BT GT NT Industry in Seoul

BTGTNT INDUSTRY IN SEOUL
SEOUL METROPOLITAN GOVERNMENT

ENGLISH
Contents
BT Industry 06
TheGlobalBiotechnologyIndustry 07
OverviewoftheKoreanBiotechnologyIndustry 09
MarketSizebySector 11
MajorIndustrysMarketTrend 12
IndustryOutlookandInvestments 14
BTLaborForce 16
GovernmentSupport 17
Competition 18
TheBiotechnologyIndustryinSeoul 20
SeoulsBTStrategy 21
SuccessStory:NovartisKorea 22
LaborCostofBTIndustry 23
DistributionofBiotechnologyCompaniesinSeoul 24
DigitalMediaCity 25
MagokDistrict 27
BT
GT Industry 32
GlobalGTIndustry 33
KoreasGTIndustry 34
IndustryTrend 35
GTFieldsGivenPrioritybythe
SeoulMetropolitanGovernment
39
ForeignInvestmentinGTIndustry 39
MagokDistrict 40
Nano Industry 42
KoreasNanoIndustry 43
SeoulsNanoIndustry 44
GovernmentSupportPolicy 44
NewGrowthEngineHopeFund 45
GongneungDistrict 46
MagokDistrict 48
GT
NT
Incentives for the BTNTGT Industry 50
TaxReduction/Exemptionfor
Foreign-InvestedCompanies
51
Foreign Investment Process 56
BusinessActivitiesofForeign
CompaniesinKorea
57
ForeignDirectInvestmentProcess 58
Foreign Investment Incentives 60
LandSupport 61
TaxSupport 61
CashGrant 62
OtherSupport 62
ForeignInvestmentIncentives 63
Support Organizations 64
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Industry Overview
The Global Biotechnology Industry
The global biotechnology market is expanding at
a double-digit growth rate thanks to countries
focusing their investments in biotechnology as the
national strategic sector. This trend is expected
to last for some time, as is continued growth with
committed investments.
The biopharmaceutical market, which accounts for most of the biotechnology market, is expected to reach
USD 189 billion by 2016, growing at a compound annual growth rate (CAGR) of 7.1% from 2009. Global sales
from the United States and Europes antibody drugs take up 51.7% and 34.8%, respectively, adding up to
86.5% and a majority of the global market. Europe has officially announced the Antibody Biosimilar Guideline,
implying its commercial feasibility, which, in turn, will trigger global competition for the biosimilar market.
Biotechnology Industrys World Market Outlook
World market (100M USD) CAGR(%)
2005 2010 2015 2020 2005~2010 2010~2020 2005~2020
721 1,642 3,714 5,179 17.9 12.2 14.1
Source: 2010 Statistical Report on the Korean Biotechnology Industry; Korea BT Industry Association
Antibody Drug Market Share
U.S. Europe Japan ROW Total
Market share 51.7 34.8 5.8 7.7 100.0
Source: Hospira, Shinyoung Securities
(Unit: %)
BT Industry
BTGTNT INDUSTRY IN SEOUL / SEOUL METROPOLITAN GOVERNMENT
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Biotechnology World Competitiveness Ranking Overview of the Korean
Biotechnology Industry
Biotechnology (BT) is a technology-intense, value-
adding industry with a high proportion of research
and development (R&D) which requires original
technologies. It is an industry many countries have
adopted as their next growth engine, and governments
have implemented policies to support and foster it.
Korea enacted the Life Science Support Law in 1983
and implemented various policies to develop the BT
industry. Due to aggressive government policies,
world-class technology developments, growing
medical demand driven by an aging population and
increased market demand in biogenerics, Koreas
BT industry is growing continuously. Its production
market (local sales + export) reached USD 2.9 billion
in 2006 and grew at an average annual rate of 18.2% to
reach USD 5.6 billion in 2010.

18.2%
10.8%
9.9%
9.8%
7.9%
5.5%
5.0%
4.5%
4.2%
3.1%
3.0%
2.9%
2.6%
2.5%
2.5%
2.4%
2.4%
1.6%
0.9%
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Ranking Score
30.11
29.26
28.63
28.52
28.41
27.90
26.75
26.66
23.60
39.04
31.85
Koreas BT Industry Market Size by Production (2006-2010)
'%%+ '%%, '%%- '%%. '%&%
'%%+ '%%, '%%- '%%. '%&%
CAGR 18.2%
CAGR 15.0%
AdXVa HVaZh :medgi AdXVa EgdYjXi^dc IdiVa
AdXVa HVaZh >bedgi AdXVa 9ZbVcY IdiVa
1,633
2,204
2,354
2,624
2,851
3,352
CAGR 15%
4,083
5,087
5,560
2,477
2,945
3,389
3,824
4,330
3,083
1,219
844
1,633
2,024
2,354
2,624
3,083
921
1,035
1,200 1,247
1,328
1,718
2,463 2,477
(Unit: million USD)
Source: Scientific American
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Market Size by Sector
Supply and demand in Koreas BT industry is as follows in the table. The pharmaceutical and food industries
in 2010 accounted for approximately 77% of the market, followed by the chemical and resource industries.
The pharmaceutical industrys market share grew to 49.2% in 2009 from 38.6% in 2006, while the bio-food
industry in the same period decreased from 43% to 27.7%. Clearly, technology-intensive industries like the
biopharmaceutical industry are taking a bigger share of the production.
Local demand in Koreas BT industry reached USD 2.5 billion in 2006. Growing at an average annual rate of
15%, it reached USD 4.3 billion in 2010. Creating about 22,000 jobs, the BT industry became one of Koreas
major industries.
In addition, the Korean government and consistent
corporate investment in BT R&D are paying off,
producing notable research results that are
receiving worldwide attention. In particular, the
bioenergy industry, which grew more than 50% year
over year, resource industry, biochemical industry
and bioelectronics industry will lead BT growth in
the coming years in local demand and the export
market.
Koreas BT Industry Market Size by Demand (2006-2010)
(Unit: million USD)
(Unit: million USD)
Koreas BT Production Size by Sector
2006 2007 2008 2009 2010 Growth rate
Pharmaceutical 1,101 1,521 1,827 2,249 2,184 19.67%
Food 1,227 1,188 1,224 1,407 2,138 14.85%
Chemical 183 211 250 298 569 42.19%
Environment 147 181 193 206 100 -6.39%
Bioassay/ Bioinformatics 88 99 226 308 146 13.18%
Others 105 152 351 364 423 60.57%
Total 2,851 3,352 4,071 4,832 5,560 19.00%
2006 2007 2008 2009 2010 Growth rate
Pharmaceutical 1,543 1,857 2,085 2,289 2,410 11.24%
Food 320 357 392 465 923 37.69%
Chemical 202 247 287 336 302 9.90%
Environment 147 179 186 198 97 -6.80%
Bioassay/ Bioinformatics 78 91 117 127 122 11.28%
Others 187 215 321 409 476 30.91%
Total 2,477 2,946 3,388 3,824 4,330 14.96%
Koreas BT Demand by Sector
'%%+ '%%, '%%- '%%. '%&%
'%%+ '%%, '%%- '%%. '%&%
CAGR 18.2%
CAGR 15.0%
AdXVa HVaZh :medgi AdXVa EgdYjXi^dc IdiVa
AdXVa HVaZh >bedgi AdXVa 9ZbVcY IdiVa
1,633
2,204
2,354
2,624
2,851
3,352
CAGR 15%
4,083
5,087
5,560
2,477
2,945
3,389
3,824
4,330
3,083
1,219
844
1,633
2,024
2,354
2,624
3,083
921
1,035
1,200 1,247
1,328
1,718
2,463 2,477
(Unit: million USD)
'%%+ '%%, '%%- '%%. '%&%
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14%
29%
2%
6%
19%
34%
1%
8%
65%
8%
3%
1%
1%
Antibiotics
Antibiotics
14%
Others
Others
6%
3%
17%
12%
10% 49%
12%
Anti-Cancer
Anti-Cancer
19%
Vaccine
Vaccine
34%
Hormone
Hormone
8%
Blood Product
6%
Diagnostic Kit
Diagnostic Kit
8%
Diag Veterinary
Drug
Diag Veterinary
Drug
4%
Alternative Treatment
3%
Immune System
Immune System
1%
1,227
320
1,188
357
1,224
393
1,407
465
2,138
923
6%
Blood Product
Others
Feed-additive
Food-additives
Functional foods
Functional foods
Food-additives
Fermented food Fermented food Feed-additive
Others
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'%%+ '%%, '%%- '%%. '%&%
14%
29%
2%
6%
19%
34%
1%
8%
65%
8%
3%
1%
1%
Antibiotics
Antibiotics
14%
Others
Others
6%
3%
17%
12%
10% 49%
12%
Anti-Cancer
Anti-Cancer
19%
Vaccine
Vaccine
34%
Hormone
Hormone
8%
Blood Product
6%
Diagnostic Kit
Diagnostic Kit
8%
Diag Veterinary
Drug
Diag Veterinary
Drug
4%
3%
Immune System
Immune System
1%
1,227
320
1,188
357
1,224
393
1,407
465
2,138
923
6%
Blood Product
Others
Feed-additive
Food-additives
Functional foods
Functional foods
Food-additives
Others
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Major Industrys Market Trend Bio-Food Industry
Koreas bio-food industry, as well as that of Europe, Japan and the U.S., is in its developing stage, with the
number of patents rapidly increasing. The fast-growing market was valued at USD 2.1 billion in Korea in 2010,
with an annual growth rate of 14.8% from USD 1.2 billion in 2006. Until 2009, the industry was stagnant in the
USD 1.4 billion range. But it grew by a dramatic 51% in 2010 and has since shown rapid growth.
