea’s ICT sector.
In the meantime, according to the OECD, as
of 2007, Korea ranked highest in terms of the
trade balance of ICT goods, with a surplus of
US$43.28 billion. As an aside, the Korean
government has announced that the coun-
try’s ICT trade surplus increased to US$57.78
billion in 2008. Korean companies such as
Samsung Electronics and LG Electronics are
maintaining the lead in household appliances
including memory semiconductors, LCD
/LEDs, TVs and air conditioners and more
recently are looking to grab top position in the
mobile phone market. In contrast to Korea’s
large enterprises, Korean SMEs are taking
Number of Broadband Subscribers per 1000
Inhabitants (2007) – Asia Pacific countries
Notes: Korea ranks 7 th globally.
Source: IMD World Competitiveness Yearbook 2009
Investment Environment 12 13
charge of the global ICT market in various
sectors including online games, computer
parts, network-based intelligent robots, body
composition analyzers and electronic door
locks. Korea’s competitive edge which has
been traditionally based on manufacturing
has now extended into the IT sector through
the country’s determination to develop
advanced technologies, and now synergy
effects are being seen.
World-class R&D centers
Korea’s state-of-the-art IT infrastructure,
competitive IT firms and technology, and
innovation-friendly consumers constitute a
winning combination that has attracted global
IT giants to her soil. Microsoft has opened its
R&D lab for mobile technology in Korea; IBM,
an R&D lab for ubiquitous computing; and
Google, an engineering lab.
Meanwhile, Motorola, Microsoft and Intel
have chosen Korea as the test market in
which to first release their new products in
light of the nation’s technology-savvy and
trend-conscious consumers whose feedback
is highly prized. Motorola and eBay have
selected Korea as their Asia-Pacific head-
quarters from which to oversee their busi-
ness interests in countries like China and
India. Kimberly-Clark opened its first R&D
center outside the United States in Korea
while Siemens and Dupont also operate a
medical R&D center and a nano R&D lab,
respectively, within Korea. L’Institut Pasteur,
an eminent French biotechnology institute,
has also had a research presence in Korea
since 2004.
 LIVING ENVIRONMENT

The 5.5 km-long Yangjae Stream traverses the upscale
residential area of Dogok-dong, Seoul
Seoul, the green digital capital
A megalopolis home to over 10 million resi-
dents, Seoul is a dynamic modern city situat-
ed within a majestic river plain. Harmoniously
marrying modernity with tradition, technology
with art, Seoul is a vibrant city that has suc-
ceeded in transforming and reinventing itself.
In recent years, Seoul has been rapidly shed-
ding the concrete facade acquired during
decades of industrialization, and is now span-
gled with an increasing number of green
spaces.
The Cheonggyecheon (or Cheonggye Stream)
whose refurbishment was completed in
December of 2005 won ‘The Best Public
Administration’ prize at the 9th International
Architecture Biennale in Venice, Italy, in 2004,
receiving praise not just at home but from
around the world. The stream is gaining a
reputation as a nice place for refreshment for
entrepreneurs and investors, going beyond
just a tourist attraction. The capital city’s two
main squares – near Seoul City Hall and
Gwanghwamun – have brought a sense of
comfort to the urban landscape. The vivid
greens of Seoul Forest, the rejuvenated
Namsan and clean streams that stretch
throughout the city have led to the creation of
a massive jogging course, connecting Seoul
with the city’s periphery. In a nutshell, Seoul
is a place where citizens can go hiking near
their home, enjoy the colorful night scenery of
the Han River and stroll around without con-
cern for their safety at night.
Seoul’s transportation system that connects
nearly all sections of the large city was
awarded the ‘Certificate of Recognition’ by the
International Association of Public Transport
for the city’s successful policy. The officials
from the House of Commons Committee on
Transport in the United Kingdom, as well as
the Ministries of Transportation of Vietnam,
Beijing and Istanbul have visited Seoul to
observe the capital’s public transit system
and some have signed an MOU to expand
cooperation in transportation. In May 2005,
Seoul was awarded the Metropolis Award for
its innovative theme project in Berlin. Another
achievement that Seoul is proud of is its
humans-centered transportation innovation
that is now being benchmarked by other
large cities across the globe. In addition to its
current subway system with nine lines which
are linked to every nook and corner of the
capital, a nationwide rail network that con-
nects the country’s urban areas will be built,
further solidifying Seoul’s public transit infra-
structure.
In 2003, a UN assessment reported that
Seoul ranked highest among the world’s top
100 cities in terms of the e-government
system which allows the citizens to file com-
plaints, pay taxes, or make a reservation for
public services on the city’s Web site. In light
of this accomplishment, Seoul has since been
able to export its know-how to Hanoi,
Vietnam in September 2005 following a previ-
ous overseas project, ‘e-Moscow’ for Moscow
in 2004. Other countries in Eastern Europe,
Southeast Asia and South America are also
showing interest in Seoul’s e-government
system. The Seoul Arts Center, a mecca for
art, provides world-class performances and
exhibitions from classical music, jazz, gukak
(Korean traditional music), paintings, operas
and musicals along with outdoor water
shows.
24/7 non-stop services
Korean cities bustle with activity at all hours
with most essential services available
around-the-clock. In addition to uninterrupt-
ed ATM access and online banking, computer
game arcades, dry saunas (jjimjilbang), dis-
count chain stores and restaurants are open
day and night. Doctors receive patients after
hours as well, and an increasing number of
private clinics accept patients even during the
weekend. TV home shopping channels and
online stores generally offer interest-free
installment payment plans as well as free

“Cheonggyecheon, with its smartly placed nooks, rocks and rock bridges, and walkways where
people relaxed, cooled off and played, began to resemble a river environment. Artwork pops
up for festivals in and around Cheonggyecheon on holidays, it became a major venue for view-
ing World Cup, and I hear soon there will even be fashion shows on Cheonggyecheon.”
Mr. Nicholas Yukio Tomizawa, VP, Gale International Korea, and the 1st prize winner in the ‘Life in Korea’ Essay Contest sponsored by KOTRA

delivery taking no more than a couple of days
on purchases meeting a few basic conditions.
Speedy and friendly
customer-oriented services
In Korea, should a home appliance start
acting up, one can count on the retailer or
manufacturer to dispatch a technician for
onsite repair - at no or minimal cost - within
two business days. All department stores
offer parking staff to assist customers, with
some going so far as to provide valet parking
service. Road assistance from auto insurance
companies is generally very prompt with an
agent showing up within 30 minutes or less.
Service in most restaurants tends toward
excellent, and tipping is a custom which has
yet to take a strong foothold in Korea. Large-
item retail stores offer free home delivery
and set-up services. Indeed, the pervasive-
ness of service-mindedness in Korean busi-
ness is a constant source of admiration, con-
venience and delight for many international
visitors and residents in Korea.
Special services for international
visitors and residents
The Seoul Metropolitan Government opened
the Seoul Global Center on January 23, 2008
as part of its global zone project. The center
offers in-depth and specialized services via a
network that encompasses all information
necessary for living and doing business in
Seoul.
The center not only provides services for
issuance of credit cards and support of
mobile phones, driving licenses and immi-
Cheonggyecheon runs through downtown Seoul.
gration work in five languages including
English, Chinese, Japanese, Vietnamese and
Mongolian, but also offers a one-stop public
service that handles communications in other
languages like Tagalog, Russian, French and
Spanish via telephone call through a visit, by
email or through its Web site.
Aside from the Seoul Global Center, there are
5 additional global village centers in areas
where foreign nationals are concentrated,
which maintain a close relationship with the
expat community to provide public services
and resolve any difficulties they may face.
In addition to the process of obtaining an
entry visa for Korea being dramatically sim-
plified in recent years, the list of international
schools for children of foreign residents in
Korea has been steadily expanding as well.
Currently there are a total of 50 international
schools in Korea including 20 in Seoul, 8 in
Gyeonggi Province and 5 in Busan.
The quality of Korean health care is among
the world’s best, especially in the fields of
ophthalmology, dermatology and plastic
surgery. Dental care and other health care
services offer excellent price-to-quality value
to the great satisfaction of many international
patients. The country’s Medical Referral
Service will soon be implemented to give for-
eign nationals information on nearby hospi-
tals with foreign language services.
In terms of housing, for the greater conve-
nience of international residents, a special
rental agreement format has been developed
Investment Environment 14 15
exclusively for their use. To improve living
conditions in Korea, more apartment com-
plexes reserved for international residents
have been built in recent years. In addition,
the apartment rental system has been
upgraded to allow international residents to
pay rent on a monthly basis as opposed to the
lump-sum deposit system which is common
practice in Korea.
For the improved ease of those wishing to see
more of what the country has to offer, all road
signs are now written in English. A project is
currently under way to provide bilingual bus
maps and information broadcasting at bus
stops although subway information broad-
casting has been already provided in Korean
and English. The recently introduced Before
Babel Brigade (BBB) phone service has also
proved popular among international visitors.
This simultaneous interpretation service
using a special handset currently covers 17
languages. Handsets offered by the BBB may
be checked out at airports, train stations and
tourist information centers.
Meanwhile, the Investor Support Center (ISC),
located within the Invest Korea Plaza, a busi-
ness incubating facility exclusively dedicated
to foreign investors, provides settling-in
assistance to international residents newly
arrived in Korea. Support from the ISC may
be obtained both by phone or onsite at the
support center’s premises located in south-
ern Seoul. Tips on living in Korea are provided
in English, Japanese and Chinese, and a 24-
hour hotline service (1600-7119) is also pro-
vided in English.
AUTOMOTIVE INDUSTRY
Overview
The Korean automotive industry, the fifth
largest in the world for 4 consecutive years
from 2005 to 2008, produced 3,826,000 units
in 2008, enough to capture a global market
share of 5.4 percent. In the 1960s and 1970s,
the role of Korean automakers was primarily
as assemblers of imported parts. Today,
Korea domestically sources the complete
spectrum of auto parts and is both one of the
leading car-making countries and a fast
growing exporter, selling its own indepen-
dently-developed models. Currently in the
Korean automotive industry, 7 production
plants for 5 automakers including Hyundai
Motor Company, KIA Motors, GM Daewoo,
Renault Samsung, and Ssangyong Motor are
in operation. Specifically, Hyundai-KIA Motor
Group has made a giant leap in recent days
as a global automaker thanks to its continu-
ous efforts in global management and toward
quality improvement. While the landscape of
the global auto industry has been changing
due to the 2008 financial crisis, General
Motors and Renault have continuously
increased domestic investment by maintain-
ing production facilities within Korea and
through consistent R&D activities for new
cars, respectively. However, challenges still
need to be resolved since Shanghai
Automotive Industry Corporation gave up its
management rights to Ssangyong Motor,
placing the Korean car maker under court
receivership with the fired employees subse-
quently going on strike. Nevertheless, global
auto parts makers are seriously considering
starting business in Korea as the Hyundai-
KIA Motor Group augments its production
capacity, the only automaker to do so in the
midst of the financial crisis, by completing, for
example, the construction of production
bases in the United States and Europe.
Accounting for over 5 percent of total domes-
tic manufacturing output and 3.1 percent of
total exports (as of 2006), the auto parts
sector - which includes many of the world’s
leading auto parts manufacturers who have
invested in Korea - is a powerful engine for
the Korean economy. As of end-2005, some
260 automotive parts makers were foreign-
invested firms, of which 173 were tier-1 sup-
pliers representing 35.5 percent of overall
parts sales valued at 32.7 trillion won. Of the
frontrunners currently ranking among the
world’s top 30 players in the global automo-
tive parts industry, the likes of the Delphi and
Visteon of the U.S., Germany’s Bosch and
Siemens, Denso and Calsonic of Japan, and
Valeo from France have invested in Korea.

Outlook
In 2009, the volume of total production will be
around 3.6 million units, 1.05 million for
domestic consumption and 2.55 million in
exports, a 5.9-percent decline from 3,827 mil-
lion units in 2008 according to the Korea
Automobile Manufacturers Association.
The government is actively providing financial
support to the industry, with the goal of lifting
it into the ranks of the global top four by 2012.
Various initiatives are underway to raise
Korea’s share of the world automotive
market to 11 percent and have at least twelve
Korean automotive parts makers enter the
global top 100. The government also intends
to promote the transformation of the auto-
motive parts industry into a high value-added
industry through process modernization, the
use of new materials, and more ecologically
friendly production techniques. Upgrading
existing automotive parts clusters will also be
part of this plan.
Business opportunities
A 2005 survey of 42 American automotive
parts makers conducted by KOTRA’s Detroit
Korea Business Center found that the top cri-
teria in selecting overseas business bases
were market size, growth potential, accessi-
bility to surrounding markets, and skilled
labor force, in this order. Korea earned high
scores in three of the four criteria and was
ranked second in terms of overall investment
attractiveness.
Two of the most recent major trends in the
international automotive industry are global
Korea Automobile Production
(Unit: thousand vehicles)
*Notes: Presumed production volume for 2009
Source: Korea Automobile Manufacturers Association
Business Opportunities 16 17
sourcing and production from overseas
bases. Korea offers excellent business
opportunities on both fronts. First, automotive
majors worldwide are pressing forth with
platform sharing, modularization and global
sourcing in order to achieve optimal price
competitiveness. Korean automotive parts
makers are rated top in terms of both quality
and price competitiveness. However, invest-
ment opportunities in Korea will continue to
remain in the high-tech industries including
electric and electronics and basic materials.
Secondly, that Korean and foreign automak-
ers have been increasing production in Korea
will provide foreign auto parts makers with
promising business opportunities to grow
hand in hand with car assemblers. Auto com-
panies that do not have any presence in
Korea should make inroads into the Korean
market at the earliest moment possible to With Korea’s maturing automotive industry, it
form business ties with Hyundai-KIA Motors. has become difficult to expect further expan-
sion in domestic production capacity. In addi-
Investment opportunities tion, it will not be easy for new comers to
Sectors of diesel engines, automotive electri- supply parts to Hyundai-KIA Motors as most
cal components, hybrid cars, electric vehi- existing parts makers have tight relationships
cles, and fuel cells as well as basic materials with OEMs. Against this backdrop, one way to
including rubber and aluminum are the tech- start business with the assembler would be
nological areas with high growth potential as to approach the suppliers of Hyundai-KIA
they are in demand by the Korean auto indus- Motors. A foreign company that wishes to
try. Specifically, there have been noticeable become a supplier of these two companies
developments in automotive semiconductors, should explore the possibility of a strategic
sensors, and motors in car electronics as alliance with existing suppliers through
well as in hybrid cars, electric vehicles, and investment rather than seeking Greenfield
fuel cells from the environmental side. investment. It will be much more effective to
Combined with Bosch’s large scale invest- introduce new sophisticated technology and
ment in secondary cells, the sector is project- supply price-competitive parts through capi-
ed to show remarkable growth in the future. tal joint ventures.
SEMICONDUCTOR INDUSTRY

Global market mainstay industry of Korea, contributing to

The market volume of the global semicon-
ductor industry has continued to grow at an
annual rate of 5.6 percent from 2003 to 2008,
reaching US$258.3 billion as of 2008. The portion
of non-memory semiconductors (system
chips) takes up most of the market at over 80
percent. The global semiconductor market is
expected to grow by approximately 1.5 percent
from 2008 to 2013, reaching a market volume
of US$282 billion in 2013.
Due to the recent economic recession, the
environment surrounding the semiconductor
industry has seen various changes. In the
memory sector, competition in terms of cost
will become fiercer and the profit divide
between existing players and newcomers will
widen further. In regard to system semicon-
ductors, the application of developed prod-
ucts has increased with the convergence and
integration of sets. Such trends will intensify
market competition among companies in the
areas that overlap. Considering the high cost
entailed by constructing manufacturing facili-
ties in the semiconductor manufacturing
sector, apart from a number of companies
such as Intel, Samsung, and TSMC, manufac-
turing facilities only for specialized technolo-
gies will be set up, with the rest being out-
sourced. In other words, the ‘pep-light’ trend
will be further accelerated.
Domestic market
In 2008, Korea stood among the world’s top 3
semiconductor manufacturers with a market
share of 47.7 percent in the U.S., 23.9 percent
in Japan, and 9.6 percent in Korea. As a
Semiconductor line at Samsung Electronics’ Giheung plant
7.6 of overall export, the semiconductor
industry reported exports of US$32.8 billion
and imports of US$32 billion in 2008, employ-
ing 138,000 workers.
The structure of the Korean semiconductor
industry is centered around memory chips
while the competitiveness of system chips,
discrete semiconductor devices, equipment
and material are relatively weak. In the
memory industry, Korean companies domi-
nate the market with technological power
based on the manufacturing technology of
DRAM, and NAND Flash with Korea’s two
largest memory producers, Samsung
Electronics and Hynix. In terms of DRAM,
Samsung Electronics has started mass pro-
duction of 2G DDR3 adopting the 40-nano
process for the first time in the world, which
is estimated to be technologically 18 months
ahead of foreign competitors.
The system semiconductor industry is made
up of fabless companies which design the
system chips, foundry companies that are
responsible for production, and packaging
companies. The volume of the Korean fabless
industry has been showing remarkable
growth at 37 percent annually with approxi-
mately 150 companies including MTekVision
and Core Logic in operation. Representative
foundry companies are Magna Chip and
Dongbu HiTek. Magna Chip saw a 60-percent
rise in its revenue from the first quarter of
2009 thanks to an increase in production by
their customers. Meanwhile, Samsung
Electronics, ranked 11th in the foundry indus-