In 2010, the feed additive sector accounted for the majority of Koreas bio-food industry, at 49%. It was followed
by food additives, health food, etc. Koreas bio-food industry, along with Japans, leads that of Europe and the
United States in number of patent applications and is expected to continue showing solid growth.
'%%+ '%%, '%%- '%%. '%&%
14%
29%
2%
6%
19%
34%
1%
8%
65%
8%
3%
1%
1%
Antibiotics
Antibiotics
14%
Others
Others
6%
3%
17%
12%
10% 49%
12%
Anti-Cancer
Anti-Cancer
19%
Vaccine
Vaccine
34%
Hormone
Hormone
8%
Blood Product
6%
Diagnostic Kit
Diagnostic Kit
8%
Diag Veterinary
Drug
Diag Veterinary
Drug
4%
3%
Immune System
Immune System
1%
1,227
320
1,188
357
1,224
393
1,407
465
2,138
923
6%
Blood Product
Others
Feed-additive
Food-additives
Functional foods
Functional foods
Food-additives
Others
Koreas Biopharmaceutical Market by Sector 2010
Local Market Korean Market Export Market Export Market
Koreas Bio-food Market by Sector 2010
Bio-food Industry Market in Korea (2006-2010)
(Unit: million USD)
Biopharmaceutical Industry
With the growing popularity of health-conscious
lifestyles, the synthetic drug market is on a decline. And
with the KFDAs new, strict drug-approval policy, the
biopharmaceutical industry is gaining attention. In 2011,
the government implemented a biopharmaceutical safety
management policy and is working now to pass related
policies. The biopharmaceutical industry, in terms of
production, recorded USD 1.1 billion in 2006. At an annual
average growth rate of 18.7%, it grew to USD 2.2 billion in
2010.
According to various biopharmaceutical industry outlook
reports, the monoclonal antibodies area is expected to
grow most rapidly. Previous biopharmaceutical products
such as interferon erythromycin are forecast to stagnate
or slightly decline. Meanwhile, in Koreas local and export
markets, vaccines accounted for the largest share with
24% and 34%, respectively. Blood products followed in the
local market and cancer drugs and antibiotics followed in
the export market.
2012 2013 2014 2015 2016 2017 2018
55~59 3,233 3,449 3,658 3,830 3,968 4,069 4,118
60~64 2,330 2,410 2,528 2,711 2,923 3,128 3,338
65~69 1,841 1,903 1,989 2,071 2,141 2,211 2,289
70~74 1,622 1,653 1,658 1,654 1,658 1,688 1,749
75~79 1,180 1,226 1,269 1,306 1,347 1,394 1,424
80~ 1,100 1,180 1,263 1,350 1,438 1,526 1,612
Total 11,306 11,821 12,365 12,922 13,475 14,016 14,530
Rate of increase 12.6% 17.7% 18.6% 22.8% 22.4% 17.9% 19.7%
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Industry Outlook and Investments
Industry Outlook
The BT industry will show solid growth due to many factors including the increase in medical demand due
to an aging population, government support of bio-star projects and dedicated corporate investments in BT
as a future growth engine. Also, many biopharmaceutical patents are expiring, which will positively impact
the currently growing biogeneric market. As of 2011, the BT industry expects revenue from many biosimilar
developments, the commercial launch of stem cell treatments, the clinical trial phase of therapies derived
from embryonic stem cells and the beginning of U-healthcare services.
Industry Investment
The government of Korea, conglomerates and pharmaceutical companies recognized the BT industrys
growth potential and invested significantly in it until 2008. But in 2009, due to the global recession, capital
expenditure decreased, causing a reduction in overall investment. Nonetheless, investments in R&D have,
instead of withering, slightly risen. In addition to direct investment in R&D, alternative investments such as
equity investments in bio-venture companies and the establishment of dedicated research centers have led to
the commercialization of Korean pharmaceutical products.
2005 2006 2007 2008 2009
IdiVa 86E:M G9
2,000
4,000
6,000
8,000
10,000
12,000
(Unit: million USD)
BT Industrys Investment Trend
Source: Korean Statistical Information Service
(Unit: person)
Demographic Trend
&.,% &.,* &.-% &.-* &..% &..* '%%% '%%* '%&%
8.1% 8.3%
9.1%
10.0%
11.4%
13.6%
15.5%
18.1%
21.6%
34.7%
11,091
/
29.9%
9,584
35.4%
11,329
Elderly Population Ratio
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BT Labor Force Government Support
In 2010, the BT industrys labor force consisted of 918 companies with 32,004 total employees, or about 35
people per company. Employee breakdown was as follows: production staff, 11,329 people (35.4%); research
staff, 11,091 people (34.7%); and sales / management personnel, 9,584 people (29.9%).
In 2010, the government established a guideline for
antibody and biosimilar products. The Ministry of Health
and Welfare and Ministry of Knowledge Economy are
actively investing in the biotechnology area. Active
government involvement is expected to alleviate some
of the industries difficulties by, for example, supporting
those who cannot commercialize a product despite
developing blockbuster candidates due to the absence
of clinical trials.
BT Labor Force Breakdown 2010
&.,% &.,* &.-% &.-* &..% &..* '%%% '%%* '%&%
8.1% 8.3%
9.1%
10.0%
11.4%
13.6%
15.5%
18.1%
21.6%
34.7%
11,091
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9,584
35.4%
11,329
Source: Korean Statistical Information Service
(Unit: number of people, %) BT Industry Breakdown by Sector and Type of Degree
Phd Master Bachelor Others Total
Industrial
composition
Pharmaceutical 741 2,358 4,935 4,557 12,591 39.3
Food 407 1,287 2,738 2,829 7,261 22.7
Chemical 394 2,099 1,851 1,897 6,241 19.5
Bio process /equipment 46 269 502 334 1,151 3.6
Others 284 1,093 1,953 1,430 4,760 14.9
Total 1,872 7,106 11,979 11,047 32,004 100
BT Industrys Government Support Policy
2009
The Ministry of Knowledge Economy announces biosimilar and other short-term
commercialization projects and allocates USD 171 million
The government allocates USD 27 million on new growth engine smart projects
2010
20-30% of tax credit in new growth and original technology R&D
Government and private companies will invest USD 1 trillion in matching funds to
develop at least 10 blockbuster drugs
The Ministry of Finance and Strategy will support bio and new drug development with
USD 100 million
Small & Medium Business Administration will increase BT support to USD 72 million
The Ministry of Knowledge Economy announces comprehensive biosimilar roadmap to achieve
USD 20 billion in production and USD 10 billion in export, and to create 120,000 jobs by 2020
Source: Respective Press Release, KiwoomSecurities Research Center
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Competition
The number of Korean biotechnology companies is growing along with the global BT industry, which is acquiring the
fundamental technology of the bio-food sector and creating high added value for the biopharmaceutical industry.
But Korean companies are small and the absolute market size is not as big as that of developed countries.
Recently, conglomerates have been expanding into the BT industry, as shown below.