Infineon Technology
As part of strategic cooperation with Hyundai Motor Company, Infineon opened the
Hyundai Infineon Innovation Center (HIIC) in 2007. The Infineon-Kookmin University
Microcontroller Training Center was also established during the same year for the train-
ing of engineers, in addition to the Power Semiconductor Research Institute and the
Automobile Industry-Security Research Institute. The automotive lab set up by Infineon
Technologies Korea carries out joint research and development activities with major
Korean automotive electrical component companies on development trials of electrical
products for Hyundai and Kia vehicles. The up-to-date automotive semiconductors devel-
 Business Opportunities 18 19

as the persistent convergence trend in terminals. tions, home appliances, as well as automo-
biles, is expected to be most promising. The
In automotives, recent developments in com- future of discrete semiconductors such as
plex automotive electronic systems related to analogue ICs and IGBTs are also bright for
location tracking, balancing, and sensors of foreign investors.
vehicles will increase the demand for semi-
conductors, leading to continuous growth.
Against this backdrop, investment in the
Application Specific Standard Products
(ASSP), interoperable for telecommunica-

Trends in the Global Semiconductor Market

(Unit: US$ billion)
Samsung Electronics’ 40Gb NAND Flash CAGR 5.6%
263 272 258
230 239
try in 2008, is nurturing the business of out- 186
sourcing production of chipsets.

Investment opportunities
The global economic downturn has contract-
ed the electronic device market as a whole,
making it unlikely for Greenfield-type invest- Memory (CAGR: 5.7%) System Semiconductor (CAGR: 5.5%) Discrete Device (CAGR: 5.9%)
Source: ISuppi, 2009. 3
ment in semiconductor ICs or manufacturing
equipment for facilities. Nevertheless, invest-
ment in the R&D stage will continue in order 2008 Global Market Share of Memory IC
to prepare for future technology.
Other 1%

By application, although data processing U.S.A.

8% Taiwan
equipments, mostly PCs, hold the largest 19%
U.S.A.
portion, its growth will slow down with the Germany Japan 33%
10% 22%
emergence of various new applications.
Meanwhile, telecommunications is expected
Japan
to continue at an upward trend as the 16%
Korea
increase of mobile communications services 45% Korea
spur growth in the market for terminals. 45%
Demand for telecommunications semicon-
ductors will also grow with the launching of
4G mobile communications services as well DRAM NAND Flash
Source: Gartner

oped at HIIC are further refined to perfection at the Infineon automotive lab. Moreover,
Infineon has been forming close cooperative ties with core customers to reclaim the next
generation mobile communications market on all fronts including the European mobile
phone technology GSM/GPRS, WCDMA, VDSL, and Bluetooth. With 150 employers,
Infineon Technologies Korea has doubled in terms of its employment and revenues in the
past 2 years. Infineon also received government support in the hiring and training of
Korean R&D workforce having been selected as a finalist in the R&D Human Resources
Development Project by the Ministry of Knowledge Economy.
DISPLAY INDUSTRY
Current trends and development
prospects
Since 2000, the global display industry has
seen continued remarkable growth at over 20
percent annually until 2008 when growth
stalled at 0.2 percent. The fall was attributed
to the slowdown of the global economy and
the rapid increase of inventories, leading to a
recession in the display industry as product
prices began to fall and capital expenditures
declined. However, the industry is rapidly
rebounding once again with China’s recent
execution of a policy1) to offer subsidies for
home appliances, the recovery of the
European TV market, and the digital
switchover of broadcasting in the U.S. which
has led to an increase in TV demand, as well
as the launching of new models including
LED TVs.
The market volume of global flat panel dis-
plays is expected to rise to US$101.2 billion in
2011 from approximately US$78.4 billion in
2009. LCDs will account for 92 percent of the
increment while that for PDPs will decrease
slightly from 6.2 percent in 2009 to 4.5 per-
cent in 2011. OLED will show narrow growth
from 1.3 percent in 2009 to 2.2 percent in 2011.
The world's thinnest 42- and 47-inch LCD TV panel
1] The Home Appliance Subsidy Program: This is the Chinese
government's policy to provide the people in rural areas with
subsidies for household appliances. After its trial program was
implemented from December of 2007, it has been extended
across the nation since February of 2009. Under the policy aimed
to promote the provision of home appliances in rural areas and
boost domestic consumption, the people living in rural areas
receive 13% of product prices from the government.
Flat panel displays include LCDs, PDPs, and
OLEDs. Liquid Crystal Displays have been in
fierce competition with PDPs as LCD prices
fell dramatically from the last half of 2008 due
to excessive supply and the effects of a global
recession. Currently, market shares of LCD
and PDP are 8:2. However, some experts
project that, while the technological develop-
ment in the LCD industry has already
reached maturity, there is still much room for
development for PDPs. Therefore, if all
efforts are focused on increasing profitability
of PDPs by developing new applications and
high value-added models as well as by
making PDPs more eco-friendly, PDPs will
surely have a competitive edge. OLEDs are
emerging as the next generation display
through technological improvements in the
new market environment. However, if OLEDs
are to become the star of the display market
currently divided into two by LCDs and PDPs,
OLEDs should first address issues such as high
cost, a short life span, and securing of mass
production technology of large TV screens.
By display device, TVs have the largest
market volume followed by mobile devices,
monitors, and notebook computers with
market volumes of US$38.6 billion, 13.6 billion,
12.5 billion, and 8.4 billion, respectively in
2009. In 2011, the mobile portion is expected
to grow to 19.6 percent of all devices, mark-
ing 47-percent growth from 2009 and reach-
ing US$20.1 billion. The TV display market
will also expand by roughly 17 percent from
2009 to US$45 billion.
Korea, Japan, and Taiwan are engaged in
Market Share in FDP by Technology (2009~2011)
2009
Others 0.8%
OLED 1.3%
PDP 6.2%
US$78.4 BN
LCD 91.7%
fierce competition in the global display indus-
try. As China joins the fray, the market land-
scape is expected to change in the future. In
the first quarter of 2009, Korean companies
such as Samsung Electronics and LG Display
accounted for 65 percent of global LCD
market share, while Taiwan’s AUO and CMO
claimed the remaining 35 percent. In the PDP
market, Panasonic of Japan ranked first with
a market share of 39.8 percent whereas
Samsung SDI and LG Electronics stood at
29.4 percent and 21.9 percent, respectively, in
the market. As a market total, Korean com-
panies had a slightly larger share than Japan
at 51 percent versus 49 percent. Samsung
SDI became the leader in the global OLED
market after commercializing the technology
for the first time in the world in 2007.
Leading companies in the display industry
including LG Display and Samsung Electronics
have made swift investments by newly con-
structing and augmenting their 8th generation
LCD lines, as well as securing a stable source
of parts and materials in order to meet the
rapidly increasing demand recently for dis-
play panels, and find themselves at the fore-
front of the global display market.
Trends in the display parts and
material industry
Despite Korea’s leading position in the global
display market, much of the related parts and
materials have to be imported. Considering
that the cost of parts and materials account
for up to 29 percent of the finished product,
source technology needs to be urgently
secured based on its high cost and the ratio of
2011
Others 0.9%
OLED 2.2%
PDP 4.5%
US$101.2 BN
LCD 92.4%
 Business Opportunities 20 21