Conglomerates Expanding into BT industry
BT Companies by Sector
Seouls Clinical Trial Centers
Center Main area
Asan
Medical Center
Collaborating with Parexel to build foundation for
clinical trial research platform (Feb. 2012)
Parexel, the worlds biggest CRO, selected Asan
Medical Center as its frst partner in Asia
Samsung
Medical Center
Samsungs platform for BT
Established the Samsung Cancer Research Center
in 2008, invested USD 22 million to build new drug
development platform within the center.
Basic study and clinical trial taking place
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The Biotechnology Industry in Seoul Seouls BT Strategy
On the other hand, if analyzed on the basis of a Profit/
Loss (P/L) structure, in terms of companies that have
broken even and were established at least 10 years
ago, Seoul takes the number one position, with 19%
of the companies.
In April 2011, Seoul Metropolitan Government signed
an MOU for Mutual Cooperation in Biotechnology and
Cutting-edge Technology with Massachusetts, the
home of the Boston Bio Cluster, one of the worlds top
three bio clusters, to share BT industry development
know-how and exchange information on the intensive
cultivation of the BT industry.
Seoul Metropolitan Government makes long-term
investments in emerging small bio ventures and
medicine companies with the aim of nurturing
globally competitive bio star enterprises and creating
sustainable, high quality jobs.
Seoul has a KRW100 billion (appx USD 90 million) bio investment fund, and as of July 2012, six companies have
received investments. Further investments will be made in prominent biotech companies.
Investment by Biomedical Funds(as of July 2012)
Industry Investment
Kang Stem Holdings Stem Cell Medicine GMP facility, clinical trial, R&D
Earlogic Korea Hearing Diagnostic Manufacturing diagnostic equipment
Crystal Genomics Inc. New Drug Development New drug development cost
PCL Inc. Vitro Diagnostic Reagent Operation cost and product development
Pathway Genomics Personal genetic reports Operation cost and marketing cost
Pharmapcine Antibody New Drug Product development, patent cost
Koreas BT Industry by Province
Seoul
Gyeong
gi
Busan
In
cheon
Daegu Gwangju
Dae
jeon
Ulsan
Gang
won
Chung
cheong
Jeolla
Gyeong
sang
Jeju
Biopharmaceuticals 65 139 4 6 9 2 19 11 47 10 9
Biochemistry 23 39 3 2 2 1 31 2 7 28 13 20 5
Bio-foods 18 53 8 5 3 2 4 19 39 12 33 7
Bio environments 5 23 2 4 1 3 3 4 6 6 6 2
Bioelectronics 8 6 3 5 1
Bio-processes and
equipment
17 25 1 2 7 1 3 1
Bioenergy and
resources
5 1 2 2 1 1 1
Bioassay /
Bio-informatics
27 15 1 1 5 2 2 2
Total 163 305 16 16 21 7 74 5 47 128 44 72 15
(Unit: number)
Of the nations 913 BT companies, 163 are in Seoul, and this figure follows Gyeonggi Provinces 305 companies.
About 50% of Koreas 55 bioassay and bio-informatics services companies, or 27, are in Seoul. As for the
bioelectronics industry, 17 out of 23 companies are concentrated in Seoul.
Distribution of Biotechnology Companies in Korea
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Labor Cost of BT Industry
Success Story : Novartis Korea
Salary Range (Unit: USD)
(Unit: USD) (Unit: USD)
(Unit: USD)
6kZgV\ZHVaVgn
27,681
Industry
Average
Junior
colleges
Universities Masters
degree courses
PhD courses
Company 1
Company 1: Yuhan Corporation
Company 2: KCC / Company3: Dongwoo Fine-Chem
Company 2 Company 3
7diidbFjVgiâZ
15,903
IdeFjVgiâZ
42,987
1,0000
2,0000
3,0000
4,0000
22,500
22,572
28,384
32,139
39,025
27,076
23,646
24,368
0
6kZgV\ZHVaVgn
27,681
Industry
Average
Junior
colleges
degree courses
PhD courses
Company 1
Company 2 Company 3
7diidbFjVgiâZ
15,903
IdeFjVgiâZ
42,987
1,0000
2,0000
3,0000
4,0000
22,500
22,572
28,384
32,139
39,025
27,076
23,646
24,368
0
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27,681
Industry
Average
Junior
colleges
degree courses
PhD courses
Company 1
Company 2 Company 3
7diidbFjVgiâZ
15,903
IdeFjVgiâZ
42,987
1,0000
2,0000
3,0000
4,0000
22,500
22,572
28,384
32,139
39,025
27,076
23,646
24,368
0
Industry Annual Starting Salary for
University Graduates
Annual Salary by Degree
Starting Salary of University
Graduates for Top 10 Industries
1. GSK 33,393
2. Polyol 32,491
3. Astra Zeneca 31,769
4. Pfizer 31,588
5. Hanil Cement 30,686
6. Isu Chemical 30,505
7. Dong-A 29,874
8. Donghae Pulp 29,783
Financial Status
Novartis Korea, established in 1984, is a generic drug subsidiary of the global drug company Novartis.
The company supplies generic drugs such as anti-cancer drugs and injectable drugs. The companys
revenue is posting rapid growth each year.
Potential of Korean Market (Peter Yager, CEO of Novartis Korea)
Outstanding Human Resources
Having outstanding human resources is also a main strength of Novartis Korea and the secret to its
success. According to Novartis Koreas observation, Koreans value national success as well as per-
sonal success, are passionate about education, and are highly competitive.
Potential of the Korean Market
Behind the continued growth of Novartis Korea lies the potential of the Korean market. Koreas drug
market is the 12
nd
largest in the world and has become one of the most important markets in Asia. It
has also caught the attention of Novartis as one of five emerging growth markets (EGM), primarily
because the country is experiencing faster onset of an aging population compared to other countries
such as Japan.
As 99% of Koreans are covered by health insurance, we expect that the demand for high quality drugs
will increase as the nations medical services grow and develop in line with the rapid pace of ageing
population. Koreas drug market particularly has the outstanding potential in innovative new drugs and
R&D, as the market is divided into new drugs produced by global drug companies (35%) and generic
drugs (65%).
0
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Distribution of Biotechnology Companies in Seoul
17.8% of all biotechnology companies in Korea are located in Seoul, mainly in Dongdaemun-gu,
Seongdong-gu, Gangnam-gu and Geumcheon-gu.
The DMC, or Digital Media City, is an advanced digital media
entertainment(M&E) cluster currently under construction
in the Sangam Zone on a 569,925m
2
site in Northwestern
Seoul. The project is led by the Seoul Metropolitan Govern-
ment and is scheduled for completion in 2015. At present,
350 advanced M&E and IT businesses are located and over
25,000 people work in the DMC. By 2015, over 600 busi-
nesses will have been operating there with at least 60,000
employees working there.
.BHPL
Seoul City Hall
16.34km(29minutes)
Incheon International
Airport
46.05km(47minutes)
Gimpo Airport
6.43km(20minutes)
Seoul City Hall
10.36km(20minutes)
Airport
40.10km(46minutes)
Gimpo Airport
12.46km(20minutes)
%.$
Location Land Development Area, Sangam New Millenium New City, Mapo-gu, Seoul
Area 569,925m
2
(Business Area : 335,134m
2
/ Public Area: 234,791m
2
)
Period 2002~2015
Developer The Seoul Metropolitan Government
Target industry
Media industry including broadcasting, movies/animation, games, music, digital
education and any businesses involved in R&D for entertainment-related technologies
or the production and distribution of digital content
Businesses distributing or consuming digital content
Software or other IT-related service businesses
IT, BT or NT R&D or manufacturing
Digital Media City
Overview
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Current Status of Businesses Operating in DMC
Industry Businesses
Game
Korea Game Developers Association, Korea Game Society, Neowiz ENC, Dongyang Online,
Gravity, E-mir Entertainment, Game Incubating Center, GeoInteractive, etc.
Broad-
casting
CJ Media, Gugak FM Broadcasting System, CJ TVN, KBS Media, KBS i, etc.
Movies MnFC, Korea Film Council, Visual Story Factory, Chungeoram, etc.
Internet Korea.com Communcation, Nemo Communcation, etc.
Telecom Pantech, LG Telecom, XeLine, etc.
IT Korea Honeywell, Woori Technology, LG CNC, KETI, etc.
BT Bioneer, I-Gene, Advanced Biotechnology, Ecowell, etc.