localization.
The cost ratio of parts and materials for LCDs
ranges from 10 percent to 29 percent in the
order of BLU, Pol, C/F, Glass, and IC. BLU is
composed of CCFL, LED, light guide panels,
diffusing panels, reflector sheets, prism
sheets and DBEF. All of the reflector sheets
and DBEF have to be imported. Among AG
TAC, TAC, PVA, Phase Difference, and Protect
Film which constitute a Pol, the localization of
TAC, PVA, and Phase Difference is 0% which
makes them fully dependent on imports.
Major glass companies doing business in
Korea include Samsung Corning Precision
Glass, Asahi Glass of Japan, and Schott of
Germany. Market leaders in liquid crystals
are Merck (Germany), and Chisso (Japan).
Household names in color filters are LG
Display, Samsung Electronics and Dongwoo
Fine-Chem. Companies including LG
Chemical, and Ace Digitech lead the polarizer
market, while Taesan LCD, Wooyoung
Information Communication, Heesung
Electronics and Kumho Electric are major
players in BLU, with Samsung Electronics
and Magna Chip taking the lead in driver ICs.
Within the PDP components sector including
FP, BP, and optic, fluorescents and Ag-elec-
trodes are highly dependent on imports with
a localization rate of 2 percent and 10 percent
respectively.
Parts and materials for OLED including dri-
ving, organic, and encap as well as die bond
materials account for anywhere from 7 per-
cent to 45 percent of the total cost. Among
them, encap materials have the lowest local-
ization ratio at 5 percent, while organic materi-
als stood at 20 percent. In terms of driving and
die bond materials, 80~100 percent are pro-
duced in Korea.
LG Chemical recently announced that it
would be starting production in LCD sub-
strate glass after signing a contract with
Germany’s Schott to adopt its technology.
LCD substrate glass is the portion with the
highest added value, accounting for 20% of all
parts and material costs for LCD. Affiliates of
Corning in the U.S. including Samsung
Corning Precision Glass contribute 60 per-
cent to the global market, while Japanese
companies such as Asahi Glass, NEG and
AvanStrate claim the rest of the market
share. By engaging in the LCD substrate
glass sector, LG Chemical plans to nurture
both the upstream and downstream of the
display industry, further accelerating efforts
in localizing parts and materials for displays.
Government policy for the
development of the display industry
The display industry is placed among Korea’s
next generation new growth industries, con-
sidering its creation of high added value and
characteristics as a comprehensive core
industry. Korea is currently leading the dis-
play industry as a whole outpacing compa-
nies in Japan and Taiwan. However, because
of the high dependency on foreign imports for
the core materials and source technology
used for displays, it is critical for Korea to
actively develop new technology and attract
investment. Furthermore, in order to hold off
competition with Japan, Taiwan and China,
Korea needs to be superior in terms of tech-
nology by making capital expenditures at the
right moment and establishing an environ-
ment to commercialize new technology in
R&D, as well as making Korean products a
global standard.
In this regard, the Korean government has
set into place a variety of core tasks in order
to help the country become a powerhouse in
the display industry by 2017 with exports of
US$100 billion and 45 percent in global
market share. The core tasks are as follows:
concentrate development of core source
technology for next generation displays,
establish private-sector-led “flexible display
centers”, promote joint R&D among compa-
nies in core areas to improve Korea’s com-
petitive edge in the currently weak equip-
ment, parts and material sectors, pursue
industrial standardization and global R&D
activities with advanced nations to create a
growth infrastructure as well as refurbishing
systems to facilitate investment.

Prospects for FPD Market Share by Device (2009-2011) Market Share in the Global Display Industry by Country
Section Country Key Player 2007 2008
Samsung Electronics,
Korea 43.7% 46.1%
LCD LG Display
Taiwan AUO, CMO 42.4% 38.8%
Samsung SDI,
Korea 50.3% 52.3%
PDP LG Electronics
Japan Panasonic, Pioneer 49.7% 47.7%
Korea Samsung SDI 42.0% 45.3%
OLED
Taiwan RIT Display 25.4% 32.2%
TVs Notebooks Monitors
D Cameras Mobile Other Source: Display Search (Revenue basis)
IT INDUSTRY

Overview more employees was roughly 15,000 as of the

LG’s Prada Phone has been chosen the 'Best of the Best' for
2007 by the Red Dot Design Award committee. The Red Dot
Design Award is one of Europe’s most prestigious industrial
design awards.
The information technology (IT) industry has
served as a national growth engine through-
out the past decade both in terms of public
policy and business, leading Korean society
as well as the national economy. From a
policy perspective, Korea was able to estab-
lish world class IT infrastructure with the
national informatization efforts that started in
the 1990s, as well as aggressive nurturing of
the Korean IT industry steered by the govern-
ment. In the new millennium, convergence
policies that comprehensively combine ser-
vices, infrastructure and devices have been
pursued to build a safe and sound digital society.
From an economic perspective, the IT indus-
try accounted for 9.9 percent of total GDP in
2008 and also contributed a 0.5 percent point
rise in the 2.2 percent GDP increase rate
during the same period. The IT industry,
which has traditionally led economic stabi-
lization at the macro level and played a signif-
icant role in Korea’s economic growth, made
substantial contributions in generating
growth, job creation, as well as improving
national trade balances, while accounting for
39.9 percent and 24.8 percent, respectively, in
the country’s total exports and imports in
2008.
The IT industry can be largely divided into
three sectors: IT services, IT devices and soft-
ware. Total production for the sector in 2007
stood at KRW268 trillion, with IT services con-
tributing to 20.6 percent of the total, IT
devices 70.8 percent and software 8.6 per-
cent. The number of IT related firms with 9 or
end of 2007.
Domestic IT market environment
As of March 2009, the number of mobile
phone subscribers in Korea equaled 46.23
million, or 95.1 percent of the total popula-
tion. Three major service providers (SKT,
KTF, and LGT) are operating in the mobile
phone market, with SKT as the dominant
player accounting for 50.5 percent of the
market along with KTF and LGT competing to
increase their share in the market. Local
telephony has declined by 4.3 percent year-
on-year for 2009 to 22.13 million subscribers
after stagnating from 2005. The decline was
due to the launching of bundled products
(broadband Internet + IPTV + VoIP) at an
affordable price by telecom service providers
combined with the emergence of a new trend
in 2009 where Internet telephony replaced
local phones. Broadband Internet services
grew from 24.9 percent in 2004 to 31.8 per-
cent in 2008. This upward trend is expected to
persist as cable service providers deliver
broadband Internet services at a higher
speed as affordable bundled products contin-
ue to be launched. .
New IT technology
Internet Protocol Television (IPTV) is the most
representative service to be launched in 2008
and 2009. IPTV enables users to enjoy con-
ventional TV programs and videos using
Internet protocol. In Korea, IPTV services
refer to real-time TV programs delivered to
television receivers over the broadband net-
work, a premium network that guarantees

Cisco
A leading telecommunications network company, Cisco designs, manufactures, and sup-
plies IT networking equipments and management solutions to the world, with a larger
market share than any other company worldwide in all sectors related to networks. Cisco
Systems, Inc. was founded in 1984, and currently has over 67 thousand employees global-
ly with annual revenue of US$39.5 billion in 2008. Cisco was also selected as the most
respected company in its industry in the U.S. by Fortune Magazine. Cisco’s Korean branch

quality of service. Three service providers
were licensed in September 2008. Qook TV
(formerly Mega TV) from KT, BroadN TV (for-
merly Hana TV) of SK Broadband (formerly
Hanaro Telecom), and myLGtv from LG
Dacom currently deliver IPTV services to the
Korean market. As of June 2009, approxi-
mately 467,000 people have subscribed to
IPTV services, reaching a whopping 1.68 mil-
lion when this total is combined with VOD
subscribers.
Future industrial trends and
opportunities
With growing attention on low carbon, green
technology of late, areas such as green IT
technology have received new light.
Moreover, the IT industry will continue to
grow as a ubiquitous environment is being
universally established based on low power
technology through the networking of smart
devices.
In 2009, the government announced the
national strategy for green growth and a 5-year
plan through the Presidential Committee on
Green Growth and selected 3 focal sectors
and 10 major policy directions on which the
government will concentrate its efforts in the
future. The government defined ‘green
growth by IT convergence’ as ‘where green
and IT technology converge’, and declared its
wish to become one of the 7 major green
nations by 2020, and one of the top 5 by 2050,
through the development of eco-friendly IT
technology as a new growth engine, as well
as transforming the country into a low-
carbon smart convergence society. In Korea,
has 350 employees and generates an annual revenue of KRW600 billion. Cisco Korea is
actively promoting plans to transform Korea into a global hub for the development of
intelligent cities by announcing the establishment of a u-city global R&D center in Songdo
to develop technologies and solutions related to intelligent cities, and operate test beds to
make inroads into overseas markets.
Business Opportunities 22 23
the government’s green growth strategy will
create new growth engines by upgrading
industrial structures and establishing a
strong foundation for a green economy. From
around the world, leading companies have
shown much interest in the potential of
Korea’s green sector strategy. In particular,
Cisco, a network equipment company, has
been seeking transformation into an integrat-
ed network platform service provider by par-
ticipating in eco-friendly low-carbon city iriver PMP P7
development projects utilizing IT technology.
To this end, Cisco signed an MOU with
Incheon Free Economic Zone for a new town
development project, announcing a commit-
ment to invest US$2 billion in Korea. With its
participation in the Global Centre of
Intelligent Urbanization (GCIU) Project, Cisco
will develop new network platforms and solu-
tions in the course of working with IT compa-
nies in Korea that hold green technology to
build an eco-friendly city.
Total Production of the Korean IT industry
(Unit: KRW trillion)
IT service IT device SW, Computer related service
Source: Korea Association of Information & Telecommunication
BIO INDUSTRY

Bioclusters in Korea Current trends

- 9 Bio Venture Centers The bio industry covers areas related to pro-
- 16 Regional Technology Innovation Centers ducing useful material and services for the
purpose of improving health, and preventing
as well as diagnosing and treating diseases
by making use of functions and information of
bio organisms based on life science technology.
The bio industry has served as a locomotive
for new technology in Korea as many factors
converge, including stem cell research,
genetic recombination technology, techno-
logical competitiveness in cell fusion and pro-
tein engineering, combined with Korea’s
prowess in information processing and analysis
based on the country’s sophisticated IT infra-
structure. As of 2006, the volume of Korea’s
bio industry was KRW4.9 trillion, accounting
for 2 percent of the global bio market. When
looking at production by type, bio-food and
drugs took up over 80 percent, with biochem-
istry, bio environment, bio analysis and R&D,
as well as bio process and equipment filling
the remaining 20 percent. Bio drugs account
for 62 percent of domestic demand whereas
only 39 percent is produced in Korea, making
the country highly dependent on imports.
Meanwhile, bio food recorded a net surplus
with 43 percent being produced in Korea,
although accounting for only 13 percent of the
domestic market.

More than 580 pharmaceutical companies,

600 bio start-ups, and 250 functional food
makers are doing business in Korea, and
over 30,000 bio science majors are graduat-
ing from universities every year. In 2008,
5,755 SCIE level theses were published, with
229 rated IF (impact factor) 10 or over among

BERNA
Berna Biotech Korea, a pharmaceutical firm specializing in vaccines, was established in
2000 as a joint venture between Greencross and the Dutch company Reign Biotech under
the name Greencross Vaccine. Reign Biotech, a pharmaceutical firm possessing vaccine-
related source technologies and an international network, subsequently increased its
interest in Greencross Vaccine to 80 percent, betting heavily on the preventive capacity
and revenue potential of the hepatitis B vaccine developed by the latter. Reign Biotech has
also channeled massive investments into technological development and opened a
research institute - the Greencross Vaccine Institute - to support its R&D activities. In
2002, Reign Biotech was bought out by Swiss firm Berna Biotech, and four years later in
2006, Berna Biotech merged with the Dutch biotech company Crucell. Greencross
 Business Opportunities 24 25

them. In particular, the number of theses that
were featured in the 3 major bio science jour-
nals was 23 in 2005, 18 in 2006, and 16 in
2007. Patent applications in bio science have
also been increasing, putting Korea 13th in the
technology power index in 2007 with 170
patent applications registered in the U.S.
Strong government support
Recognizing BT as one of Korea’s national
core strategic industries along with IT, the
Korean government has been providing full
support while continuously investing in R&D.
Research and development for BT was allotted
the largest portion at KRW2.15 trillion or 17.4
percent of the total national R&D budget in
2009. After the first basic plan for the promo-
tion of bio science was completed in 2006,
“Bio-Vision 2016” a national policy blueprint
for bio science in the period from 2007 to
2016 has been in motion. “Bio-Vision 2016”
was created by 8 government agencies
including the Ministry of Education, Science,
and Technology, with a goal to secure Korea’s
position as a global BT powerhouse by devel-
oping source technologies and establishing
necessary infrastructure for the industry with
an investment of over KRW14 trillion. This is a
substantial increase in the amount considering
that government investment during the period
of the first basic plan for the promotion of bio sci-
ence was KRW4.3 trillion. Government sup-
port will be specifically concentrated in the
following areas of R&D: post-genome R&D,
IT・BT・NT convergent technology, brain
research, as well as stem cell research.
Furthermore, government policies including
the ‘Measure to Nurture New Growth
Engine’, the ‘Basic Plan to Develop National
Convergent Technology’, the ‘Comprehensive
Plan of Global Science Business Belt’, and
‘Advancement of Medical Service Industry’ all
feature core sectors of bio science, putting
the industry at the receiving end of policy and
financial support.
Bioclusters
The Korean government and local govern-
ments have actively promoted the establish-
ment of bioclusters to create a regional
industrial foundation in bio science. In line
with industrial policies, 9 bio venture innova-
tion centers and 16 regional specialized bio
centers were opened from 2002 and the
Korea Bio-Hub was set up to support their
activities. As part of a national project, a bio-
cluster was established in Osong and Incheon
was designated as a biomedical hub to attract
high-tech specialized hospitals and R&D cen-
ters from advanced nations. Other bioclus-
ters are also being set up by regions. In order
to support the development of sophisticated
new drugs and medical equipment, the gov-
ernment has made a decision to build a bio-
medi cluster in Daegu and Osong by 2012 and
will invest KRW5.6 trillion until 2038.
Investment opportunities
The government supports the industry for bio
drug and organs as a next generation indus-
trial growth engine considering its high
growth potential and contributions for the
Korean economy. The bio drug and organ
industry can be divided into 3 fields: bio drugs,
bio organs, and bio chips. In the bio drug field,
the selective high-efficiency drug delivery
system, cell therapy products for incurable
diseases, targeted cancer drugs, and disease
treatment drugs are the most promising
areas. In bio organs, the future for functional
cell therapy through regeneration, tissue
engineering products, and xenogeneic organs
appears bright. In bio chips, there are high
hopes for the development of diagnostic tech-
nology using genetic chips, protein chips, and
cell chips with advancements in convergence
technology combining bio science with IT and NT.
The production and clinical trials of bio simi-
lar also have bright prospects for the future.
Related areas of bio similar have been gain-
ing more positive attention as Samsung
Electronics recently announced a 5-year
investment plan of KRW500 billion after
adding the production of bio similar to its
business portfolio. Moreover, global pharma-
ceuticals have given Korea high marks on her
capacity for clinical trials in the adeptness of
researchers, facilities to gather patients, and
in regard to the fact that there are 12 regional
clinical trial centers. As a result, over 216
multinational clinical trials were conducted in
Korea in 2008, by far the highest in Asia.
Hopes for BT convergent technology, which
can optimize Korea’s competitive edge as an
IT powerhouse, are also growing. Seoul
National University and KAIST jointly estab-
lished the ‘International BIT Port” in the
Cheongna district within the Incheon Free
Economic Zone to develop next generation
System on Chips (SoC), artificial senses, bio-
mimetics, u-Health services, and nano mole-
cular imaging.

Vaccine was renamed Berna Biotech Korea during the same year. The construction of a
cutting-edge vaccine production facility in 2005 doubled the company’s production to over
177 million doses annually. As of June 2007, roughly 470 million doses have been sold.
In the meantime, Berna will be moving to Songdo International City within the Incheon
Free Economic Zone. Berna is also set to be the first company to receive tax reduction
incentives (5-year exemption and 2-year 50-percent cut on national corporate tax, income
tax and local tax including acquisition and registration tax, as well as property tax) in the
Incheon Free Economic Zone. The decision to do so was made on the anticipation that
such incentives will not only facilitate additional foreign investment into Korea’s Free “Capillaries and red blood cells,” a winning entry of the
Biomicroscopic Photography Contest organized by the Osong
Economic Zones but also create jobs and contribute to increasing exports. Bio Promotion Foundation
ENVIRONMENTAL INDUSTRY
Current trends and prospects
The environmental industry is indeed crucial
to tackling the increasing consumption of
energy and resources globally, which is one
of the direct causes of environmental pollu-
tion and global warming. Accordingly, the
scope of the environmental industry is now
expanding to include not just the after effects
of pollution-causing substances but also the
areas that prevent and reduce pollution, and
restore the environment, and that provide
technologies and products for efficient use of
resources. In the 21st century, the environ-
mental industry is being converged and inte-
grated with other industries that enable eco-
friendly production of products, the develop-
Top 10 Environmental Technologies
Top 7 Core Technologies
1) Advanced Water Treatment Technology
2) Green Car Technology
3) Climate Change Technology
4) Soil and Underground Water Remediation Technology
5) Biological Resources Utilization · Restoration Technology
6) Advanced Environment · Health Technology
7) High-efficient Resource Recovery Technology
Top 3 Source Technologies
8) Convergence-based Technology for Environment Pollution
9) Technology to Develop Alternatives for Green House Gas
10) Eco-friendly Product Technology for Life
ment of new and renewable energies, IT, and
BT (Bio Technology) and is expanding to more
diverse areas such as eco villages and eco
industrial parks.
The global market surrounding the environ-
mental industry has shown continuous
growth since 2000 and its size is expected to
reach KRW1,100 trillion by 2015. In particular,
the environment-related market in emerging
economies such as the BRICs and Middle
East and Asian countries facing imminent
environmental problems will grow at an
annual rate of over 10 percent. Korea’s envi-
ronment market has been also growing at a
double digit rate annually since 2003, taking
up 3~4 percent of the country’s GDP.
In response to the global trend in which the
environment market is gaining greater
importance, environmentally advanced eco-
nomic blocs and countries like the EU, Japan,
and the U.S. are rapidly shifting toward an
economic structure that focuses on saving
resources and using energy in an eco-friendly
manner. In the meantime, developed coun-
tries are providing government-level initia-
tives to strengthen the competitiveness of the
industry and dominate the market, through
which they can restore growth potential.
Based on their advanced environmental tech-
nologies, the aforementioned countries have
introduced strong environment regulations to
contain new developing countries while utiliz-
ing it as a trade barrier to protect their own
industry. Korea is also pursuing a low-carbon
or zero-waste policy, which is helping the
country move toward a green growth society
Top 10 Environmental Industries
1) Environment Plant Business including
Water Supply and Drainage
2) Green Car Industry
3) Carbon Market
4) Meteorological Industry
5) Soil Remediation Technology
6) Biological Resources Industry
7) Urban Mining
8) Eco-tourism Industry
9) Eco-friendly Product Industry
10) Environmental Consulting Industry
 Business Opportunities 26 27