HW Fuji Zerox Asia Pacifc, PTE Ltd., SRC, Jooyon Tech Co., Ltd, etc.
SW Hyundai Card, Daesung Holdings, Esum Tech, HK e-Car, Site-On, etc.
Easy Access to Northeast Asian Markets
The DMC is accessible from Incheon International
Airport, the hub of East Asia, within 50 minutes
either by highway or express railway. A huge East
Asian market of 1.7 billion people can be reached in
just two hours from the DMC.
The Enormous Seoul Metropolitan Market
DMC is located in the middle of a huge market of
24 million consumers in Seoul and the surrounding
Gyeonggi Province, providing the best access to one
of the biggest domestic markets in the world
Cutting-edge IT Infrastructure
Citizens within the DMC complex can access the Internet free of charge through a wireless high-speed fiber
optic network anytime anywhere. The DMC is equipped with the worlds fastest high-speed telecom network
and IT infrastructure.
Benefts Available to Foreign Investors
Supply of Land _ Foreign investors are given additional points upon evaluation of their project plans.
Supply of Rental Offces _ Foreign businesses are eligible for low rates when renting offices from the Seoul
Metropolitan Government in venture business facilities, and are given priority in the assignment of office space.
Supply of Rental Housing _ The Seoul Metropolitan Government provides rental housing in convenient
locations for foreigners.
Benefts under the Foreign Investment Law _ Foreign investors based in foreign investment areas or
engaged in industry support services or high-tech industries are entitled to tax breaks (national and regional),
benefits in financing, and exemptions from fees according to the Foreign Investment Promotion Act and the
related city ordinances.
Long-term Land & Building Rents _ Foreign investment companies are entitled to rent land and/or buildings
at low rates for up to 50 years.
.BHPL
Seoul City Hall
16.34km(29minutes)
Airport
46.05km(47minutes)
Gimpo Airport
6.43km(20minutes)
Seoul City Hall
10.36km(20minutes)
Airport
40.10km(46minutes)
Gimpo Airport
12.46km(20minutes)
%.$
Location Magok-dong & Gayang-dong, Gangseo-gu, Seoul
Area 3,665,336m
2
Business
development
status
Dec. 2005 Announce Magok district basic development plan
2007 Public Announcement on district designation and development plan
2008 Announce development plan approval
Sep. 2009 Begin basic foundation construction
Oct. 2011 Announce Magok industry complexs preferred sale to leading companies
Sep. 2009 Announce 1st Magok industry complexs general sale (planned)
Investment
methods
Participate development program by purchasing land
Provide ITBTGTNT R&D related companies at construction cost price
Construct building or lease office after buying land
Overview
Located in southwestern Seoul, the Magok District is
an environmentally-friendly knowledge industry clus-
ter where cutting-edge technology industries using IT,
BT, GT and NT coexist with organizations specializing in
international business. It is a future-oriented town that
will connect Seoul to the rest of the world.
Magok District
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2 hours and 30 minutes from Magok to downtown Tokyo: Traveling on the Gimpo- Haneda route takes 1 hour 30
minutes less than the Incheon-Narita route.
2 hours and 20 minutes from Magok to downtown Shanghai: takes more than 1 hour less than when using the
Incheon-Pudong route.
Presently the international airlines from Gimpo International Airport includes Shanghai, Tokyo, Osaka (six flights
a day), having potential development into the center of business between Korea, China and Japan through the
establishment of a shuttle route between Gimpo and major Asian cities within 2 hours flight distance.
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Plan on Land Utilization
Type Development concept Site plan
Industrial
complex
(770,922m
2
)
To effectively foster knowledge-based compa-
nies, the complex clustered
research and education space so that each func-
tion can be fexibly connected
To facilitate industry wide convergence, mixed
legal land usage will be adopted to optimize
synergy between regions.
Create fve special clusters in Magok district to
perform industry specifc functions such as InT,
BaT, BmT, GeT
Business
district
(325,571 m
2
)
Create business center to serve as the North-
east Asian Economy Network Hub
Create high-tech business center
combined with a high-tech industrial cluster
Ensure quick and convenient access to transpor-
tation to the city and other
business hubs
For balanced regional development,
supply basic living facilities in the
south-west district
Core business district. Suggested tenants are
anchor business, high tech related business and
venture companies.
Developing underground space for business sup-
port function using the space created by subway
transfer platform
Aside from commercial function in the subway
transfer platform, add public administrative
service and cultural related facilities
Commercial
site
(148,187 m
2
)
Urbanize the area by placing
commercial entities in the station area
Create neighbor friendly facilities and commer-
cial district in line 5s Balsan Station area
Create special commercial functioning clus-
ter in subway line 9s Sinbanghwa Station and
Yangcheon-hyanggyo area
Residential
site
(612,620 m
2
)
Create neighbor friendly living facilities around
Magok high-tech area to maintain pleasant
residential living environment
Create extensive residential area in Balsan Resi-
dential District which is near the southern part of
Gonghangno
Develop Balsan Residential District in conjunc-
tion with the Agricultural and Marine Products
Wholesale Market which is situated near the
residential area
Accessibility
The Magok District is directly connected to Inchon International Airport and Gimpo International Airport through
the metropolitan road network. It is located at the heart of Northwestern Seoul. Subway lines 5 & 6 run through
the area, as does the railway to Inchon International Airport. Most notably, the area is right alongside Gimpo In-
ternational Airport, which covers all domestic flights plus flights to five Asian cities. All of the flight destinations
from Gimpo are within the single-day business range. Also, the Magok District is reachable from Beijing, Shang-
hai, Osaka and Tokyo within about two hours, surely making it one of the best locations in which to do business in
Northeast Asia.
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Types of Business in the District
High-tech Industrial Complex(770,922m
2
) : Priority is given to R&D companies specializing in IT, BT, GT and NT.
Business Complex(325,571m
2
) : Financing, insurance, convention, R&D, business services, telecom and
broadcasting
Major Companies that Will Move into the
Magok District
LG and Kolon are set to move into the zone
With the conclusion of agreements with the two out-
standing anchor companies, the reputation and val-
ue of the zone has been incontestably reconfirmed.
A great integration effect between the anchor com-
panies and SME venture businesses is anticipated.
The LG Consortium has presented its vision for a
next-generation convergence R&D hub, which will
become a next-generation growth engine. It has
confirmed the execution/implementation of a USD
3,610 million investment plan in the Magok District
by the end of 2012. The area secured by the LG con-
sortium occupies 58%, or 133,588m
2
of the total area
required. LG plans to conduct research and develop-
ment for next-generation growth engine businesses
here and to create a pan-business R&D center. The
Kolon Consortium has presented a business plan
focusing on water treatment, energy and biotechnol-
ogy. It will be based on an 11,729m
2
site.
Computer
Information Communication
Semiconductor
Information Processing
Nanosensor
Nanoelectronics
Nanophotonics
Nanocomputer
Nanobiosensor
Artifcial organs
Drug delivery
Bio body friendly material
Greenbio
Medical device
Healthcare
Biofuel
High-tech IT agriculture and
fsheries
Green technology industry
High value-added food industry
Nanomaterial
Nanodevice
Nanoprocess
Uni-material
Green production
Recycling resource
Ecosystem replication
IT
GT NT
BT
Convergence
Industry
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GT Industry
Global GT Industry
Global green technology (GT) industry has been
growing rapidly since 2000. The market size in 2007
was at USD 1.4 trillion and is estimated to reach USD
3.1 trillion by 2020. By regional market, as of 2010,
the United States, Japan and Western Europe were
the world's top three markets. But the Asian market,
excluding Japan, will grow at an average annual rate
of 8.3% until 2020, which makes it the market with
the highest growth rate.
'%%, '%'%;
3,100
1,400
'%%, '%'%;
3,100
1,400
CAGR 8.3%
Global GT Industry Market Outlook (2000-2020)
Source: KITA (Korea International Trade Association)
(Unit: billion USD)
GT Industry
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Koreas GT Industry
Koreas GT industry boasts annual production of USD 1.8 billion, USD 1.1 billion in exports and the generation of
9,000 jobs. This is at a global market share of only 1.4% and energy supply rate of 2.4%. Therefore, the government
plans to increase the renewable energy penetration rate to 11% by 2030. Currently, Koreas GT technology level
is about 50-85% that of the developed world and lacks basic technology and major components production
technology. This, in turn, requires imports of 75% for solar energy and imports of 99.6% for wind energy. To cope
with such external factors as the ratification of the United Nations Framework Convention on Climate Change and
high oil prices, the government and companies are making aggressive investments and the renewable energy
supply is steadily increasing. Government support for solar energy, wind energy and other renewable energy was
worth USD 106 million in 2003 and it rapidly increased to USD 704 million in 2009. Also, many energy-generation
sites were built, further fueling the industrys growth. In 2009, the renewable energy supply consisted of waste
management (74.9%), hydro-electricity (10%) and bio-thermal (9.5%). The ratio of energy from waste management
declined from the previous year and is gradually decreasing. Koreas ratio of renewable energy against fossil
energy is at 2.5% which is low compared to that of other developed countries such as Germany (10.0%), Denmark
(20.1%), France (8.1%), Spain (9.5%), Japan (3.4%) and the U.S. (5.7%).
Photovoltaic(PV) Market
Government policies on renewable energy recently
changed from the Feed in Tariff (FIT) under the
New and Renewable Energy Development, Usage,
Dissemination Promotion Act in 2005 to the
Renewable Portfolio System (RPS) in 2012. The RPS
mandatory rate will be 2.0% in 2012 and increase by
0.5% annually until 2016, after which it will increase
by 1.0%, reaching 10% in 2022. The government will
focus on fostering the PV market in the next five
years, as it is the least economically feasible. This
will help invigorate the PV market in Korea.
Note that the mandatory PV installation amounts
from RPS during 2012 to 2016 is greater than the
annual PV market (FIT) of 70-80MW estimated in
2010-2011. But the mandatory amount of 280MW
in 2016 is still lower than that of 2008, when FIT
was at its highest. In regards to RPS, the PV supply
certificate provider will be selected which will
provide the PV and related industries with positive
momentum.
Industry Trend
Renewable Energy Supply
2005 2006 2007 2008 2009
Supply 4,879.20 5,225.20 5,608.80 5,858.50 6,086.20
Supply ratio (%) 2.1 2.2 2.4 2.4 2.5
Solar heat 34.7 33 29.4 28 30.7
PV 3.6 7.8 15.3 61.1 121.7
Bio 181.3 274.5 370.2 426.8 580.4
Waste management 3,705.50 3,975.30 4,319.30 4,568.60 4,558.10
Hydro 918.5 867.1 780.9 660.1 606.6
Wind 32.5 59.7 80.8 93.7 147.4
Thermal 2.6 6.2 11.1 15.7 22.1
Hydrogen, Fuel cell 0.5 1.7 1.8 4.4 19.2
Source: Statistics Korea
(Unit: thousand toe)
Koreas Wind Energy Market Forecast with RPS
12F 13F 14F 15F 16F 17F 18F 19F 22F
Total Supply 490 500 509 517 527 533 537 546 553
RPS applied generation 448 460 474 480 502 507 511 519 526
Mandatory rate 2 2.5 3 3.5 4 5 6 7 10
RPS required generation 9 12 14 17 20 25 31 36 53
RPS required net generation 8 10 12 14 17 22 26 31 49
RPS wind generation 5 7 8 10 12 15 18 22 34
Required wind generation plant 2.40 3.20 3.84 4.57 5.44 6.90 8.34 9.88 15.66
Source: Korea Wind Energy Industry Association
The RPS system requires that by 2022, 49,749GWh (9.6%, excluding hydro and tide generation) of energy must
be produced by renewable technology. Wind energy is considered the most feasible choice because it can
produce energy in mass at an economical price. And with the concrete government plan for offshore wind
farms, wind energy will take more of the spotlight. Offshore wind energy costs on average 1.6 times more
than onshore energy, so differentiated support can be expected. The Korea Wind Energy Industry Association
presents the following industry forecasts with the RPS in effect.
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Wind Energy Market
Korea's wind power industry is relatively weak in terms of market size and
technological competitiveness. But the central and local governments plan
to build offshore wind farms to procure a large amount of renewable energy
and foster the domestic wind energy industry, while achieving technological
independence. Apart from Unison, Doosan Heavy Industries and Hyosung,
shipbuilding companies such as Daewoo Shipbuilding & Marine Engineering,
Hyundai Heavy Industries, Samsung Heavy Industries and STX Shipbuilding are
aggressively investing in wind energy and conducting R&D. With the current
investments, we can anticipate future global leaders in wind energy. Shipbuilders
have stayed competitive with rigorous R&D, capital expenditure and M&A and it is
relatively easy for shipbuilders to enter the wind energy market because turbine
technology resembles the propeller technology used in ships. As leaders in the
global market, Korean shipbuilders have a competitive edge to enter the wind
energy market and create a synergy between the two industries in a short period
of time.
(Unit: Twh)
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Water Treatment Market
In Korea, the top three companies dominate the RO
(Reverse Osmosis) filter market with 75% (Dow 35%,
Nitto Denko 25%, Toray 15%) of the market share,
forming an oligopolistic market, and Woongjin
Chemical holds 11% of the market. Many Korean
companies are in the water business but most are
investing in design, construction and equipment.
Kolon and Cheil Industries are investing in the
material sector but most are MF and UF filters, which
have low technical barriers. Practically none exist
in the RO filter area, which has high entry barriers.
Woongjin Chemical is the only company in Korea that
can produce RO filters, and profitability and technical
barriers are very high in the value chain, which offer
very attractive growth momentum for the company.
They are also expanding in MF and UF filters, which
means the filter business is expected to grow.
The government convened the 9th Green Growth
Committee in 2010 and announced the Water
Industry Development Strategy, which will create
37,000 jobs and develop original water technology
such as a state-of-the-art membrane filter, smart
water works and a total water solution providing
company. The strategy will also provide a platform
for overseas investment, to grow Korea as a strong
water industry nation.
Accordingly, by 2012, the Ministry of Land, Transport
and Maritime Affairs will operate the Seawater
Desalination Plant Center. The ministry will also
invest USD 138 million from 2006 to research and
develop RO material technology for desalinating
seawater, as it will take up 60% of the desalination
market.
Seoul, in accordance with national policy, seeks to
reduce greenhouse gas emissions. The "2030 Green
Design Seoul" plan has been established to support
GT industries and lead Seouls green growth. Also to
meet this goal, the Seoul Metropolitan Government
(SMG) has selected 10 GT areas that will have a direct
impact to promote low-carbon green growth policies.
The SMG will also provide USD 1.3 million in support
for Green Technology R&D of a distinctly Seoul style
to encourage research in universities, companies
and research institutions. And SMG created its own
fund, in the amount of USD 9 million, to invest in
to small and medium-sized companies engaged in
green technology. Focus areas for support include
renewable energy, green cars, LED and the green
building sector. Finally, the SMG will train 400 GT
specialists by 2014. The industry will focus on green
building, renewable energy, LED lighting and green
cars. With industry-academy specialists, the GT
industry will grow stronger, and sustainable growth
can be expected.
As of 2008, there were 160 foreign-invested companies in the GT industry and accumulated total investment
reached USD 685 million. In 2006, only USD 46 million (notification basis) was invested, but investments
reached USD 173 million in 2007 and USD 165 million in 2008, showing rapid increases.
GT Fields Given Priority by the Seoul Metropolitan Government
Foreign Investment in GT Industry
Foreign Direct Investment in the GT Industry (1975-2008)
Sector Number of companies Invested amount
Renewable energy (PV, wind energy and fuel cell) 32 241,951
Environment related (waste management, etc.) 73 195,770
Resource management (resource recycling, water supply, etc.) 55 247,010
Total 160 684,731
Source: KOTRA (INSC)
Environment-related foreign direct investment statistics have been collected since 1975.
(Unit: thousand USD)
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Overview
Located in southwestern Seoul, the Magok District is an
environmentally-friendly knowledge industry cluster where
cutting-edge technology industries using IT, BT, GT and NT
coexist with organizations specializing in international business.
It is a future-oriented town that will connect Seoul to the rest of
the world.
Magok District Accessibility
The Magok District is directly connected to Inchon International Airport and Gimpo International Airport
through the metropolitan road network. It is located at the heart of Northwestern Seoul. Subway lines 5 & 6
run through the area, as does the railway to Inchon International Airport. Most notably, the area is right along-
side Gimpo International Airport, which covers all domestic flights plus flights to major Asian cities. All of the
flight destinations from Gimpo are within the single-day business range. Also, the Magok District is reachable
from Beijing, Shanghai, Osaka and Tokyo within about two hours, surely making it one of the best locations in
which to do business in Northeast Asia.