with a virtuous development cycle of the
economy, society and the environment.
Government policy to promote
the environmental industry
With its Low Carbon Green Growth policy, the
Korean government is not only reacting to cli-
mate change but is also creating new growth
engines of green technologies and green
industries and enhancing their competitive-
ness in the global environment market. As an
initial step, the government has designated
ten environmental technologies where Korea
can secure competitive advantage and aug-
mented R&D investment in those technolo-
gies while facilitating industrialization of the
focal areas through green finance. The gov-
ernment also supports key industries like the
automobile, machinery, steel industries to
help them adopt sustainable production
methods.
Investment opportunities
When following green growth, Korea’s envi-
ronment industry is expected to select the
fields and processing where it has global
competitive advantage to focus its efforts on.
This is in line with the global strategy for divi-
sion of labor that has been under way across
the globe. Advanced countries (companies)
specialize in the R&D sectors in the value-
chain where they have competitive advantage
while investing in countries like Korea with
mid-level technological capabilities for pro-
duction of needed parts and materials, and
where finished goods can be assembled and
produced. Then projects are exported to envi-
ronmentally vulnerable countries or are
invested overseas. This is closely related to
CMD (Clean Development Mechanism), a
market system for green house gas reduc-
tions under the Kyoto Protocol and the
carbon credit business.
Today, Korea stands only at the 40-60-per-
cent level of advanced countries in terms of
high-tech environmental technology, with a
mere 3-percent share in the global market.
Twilight view of the Yeongdeok Wind Power Complex
Furthermore, most Korean companies in this
field are relatively small and lack sufficient
resources to invest in new technologies. Yet,
the level of Korea’s environmental technolo-
gies that can be converged with the country’s
key industries is good enough to adapt to the
global structure for division of force. The
industries that turn waste into energy
through recycling, restore soil, recycle pre-
cious metals and are engaged in urban
mining are evaluated to have high potential
for domestic demand and growth. Such
global structure of division of force and the
growth potential of the Korean environmental
industry will be able to provide a variety of
business opportunities to foreign investors.

Scandinavian Biogas Fuels

Scandinavian Biogas Fuels (SBF), based in Uppsala, Sweden, is a world class environ-
mental company with highly sophisticated technology that produces biogas with organic
wastes, which is then sold, and generates power for commercial use. Scandinavian
Biogas Fuels is now engaged in a project to build a biogas production facility in Korea by
utilizing sewage sludge in the Yong Yeon Quality of Water Improvement Office in Ulsan.
Under the London Convention, the ocean dumping of organic wastes is to be banned from
2012. After seeing an opportunity in Korea, given the fact that Korea has treated organic
wastes such as animal manure and food wastes by dumping them into the ocean, SBF
has tried to expand into Korea from 2006. In 2008, with the support from the Ulsan munic-
ipal government, the SPF set up Scandinavian Biogas Fuels in Korea, and construction on
the facility is expected to be complete by late 2009.
PHOTOVOLTAIC POWER GENERATION

the 2nd plan, has been revised upward to

4.3GW by 2030.

Goal for Renewable Energy Supply

(Share in the Primary Energy Supply, %)
11.0

6.1
4.3
3.0
2.6

Source: Ministry of Knowledge Economy

The Feed-in-Tariff (FIT) introduced in 2004 is

Solar installations at the Jinhae Energy & Science Park
Policies to promote
the photovoltaic industry
In 2007, the proportion of renewable energy
in Korea was 2.4 percent out of the total
amount of primary energy used, and merely
1.2 percent as of late 2008 in terms of the
total amount of power generated. In 2003, the
2nd national basic plan for renewable energy
aimed to increase the proportion of renew-
able energy to 5 percent by 2011, which was
later found to need overall revision due to an
insufficient technological and institutional
background. The 3rd national energy plan
released in August 2008 aims to increase the
proportion of renewable energy to 11 percent
for primary energy, while photovoltaic power,
which was planned to reach 1.3GW by 2012 in
a successful policy to rejuvenate renewable
energy, which has led to remarkable growth
of the photovoltaic industry in Korea. With the
policy, the accumulated capacity of Korea,
with a total of 939 PV power plants, reached
357MW as of late 2008. In 2008 alone, a PV
power plant with a capacity of over 275MW
was built, thanks to policy changes and
improvements in market ability of renewable
energy that resulted from the FIT and jump in
oil prices. A system placing a marginal cap on
photovoltaic generation (500MW until 2011)
was adopted because of the limited govern-
ment budget, and the government is aiming
to gradually develop the country’s PV indus-
try. Residual support capacity of 200MW will
be appropriately divided until 2012 when the
FIT system expires. With the adoption of an
annual cap scheme of 50MW in 2009, 70MW
in 2010, and 80MW in 2011, the government
aims to assist the soft landing of the market
as well as provide continuous support at the

FDI case study

Turnkey solutions for cell and module production processes are currently dominated by a
few providers from the U.S., Germany and Japan, with a relatively high entry barrier. For
this reason, a viable strategy for multinational companies seeking to expand their pres-
ence in the Korean market is to forge a strategic partnership with Korean companies that
have recently entered the PV parts business. A case in point is Germany’s Roth & Rau
which announced a joint investment plan with its Korean partner, Hydrogen Power, at the
2nd Korea Regional Investment Fair in July 2009. The joint project, with KRW160 billion
 Business Opportunities 28 29

Current Trend and Prospect of Korea’s PV Market

(Unit: MW)

Current Trends of Major Companies by Supply Chain

Index 09 10 11 Total Phase Major Companies
Feed-in-Tariff 50 70 80 200 p-Si OCI, Hankook Silicon, KCC (KAM), Woongin Poly Silicon

For Business RPS Trial Project (New) 21 32 49 102 Ingots

Siltron, Rexor, Neosemitec, Smartace, Woongjin Energy, Nexolon, Glosil
Subtotal 71 102 129 302
Wafers
Green Home,
Cells KPE, Millinet, HHI, Shinsung, Hanwha, STX, Korea Steel
For Households Local Dissemination, 27 30 33 90
General Dissemination
STX, HHI, LS, Dongyang Creditech, Symphony Energy, S-Energy, KD
Modules
Total 98 132 162 392 Solar, Unison, Solartech, Solarworld Korea

Source: Ministry of Knowledge Economy

same time. With the adoption of the Renewable Portfolio Standard in

2012, if the mandatory quota of 102MW for the initial 3 years is distrib-
uted in advance, performance on early distribution will be given an
incentive in order to settle the Renewable Portfolio Standards system in
the market early on and to nurture a stable domestic market for PV.