2
2
broadcasting
Magok District
With the conclusion of agreements with the two outstanding an-
chor companies, the reputation and value of the zone has been
incontestably reconfirmed. A great integration effect between the
anchor companies and SME venture businesses is anticipated.
The LG Consortium has presented its vision for a next-genera-
tion convergence R&D hub, which will become a next-generation
growth engine. It has confirmed the execution/implementation
of a USD 3,610 million investment plan in the Magok District by
the end of 2012. The area secured by the LG consortium occupies
58%, or 133,588m
2
of the total area required. LG plans to con-
duct research and development for next-generation growth en-
gine businesses here and to create a pan-business R&D center.
The Kolon Consortium has presented a business plan focusing on
water treatment, energy and biotechnology. It will be based on an
11,729m
2
site.
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4FPVM(SBOE1BSL
:POHTBO
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(POHOFVOH
Seoul City Hall
10.36km(20minutes)
Airport
40.10km(46minutes)
Gimpo Airport
12.46km(20minutes)
Seoul City Hall
7.07km(17minutes)
Airport
53.63km(55minutes)
Gimpo Airport
17.99km(30minutes)
Seoul City Hall
16.34km(29minutes)
Airport
46.05km(47minutes)
Gimpo Airport
6.43km(20minutes)

Seoul City Hall

5.12km(15minutes)
Airport
57.29km(54minutes)
Gimpo Airport
21.49km(30minutes)
Seoul City Hall
13.25km(30minutes)
Airport
71.97km(77minutes)
Gimpo Airport
36.12km(54minutes)
Area 3,665,336m
2
Business
development
status
Oct. 2011 Announce Magok industry complexs preferred sale to leading companies
Investment
methods
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Nano Industry
Koreas Nano Industry
Korea's nanotechnology (NT) competitiveness ranks
fourth in the world. Nano-process, Nano-components
and system sectors have advantages compared to
other sectors. The R&D function of nanotechnologies
is carried out by institutes based in the Seoul metro-
politan area, Joongbu area (Gyeonggi-do, Gangwon-do,
the central region of Korea) and Yeongnam area (Gyeo-
ngsang-do, the southeastern region of Korea). In par-
ticular, diverse nanotechnology companies, including
university R&D centers and government R&D centers
throughout the metropolitan area form a nano-cluster.
Nanotechnology such as silver-nano and photo-cata-
lytic materials are used for household products com-
mercialized in the market. For industrial products, the
biggest market is related to semiconductor equipment.
More than 50% of the nanotechnology companies are in
the nano-material area, and Korea is the worlds fifth
most competitive and moving into a mature stage. The
nations technology level is at 60% that of developed
countries.
The future materials market is expected to expand
dramatically due to development in hybrid cars / air-
craft / wind turbines (light-weight composite materi-
als), smart textiles clothing (high performance, eco-
friendly materials), home networks (flexible display,
e-paper material), WIG wire (high-strength steel mate-
rial), artificial organs (biocompatible material) and so
forth. Multinational companies with nano-based inte-
gration technology will speed up to compete for market
domination
Nano Industry
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Seouls Nano Industry New Growth Engine Hope Fund
Government Support Policy
Seoul has quantitative and qualitative advantages in
nanotechnology and related technology research com-
petency. Thats why the city boasts a positive environ-
ment for achieving innovation through interdisciplin-
ary research in the development of fusion technology.
Seoul can create many urban public business opportu-
nities that need nanotechnology and related industries.
In terms of the nanotechnology development environ-
ment, Seoul has numerous related universities and
companies. Indeed, with its fertile network, Seoul is
competitive in terms of nanotechnology.
Seoul Metropolitan Government is planning to create its own version of the New Growth Engine Hope Fund
in the amount of USD 902 million to provide assistance to companies engaged in one of the eight new growth
engines such as IT, BT and GT; design and fashion industries; financial industries; and finally the tourism
industry.
According to the Seoul Economic Vision 2020 established in 2011, the Seoul Metropolitan Government plans
to promote more active participation in venture investments by the private sector that the city budget cannot
afford to support.
The government set forth the third phase of Nano
Technology Development Plan (2011~2020) to build
world class nano technology nation. With the results
from first and second phase of the development plan
the third plan will facilitate nano technology to cre-
ate future new industry.
Also in order to be the first mover and dominate the
market in the global nano convergence industry, the
government has established Nano Convergence In-
dustry Development Strategy (2009.3) and is carry-
ing out sub tasks to execute the strategy.
Especially, in order to secure original technology
patents in nano technology, the government has in-
vested USD 26 million in 2010 for continuing and new
projects. Also, nano convergence commercialization
R&D program is in effect by utilizing the nano ba-
sic technology capability. The government is setting
innovative system for sustained nano convergence
technology development to proactively create an
early market for future new industry market.
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.BHPL
Seoul City Hall
16.34km(29minutes)
Incheon International Airport
46.05km(47minutes)
Gimpo Airport
6.43km(20minutes)
(POHOFVOH
Seoul City Hall
13.25km(30minutes)
Incheon International Airport
71.97km(77minutes)
Gimpo Airport
36.12km(54minutes)
Gongneung District
Outlook
The Gongneung Future Industry Technology Complex is
a strategic project being promoted by the Seoul Metro-
politan Government to create a NT, IT R&D Complex and
a Subminiature Complex System Technology Develop-
ment Complex in the Gongneung area of northeastern
Seoul. The comprehensive complex is being built for the
purpose of developing NIT-related businesses, promot-
ing joint development with other industries, and creat-
ing a synergy effect across the overall industry.
Seoul Metropolitan Government aims at establishing an R&D network particularly in such areas as IT-NT con-
vergence, electricity, bio, nuclear and medical industries through technical development, human resources
development and industry-academia cooperation. Ultimately the city government pursues a greater balanced
development between its districts, while contributing to the technical development of the country through
the successful expansion of DMC. The Seoul Metropolitan Government plans to attract more than 50 global
enterprises with top notch technologies, create 2,000 jobs by 2014, train more than 200 personnel, and create
a USD 913 million market in the NIT parts and equipment industry.
Phase I
Location
Seoul National University of Science & Technology (83,905m
2
) at 172
Gongneung-dong, Nowon-gu, Seoul
Area
30,872m
2
(A 12-storey headquarters building with one basement foor &
two other buildings)
Project period 2004 ~ 2008 (5 years)
Clients
Seoul Metropolitan Government, Seoul Techno Park, KEPCO, Nowon District Offce,
the Ministry of Knowledge Ecnomy
Project contents Construction of NIT-related R&D centers and establishment of educational facilities
Phase II
Location KEPCO Central Education Institute (31.417m
2
) at 170-2 Gongneung-dong, Nowon-gu, Seoul
Building area 23,140m
2
(10 foors including the basement foors)
Project period To be completed in 2014
Clients
Seoul Metropolitan Government, SeoulTechnoPark. KEPCO, Nowon Disrict Offce,
Ministry of Knowledge Economy
Project contents
Expansion of the Industry Technology Complex
(and establishment of the Smart Grid R&D Center)
Target industry
Nano, IT convergence, electricity, biotech, nuclear medicine industry
(at a future-oriented technology complex in northeastern Seoul for R&D and
human resources development)
Construction
budget
USD 43 million(KEPCO budget)
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Overview
Located in southwestern Seoul, the Magok District is an
environmentally-friendly knowledge industry cluster where
cutting-edge technology industries using IT, BT, GT and NT
coexist with organizations specializing in international business.
It is a future-oriented town that will connect Seoul to the rest of
the world.
Magok District
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.BHPL
4FPVM(SBOE1BSL
:POHTBO
:FPVJEP
(POHOFVOH
Seoul City Hall
10.36km(20minutes)
Airport
40.10km(46minutes)
Gimpo Airport
12.46km(20minutes)
Seoul City Hall
7.07km(17minutes)
Airport
53.63km(55minutes)
Gimpo Airport
17.99km(30minutes)
Seoul City Hall
16.34km(29minutes)
Airport
46.05km(47minutes)
Gimpo Airport
6.43km(20minutes)

Seoul City Hall

5.12km(15minutes)
Airport
57.29km(54minutes)
Gimpo Airport
21.49km(30minutes)
Seoul City Hall
13.25km(30minutes)
Airport
71.97km(77minutes)
Gimpo Airport
36.12km(54minutes)
Accessibility
The Magok District is directly connected to Inchon International Airport and Gimpo International Airport
through the metropolitan road network. It is located at the heart of Northwestern Seoul. Subway lines 5 & 6
run through the area, as does the railway to Inchon International Airport. Most notably, the area is right along-
side Gimpo International Airport, which covers all domestic flights plus flights to major Asian cities. All of the
flight destinations from Gimpo are within the single-day business range. Also, the Magok District is reachable
from Beijing, Shanghai, Osaka and Tokyo within about two hours, surely making it one of the best locations in
which to do business in Northeast Asia.
2
2
broadcasting
Magok District
With the conclusion of agreements with the two outstanding an-
chor companies, the reputation and value of the zone has been
incontestably reconfirmed. A great integration effect between the
anchor companies and SME venture businesses is anticipated.
The LG Consortium has presented its vision for a next-genera-
tion convergence R&D hub, which will become a next-generation
growth engine. It has confirmed the execution/implementation
of a USD 3,610 million investment plan in the Magok District by
the end of 2012. The area secured by the LG consortium occupies
58%, or 133,588m
2
of the total area required. LG plans to con-
duct research and development for next-generation growth en-
gine businesses here and to create a pan-business R&D center.
The Kolon Consortium has presented a business plan focusing on
water treatment, energy and biotechnology. It will be based on an
11,729m
2
site.
Area 3,665,336m
2
Business
development
status
Oct.2011 Announce Magok industry complexs preferred sale to leading companies
Investment
methods
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Tax Reduction/Exemption for Foreign-Invested Companies
In cases where companies operate a business falling under businesses that accompany highly advanced
technologies or business service businesses among BTNTGT businesses found a new business
establishment in Korea, the Korean government grants, on the basis of reviews conducted by the Foreign
Investment Committee, corporate and income tax incentives regardless of the invested amount or region.
BTNTGT businesses eligible for tax abatement under the foreign investment regulations are as follows:
Incentives for the BTNTGT Industry
Industry Area Product
NT
Nano-element
application technology
Electronic nano semiconductor elements; nano photoelectric elements; nano met-
al electric elements; molecular elements
Nano-based
technology
Nano electronic element simulators; nano-level analysis; nano- structure
processing/materials; nano lithography
BT
Medical supplies
manufacturing
Medical ingredient/intermediate synthesis technology; advanced substance develop-
ment technology(technology for searching and design new medicine); rare medicines
(orphan drugs); synthesis/manufacturing technology; medical supply control technol-
ogy (DDS); testing reagents
Cosmetics manufactur Cosmetics ingredient/intermediate synthesis technology
Agricultural chemical
manufacturing
Synthesized agricultural chemical manufacturing technology (must be patented)
Biomedicine
technology
Manufacture of new protein/carbohydrate/peptide/nucleic acids; medicines used in the
treatment and diagnosis of diseases, such as gene therapy medicines, immunity dis-
ease medicines, antibody-based cancer medicines; animal/plant/microorganism-based
medicines; blood medicine manufacturing technology (only the tax exemption/reduc-
tion specifed in Article 9 applies to this technology; and not that which is specifed in
Term 1 of Article 4); new substance searching technology, safety analysis technology
Advanced
production
technology for
the biotechnology
industry
Artifcial enzymes; artifcial organs; bioelectronics (biosensors, biochips); trans-
forming animal/ plant production/application technology; gene manifestation
analysis/gene control technology; agricultural chemicals for microorganisms;
environmentally-friendly agricultural chemicals
Biotechnology-based advanced food/additive development technology, bio-remediation
Bio-energy
Biotechnology-
related hybrid
technology
Bioinformatics technology; human interface technology; bio-electronic elements for
insertion in the human body; molecular electronic element manufacturing technology;
intelligent medicines
Bio-recognition
technology
Comprehensive bio-recognition technology and biomedical information technology
Medical device
manufacturing
Bio-state measuring/recording devices (electrocardiographs and patient monitoring
devices excluded); electric/electronic diagnostic device and machines; artifcial joints;
bio structure/function substitutes; organ replacement; orthopedic/recovery devices;
small pumps for electronic tonometers; cardiovascular devices; medical information
systems (remote visual treatment device)
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Industry Area Product
GT
Power generation technology; generators
Solar ray (silicone membrane solar battery manufacturing technology, built-in building
solarbattery technology, solar ray generation system performance analysis technology)
Wind energy (aero-generation technology, aero-generators)
Fuel cell generation systems Hydro-power Coal-gas production Tidal power and tides
Advanced fuel manufacturing technology (bio-energy, hydrogen energy)
Heat-based technology and facilities
Solar heat air-conditioning/generation systems, geothermal heat, waste energy
(RDF manu-facturing/utilization facility)
Coal liquefying technology / Biomass-energy-based technologies/facilities
Methane gas/LFG facilities
Hybrid thermal power generation facilities
Tidal/wind/solar power generation facilities, etc
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Requirements for Tax Reduction/Exemption
Out of the businesses recognized as the ones which are needed for enhancing the
competitiveness of domestic industries in the international market by the Minister
of Strategy and Finance, the businesses seeking tax reduction or exemption must be
deliberated by Foreign Investment Committee, and be operating established factory
facilities (or business premises if not in the manufacturing business). In addition, all
of the following requirements must be met.
Technology indispensable to the creation of an advanced industrial structure and
increased industrial competitiveness likely to have a positive effect on the finances
and technology of the national economy
In case that less than three years have passed since the introduction of technology(the
date on which a foreign investment or technology contract is reported), or that a
technology having been introduced for three years or more is more excellent in
economic effect or technological performance than the technology already introduced.
Most of the processes that the above technologies require should take place in Korea
Tax Reduction/Exemption
Application Process
Corporate tax
Amount eligible for
tax abatement
Corporate or income tax payable on income generated by business eligible for tax
abatement(total computed tax amount x tax base of eligible business / total tax base)
multiplied by foreign investment ratio
Abated period / ratio
100% abated for fve years from the year when the income is frst earned from the
eligible business; 50% abated for the next two years
Acquisition and
registration
tax on land and
buildings
Amount eligible for
tax abatement
Tax amount computed on the asset multiplied by the foreign investment ratio
Abated period / ratio
The amount arrived at by multiplying the computed tax amount by the foreign
investment ratio (tax amount eligible for tax abatement) for 10 years from business
start date; 50% of the tax amount eligible to tax amount for the next fve years
Property tax Determined by basic municipal government ordinances
Exemption of
customs, etc.
(full exemption
regardless of
foreign investment
ratio)
Taxes eligible for
exemption
Customs, special consumption tax, value added tax
Capital assets eligible
for tax exemption
Capital goods required for business eligible for tax abatement
Details of Tax Reduction/Exemption
Businesses may request the Minister
of Strategy and Finance to confirm
whether their business is eligible for
tax abatement before reporting their
foreign investment; the Minister of the
Strategy and Finance shall notify the
applicant of tax abatement eligibility
within 20 days.
Foreign-invested businesses are
required to apply for tax abatement to
the Minister of Strategy and Finance
within the end day of the tax year in
which the business start date belongs.
The Minister of Strategy and Finance
and the minister of the ministry related
to the applied technologies should
make a decision on the matter and
notify the applicant of tax abatement
eligibility within 20 days.
Step 1
Application for pre-
confirmation of eligibility of
tax abatement
Step 2
Application for
tax abatement
Step 3
Decision and notification
on tax abatement
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Foreign Investment Process
Business Activities of Foreign Companies in Korea
The various types of foreign companies operating in Korea are classified into three categories: local corpora-
tions, branches, and liaison offices. Only local corporations are recognized as foreign direct investment (FDI).
Investors should choose the type of investment most suitable to them in consideration of the relevant factors,
such as the purpose of business, expense required for the establishment of a local corporation, annual tax,
remittance of funds back home, etc.