Current trends and market prospects

Since OCI Company (former DC Chem) made inroads into the poly sili-
con sector (poly silicon is used as feed stock), and began to implement
government policy tasks in 2006, other Korean companies have also
started to advance into every part of the value chain. Initially, the com-
panies began as small-and-medium-sized niche suppliers and then
expanded their business by integrating relative industries, eventually
having the capability for mass production. The recent trend in the
Korean PV providers is vertical integration by large corporations like
Samsung, LG and Hyundai Heavy Industries

(including KRW100 billion in FDI), plans to produce 48MW thin film solar cells from April
of 2010 at a 40,000m2 area within the Dalsung Industrial Complex in Daegu. This joint
effort represents an excellent example of cooperation in the Korean PV power market.
Germany’s Solarworld is also involved in the joint project to produce 240MW PV modules
with a goal to expand its capacity of 1GW modules, the largest volume by one production
site.
PHOTOVOLTAIC POWER GENERATION_CONTINUED

As of 2009, global supply of solar grade poly silicon is estimated to be

p-SI Capacity (2009-2012) (Unit: MT) around 59,000MT, about half of the global production capacity of
2008 2009F 2010F 2011F 2012F 128,000MT. However, due to the global economic recession, supply will
DC Chemical (OCI) 3,500 10,000 22,000 27,000 31,000 grow larger than demand by 10,000MT. In case of Korea, the supply of
KCC (KAM) 100 100 3,800 6,100 13,500 poly silicon by OCI and KAM until late 2009 is expected to be 10,100MT
HK Silicon 2,500 6,000 9,000 and in late 2010 when commercial production by Woongjin Polysilicon
Woongjin Polysillicon 4,700 5,000 6,800 and Hankook Silicon begins, the supply will rise to 33,000MT and
LG Chemical 5,000 10,000
88,050MT by late 2010 and 2012, respectively.
Samsung Petrochemical 3,000 9,000
Hanwha 750 3,750
As of 2008, Korea’s solar cell production accounted for about 1 percent
Innovation Silicon (UMG) 5,000
of the global total or 166MW, but will rise to 9.4 percent or 4.2GW as
Total 3,600Ton 10,100 33,000 52,850 88,050
large corporations in Korea such as LG, Samsung and Hyundai Heavy
Industries expand their facilities prior to 2012.

Capacity M/S (2010) Investment opportunities

The current Feed-in-Tariff program for photovoltaic generation that
features marginal and annual caps on total generation has served as
Woongjin
Polysilicon an obstacle for Korea’s photovoltaic industry, stalling growth potential.
HK 14%
Silicon
However, considering limitations in regard to available land in Korea,
8.0% the government is deliberating the possibility of further dividing base
prices into smaller sections according to the location of the installment,
KCC (KAM)
11%
shifting from the current base price structure which has 5 categories
according to capacity and also favors small capacity under the existing
DC Chemical (OCI)
67%
base price system for subsidies in photovoltaic generation. The new
system will favor not only small capacity but also building integrated
forms of photovoltaic generation. With such revisions, the rooftop
installations market which is linked to the 1 million green home con-
Source: Displaybank
struction project and the building integrated PV market will be further
expanded. In addition, the manufacturing of next-generation thin film
PV cells and equipment is seen as a more promising area for invest-
ment than the conventional crystalline silicone type PV parts and mate-
rials, given that Korea is a late comer to the PV market, and in regard to
the fact that Korea can make use of its accumulated know-how and
infrastructure in displays as well as in semiconductor manufacturing.

Prospects for Global Solar Cell Production for 2006-2012

Production Capacity (MW) Ratio (%)

Source: Ministry of Knowledge Economy Korea World Ratio


LOGISTICS INDUSTRY
Global trends
It is hard to define the current state of the
logistics industry since it is becoming global-
ized while at the same time becoming more
diversified. Yet, in terms of global container
cargo volume, the industry is projected to
reach 470 million TEUs in 2010, up from 320
million in 2000. Moreover, the logistics indus-
try is an attractive area for investment with its
high potential for profitability and growth.
With regard to port logistics, liner shipping
and unloading companies are accelerating
their expansion into the global logistics sector
and investment financial institutions are
actively engaged in M&A in this area. Global
Terminal Operators such as HPH (Hong
Kong) and PSA (Singapore), posted returns
on sales of 33 percent and 25 percent,
respectively, higher than the manufacturing
average of approximately 10 percent, which is
a testament to the strong growth of this
sector.
Global shipping companies like Maersk, APL,
NYK, K-Line, and MOL are making great
strides to become global 3PL providers
(third-party logistics) so as to secure signifi-
cant market share and strengthen sales
capabilities. This is in line with the trend that
shippers are focusing on their core capabili-
ties while having other business functions
taken care of by other parties, in order to
make their logistics services more sophisti-
cated. Over 90 percent of manufacturers in
Europe are now utilizing 3PL services, which
will certainly become an inevitable trend in
Korea. In this light, logistics services are
moving from the era of 3PL to 4PL.
Business Opportunities 30 31
Domestic trends
Cargo volume in Northeast Asia by key eco-
nomic players including Korea, China, and
Japan has continued on an upward trend with
an annual growth rate of 14.1 percent sup-
ported by the rapid surge of the Chinese
economy. Despite the current global eco-
nomic slowdown, the strategic value of the
Northeast Asian market is still high from a
mid- to long-term perspective.
Against this backdrop, policies are being pro-
moted to attract more cargo by creating adja-
cent clusters at an earlier point as well as
attracting foreign logistics companies around
major stronghold ports including Busan Port,
Gwangyang Port and Incheon Port.
The number of logistic service providers reg-
istered in Korea was 65,469 as of 2005, the
Night view of Busan Port
Joint Investment Project for a Tank Terminal by Germany’s Oil Tanking within
the Yeosu National Industrial Complex
The project kicked off after a joint venture contract was signed among the
following 3 parties: the Korea National Oil Corporation, ”O” the world’s 2nd
largest oil tank terminal operation company, and a Swiss company “G” the
world’s largest oil trader in September 2009. An agreement was made to
construct a oil tank terminal with a storage capacity of 600 million barrels that
consists of 57 tanks over an area of 211,333m2 on a site owned by the Korea
National Oil Corporation within the Yeosu National Industrial Complex.
The volume of foreign direct investment is estimated at US$270 million as of
result of consistent annual growth of 5.6 per-
cent since 2001. Total revenues during the
same period were KRW66.1 trillion, a result
of 9.6 percent annual growth.

The volume of Korea’s logistic market is

expected to reach KRW119 trillion in 2010, up
from KRW97 trillion as of 2007. In line with
global trends, once the system for a compre-
hensive logistics industry is established in
Korea, the outsourcing rate, or the utilization
rate of 3PL will increase to the level of 70 per-
cent by 2010, up from 50 percent in 2007.

National basic plan & revision for
logistics
In June 2006, the Ministry of Construction and
Transportation revised the “Cargo Distribution
Promotion Act” and the “Distribution
Complex Development Promotion Act” into
the “Basic Act for Logistics Policy” and the
“Act for the Development and Operation of
Logistics Facilities” together with the former
Ministry of Maritime Affairs and Fisheries in
order to establish an integrated national
logistics policy implementation system. The
“Basic Act for Logistics Policy” will come into
effect from December 10, 2009.
According to the “Basic Act for Logistics
Policy”, the Minister of Land, Transport and
Maritime Affairs will also hold the post of
Chairman of the National Logistics Policy
Committee to facilitate the licensing of 3PL as
well as comprehensive logistic companies.
Businesses specializing in logistics will also
be nurtured. In addition, the management of
the logistics information network that was
dispersed by agencies and functions such as
by airports, railways, ports, and roads will be
integrated and linked, creating and activating
a comprehensive logistics information net-
work and a national integrated logistics data-
base by the Ministry of Land, Transport and
Maritime Affairs.
Investment opportunities
In order for Korea to become a global logis-
tics powerhouse, the government will contin-
ue to create global logistic hubs including air-
ports and ports for the purpose of generating
national wealth as well as improving the effi-
ciency of national logistics systems.
Furthermore, the government will carry on
with large scale investments to establish
high-tech logistic clusters. The operation of
port terminals and new constructions of ports
as well as core distribution centers within
logistic clusters represent promising areas
for investment. Furthermore, the logistics
Port of Gwangyang
industry has been designated as a growth
engine industry with plans to promote com-
prehensive logistic companies and a market
for 3PL, making its future also bright.
Lastly, the development of the oil logistics
industry has been selected as a major task by
the government. In this regard, major petro-
chemical clusters in Korea were designated
as oil logistics hubs for Northeast Asia to
attract leading oil logistics companies from
home and abroad. Therefore, increased
investment or new investments by global
companies are promising from the mid-long
term perspective.

2009. The real amount is expected to rise once construction starts in the
second quarter of 2010.
The project was made possible because the interests of the government and
related agencies coincided with those of the global companies. The
government and its agencies were committed to upgrading major Korean
petrochemical ports into oil logistics hubs in Northeast Asia while the global
companies were seeking a location to create a stronghold in the region. Fierce
competition is expected between the major investor “O” and its rival “V”, a
Dutch company, to secure a strategic base in the region. The project will
therefore make substantial contributions to the national economy as well as
serve to facilitate local business.
 Business Opportunities 32 33

REAL ESTATE DEVELOPMENT

ing and the property market is recovering.

Bird’s-eye view of Incheon Bridge
Due to the financial crisis, the global real
estate market is becoming more flexible. The
collapse of the investment banking sector, a
major player in project financing, an essential
part of development projects, is having a sig-
nificant impact on the new development
market. The implications are, in particular,
larger on the development of new property
rather than on the markets driven by domes-
tic demand such as housing and commercial
building and the SOC industry. However, as
economic conditions improve, the overall
property sector is expected to grow in a
stable manner. In addition, with the start of
long-term large-scale projects rather than
short term investment, the property market
has been gaining global interest
The Korean government has recently
announced a policy to ease regulations on the
property market and begun to sell non-per-
forming banks involved in real estate project
financing, which indicates that the financial
soundness of financial institutions is improv-
The OECD Composite Leading Indicators has
predicted that Korea, with a 3.5-percent
growth rate, will recover the fastest among
the 30 member countries (Korea actually post
the 2nd highest Q2 GDP growth among OECD
members at 2.6%). These positive signals
have helped restore investor confidence in
the Korean property market, which lead to 3.7
times higher returns in May 2009 compared
to the previous year. Such increases in
returns implicate that capital is flowing into
Korea due to growing foreign investment in
the country.
With economic recovery taking place faster
than the global average, Korea, which has a
stable market condition for property develop-
ment due to support from the central and
municipal governments, is emerging as an
important destination for investment in
Northeast Asia.
Commercial buildings
The commercial building sector in Korea
posts low vacancy rates. In case of A or pre-
mium–level buildings in Seoul, before the
financial crisis, vacancy rates hovered around
1.4-1.8 percent, and rose to 3-3.4 percent
during the crisis. In particular, the commer-
cial real estate market in Seoul has a supply
shortage and is shifting from short-term hit-
and-run to long-term trading in search of
profits, while equity ownership is replacing
sole ownership. Skyscrapers are enjoying
abundant FDI inflows and prominent exam-
ples are Parc1, now under construction, in
Yeouido, SIFC (Seoul International Finance

AMEC
AMEC, a global project development and construction giant headquartered in
London, U.K., is the primary contractor for building the Incheon Bridge. This
bridge project which will link the Incheon International Airport with Songdo
International City and Gyeongin Expressway - a total distance of 21.5 km -
entered the initial construction phase in 2005 and is scheduled for completion
in Oct. 2009. AMEC signed a memorandum of understanding (MOU) with the
Korean Ministry of Finance and Economy (the current Ministry of Strategy and
Center) and Incheon Tower soon to be built in as such in 2007, is set to host bio, R&D, and accordance with their own regional charac-
Songdo. auto parts centers in order to evolve into a teristics. Such development trends have
world class cluster of high-tech industries. become prevalent in Northeast Asia, espe-
SOC (Social Overhead Capital) The Daegu-Gyeongbuk FEZ aims to become cially in Japan, Korea and China. For Korea,
projects a cluster for the textile industry, while also the country needs to consider the regional
After the Korean government announced its providing a base for fashion, education and characteristics and related industries in order
balanced development policy for the nation, components·materials. Other FEZs like that to attract investment.
municipal governments began to support in Saemangeum, will strive to construct a
investment in the SOC sector. Korea’s total business complex for the high-tech and
SOC stands at 70 percent of the OECD aver- leisure·tourism industries.
age and a mere 50 percent in railroads. In
terms of water resources, although the coun- The Leisure Corporate City Project is now
try’s SOC is currently around 1 percent, it will under way in two areas including Taean and
gradually increase as the government pur- Yeongam. When complete, these areas will
sues the four river restoration project. A rail- support the culture, tourism and leisure
road project that connects the metropolitan sports industries, valuing them as future
and peripheral areas will be completed by growth engines. Corporate city projects are
2012 under a BTO (Built-Transfer-Operate) being conducted in Wonju, Cheongju and
system. When it comes to land bridge pro- Muan. Aside from these projects, each
jects, the project that links islands in South municipal government is also carrying out
Jeolla Province is in motion under BTO. projects of their own, while some are
attempting to establish innovative cities in
Large-scale development projects
Among real estate development projects,
most attention is concentrated on regional
development projects with high potential and
massive government support. Currently,
there are large-scale projects underway such
as Free Trade Zones (FTZ), Leisure Corporate
City, Corporate City and Jeju Special Self-gov-
erning Province Development Projects.
Regarding Free Trade Zones, three sites
including Incheon, Busan·Jinhae, and
Gwangyang were designated to conduct
international trade and projects aimed at
attracting investment for logistics-based
cities. Unlike the existing port-type FEZ, the
Yellow Sea Free Economic Zone designated
Aerial view of the future Taean Tourism and Leisure City

Finance) in 2005, placing it in charge of the development of the international

business zone situated to the north of Incheon International Airport. The
International Business Zone, upon its completion in 2010, will include among
its environs an international business complex, hotels, performance venues, a
water park, upscale residential buildings and international schools.
 Business Opportunities 34 35

Invest KOREA

Introduction Office of the Investment World Association of Investment Promotion

Invest KOREA, established in 2003, is the gov-
ernment organization officially charged with
attracting foreign direct investment into
Korea. With its head office located within the
KOTRA building, Invest KOREA provides a
comprehensive suite of one-stop services to
meet the diverse needs of foreign investors
ranging from investment and incorporation
consultation to information on available
incentive programs, assistance with the
selection of plant sites and license and permit
applications, and other formalities, as well as
practical support related to living in Korea not
to mention post-investment support - all of
which are intended to help speed up the
process of adaptation and settling in for for-
eign investors.
Project manager (PM) system
Invest KOREA assigns a project manager to
each of the foreign companies it assists in
order to offer more personalized service
throughout the entire process of investing in
Korea, from investment consultation to the
issuance of business licenses and permits,
the launch of operations, and post-invest-
ment management. Currently, around 100
such project managers are working with for-
eign direct investors in various stages of
investment to facilitate the process and
ensure that all the benefits for which they
may be eligible are being taken advantage of.
Project managers receive continuous in-ser-
vice training to update their skills, and new
project managers are regularly recruited to
expand Invest KOREA’s service capability.
Ombudsman (OIO)
Established in the KOTRA in accordance with
the Foreign Investment Promotion Act of
1998, the Office has helped resolve practical
and administrative difficulties encountered by
foreign-invested firms in Korea. The
Ombudsman, the head of the organization
who is appointed by the President of Korea,
works in close cooperation with a team of
‘Home Doctors’, namely specialists in the
various fields relevant to foreign investment
who are mandated to help find solutions to
the problems investors face. When deemed
necessary, the Investment Ombudsman
introduces changes to the government’s
basic foreign investment policy or investment
systems, proposes them to the Foreign
Investment Committee, the highest decision-
making body. By working closely with FDI
policymakers, the Ombudsman’s office has
successfully intervened on behalf of many
foreign companies in Korea. The Office of the
Investment Ombudsman’s impressive track
record in assisting investors has earned it the
Best Post-Investment Service Award by the
Agencies (WAIPA), presented during the
Geneva conference in March 2007.
Invest Korea Plaza (IKP)
Invest Korea Plaza is a business incubation
facility dedicated exclusively to foreign
investors located within a state-of-the-art
intelligent building. As this building is just a
stone’s throw away from KOTRA headquar-
ters, where Invest KOREA’s offices are locat-
ed, tenants of IKP have access to the compre-
hensive services including feasibility studies
and consulting services provided by Invest
KOREA’s staff of experts in addition to repre-
sentatives seconded from Korean ministries
and administrative sectors. Meanwhile, the
Investor Support Center (ISC) within IKP pro-
vides settling-in support to foreign investors
and their families to help facilitate the transi-
tion process.

Invest Korea Plaza and the KOTRA building in which Invest KOREA is located

“Invest KOREA is an essential organization to know when

doing business in Korea. The staff is very friendly, knowledge-
able and professional. They have been a remarkable organi-
zation for investors solving hundreds of problems each year.
It’s very clear that Invest KOREA is a real benefit not only to
investors but to the entire community as well.”
Terry Tuharsky, former Chairman, Canadian Chamber of Commerce in Korea
Invest KOREA’s Global Network
39 Korea Business Centers Supporting Foreign Investors Worldwide

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English