Local corporations Branch offces Liaison offces
Applicable law Foreign Investment Promotion Act Foreign Exchange Transactions Act
Type of corporation Local corporation Foreign corporation
Range of business
activities
Proft-making activities within the approved scope
Proft making is
not allowed
Minimum
required capital
Not less than USD 90,253 (=one hundred
million won)
No minimum required capital
Annual taxes
Corporate tax: 10~22% of taxable
income
Residence tax: 10% of corporate tax
VAT : between 10% of supply value
and 10% of supply cost
Corporate tax:
10~22% of taxable
income
Residence tax : 10%
of corporate tax
VAT: between 10%
of supply value and
10% of supply cost
No corporate tax,
Residence tax or
VAT imposed
Tax reduction/
exemption
Hi-tech businesses are eligible for tax
reduction or exemption under The
Foreign Investment Promotion Act
Tax reduction/exemption not applied
External audit
A business whose total asset amount
in the preceding business year came to
USD 90,253,000 (KRW 10 billion) or more
is legally required to hire an external
auditor.
No external audit required
Loans in Korea Possible, based on credit Realistically impossible
Recognized as FDI Recognized Not recognized Not recognized
Foreign Investment Process
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Foreign Direct Investment Process
Foreign direct investment in Korea includes acquisition shares or equity of a Korean corporation or business
by a foreign national; provision of a long-term (over 5 years) loan to a financed Korean corporation; and
contribution to a non-profit corporation.
A minimum of KRW 100 million (approx. USD 90,253) must be invested in the acquisition of a Korean
businesss shares, and more than 10% of the total shares or investment in a company an investing foreign
national has voting rights in must be owned to constitute a foreign direct investment.
Minimum required investment: over KRW 100 million (approx. USD 90,253)
Required foreign investment ratio: ownership of over 10% of the total shares or investment in a company a
concerned foreign national has voting rights in
(Exceptions): Contracts which allow the dispatch or appointment of executive personnel
Contracts which stipulate the supply or purchase of materials or products for a period
longer than 1 year
Contracts which stipulate the provision, acquisition or joint research of technology
The process of foreign investment taking place through the establishment of a local corporation in Korea is
as follows.
Step 4
Corporation Establishment
Registration
Step 5
Business Registration
Step 6
Foreign-Invested
Company Account Setup
Step 7
Foreign Investment
Company Registration
Step 8
Visa Request
Corporation establishment can be registered at the courthouse (district office)
under the jurisdiction of which the location of the corporation falls.
Registered at a courthouse (district office)
Required documents: foreign investment notification certification, letter of attorney,
executive appointment acceptance letter, corporation seal, copy of lease contract, minutes
of board of directors meetings
Business registration is made at the tax office under the jurisdiction of which
the location of the corporation falls.
Registered at a tax office
Required documents: business registration application form, copy of foreign investment
notification, foreign currency purchase/deposit certificate, copy of lease contract
New corporations must open a bank account using a business registration
number. At the request of the foreign-invested company, the bank can transfer
funds to this account for the company to use for business purposes.
Finally, the company must register as a foreign-invested company.
Registered at KOTRA or Invest KOREA
Required documents: foreign-invested company registration application form, business
registration form, foreign currency purchase/deposit certificate
After registration as a foreign-invested company, an application for a D8 visa
and alien registration card must be made to the Investor Support Center at
Invest KOREA or the Korea Immigration Service. The issued visa is valid for
6 months to 3 years.
All preparations required for business activities and sojourn in Korea are
made through the above procedures. If a business premise contract is in place,
completion of step 1 to 8 takes approximately 2 weeks.
The above procedure of corporation establishment is difficult for individuals
to complete. For this reason, it is advised that the assistance of a law firm or
accounting firm listed in the Support Organizations section on page 65 be
sought.
The first action required when an investment has been decided to be made in
Korea is to report an estimation of investment to be made. However, investment
of the reported amount is not mandatory.
Location: KOTRA head office, domestic/overseas offices, a foreign exchange bank head
office and branches
Required documents: investment report, certified copy of a corporation registration (for
corporations), citizenship certificate or passport (for individuals), letter of attorney (when
reported by an agent)
Step 1
Foreign Investment
Report
This step involves the transfer of an investment funds to a foreign investment
bank in Korea under the name of a foreign investor. The investor is not required
to own an account in Korea, but is required to transfer the investment funds
into Korea in foreign currency. And the transferred money must be converted
into Korean won and deposited in a bank account. A foreign currency purchase
invoice is issued.
Step 2
Transfer and Conversion
of Investment Funds
The investment funds are converted into Korean won and paid as share capital.
A share capital payment invoice is issued from the bank.
Request for the above action is made to a bank by the investor or a judicial scrivener.
Required documents: shareholders list, articles of association, minutes of inaugural
general meeting, minutes of board of directors meetings
Step 3
Share Capital
Payment
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Foreign Investment Incentives
Land Support
The Korean government provides land free
of charge or at a low rate to foreign-invested
companies which meet certain criteria. This land
can include individual foreign investment zones,
complex-type foreign investment zones, Free Trade
Areas and Free Economic Zones.
Tax Support
Investments in business service or advanced
technology industry designated by the Ministry of
Strategy and Finance or investments of a set value
in a manufacturing, distribution, R&D center or
hotel & resort business within a foreign investment
zone or Free Economic Zone are provided with a
reduction/exemption on corporation tax, income
tax, local tax and dividend tax for 5 to 7 years.
Tax reduction/exemption is provided on capital
goods of a business approved for tax reduction/
exemption for 3 years from the date of investment
report (for reported portions only). A system is in
place for verification of tax reduction/exemption
eligibility of business service or advanced
technology industry in advance to assist investors
with decision-making. Other tax support, such
as investment tax deductions and small/medium
business tax reduction/exemptions, can be received
in addition to the aforementioned tax incentives.
Foreign investment incentives in Korea are largely divided into those provided by the central government
and local governments. And the types of incentives are land support, tax support, cash grant and other
support.
Foreign Investment Incentives
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Cash Grant Foreign Investment Incentives
Other Support
The cash grant system is in place to attract foreign
investment in industries critical to the Korean
economy. Through negotiations between a foreign
investor and the Korean government, a minimum of
5% of the investment is provided to the investor in
cash.
Such cash support is provided for foreign investments
(with foreign-owned share of at least 30% and at least
USD10 million) in business service and advanced
technology industry and greenfield investment in
parts/material manufacturing. It is also provided
to the establishment or expansion of business
facilities, including factories and R&D centers, which
can create a large number of jobs. Cash grants can
also be offered to investments that do not meet
the eligibility criteria through deliberation by the
foreign investment committee if such investments
are deemed to have a positive effect on the Korean
economy, i.e. establishment of a local headquarters
of a multinational company or the establishment of a
regional strategy industry expected to contribute to
the regional economic development.
However, the use of such cash grants is restricted
to purchase/lease of land for business premises,
construction costs, capital goods, research
equipment/material purchase costs, base facility
installation costs, employment subsidies and
employment training subsidies. To attract more
foreign investments in the future, the Korean
government will redefine the industries that are
eligible for cash support and provide such grants
through a review of the expected economic impact
of a foreign investment, rather than its volume. The
amount of cash support will also be increased.
Public Property Lease/Reduced Lease Fees Land,
factories and other public properties owned by
the central government or local governments can
be leased or sold to a foreign-invested company
through a private contract without conventional
procedures, e.g. bidding.
Employment Subsidies/Employment
Training Subsidies
Employment subsidies or employment training
subsidies are provided to companies with at least
30% foreign investment ratio or companies with
a foreign national as the principal shareholder. In
general, subsidies are provided for a maximum
of 6 months when 20 or more new employees
are hired.
Incentives Offered for Investors by Country
Korea Singapore China Japan
Offered
for
Hi-tech
businesses
Those investing
a large amount
Businesses contributing to
technological advance of the
industrial structure via the
adoption of new technologies
or work processes, or
enhanced productivity
Regional
headquarters for
multinationals
N/A
Tax
reduction /
exemption
Tax reduction
or exemption
for 5~7 years
Exemption from income
tax on proft earned from
business activities
Export duties and
VAT are exempted
when exporting goods
produced by an FDI
business
N/A
Land
support
Rent reduced
by 50~100%
N/A
Paying 30% of offce
rent in the frst year
Paying a subsidy
for the frst 3 years
Paying a subsidy
of USD 146.4/m
2
in
the case of purchas-
ing a building
N/A
Cash
grant
Not less than
5% of the
investment
amount
Providing fnancial support
in the case of building an
R&D center
Paying expenses associated
with intellectual property
rights and human resources
N/A N/A
Other
support
Employment
subsidy
Education/
training subsidy
Paying operation/
R&D-related training
expenses in the case
of a newly installed facility
It is possible to apply
for a subsidy
concerning directors
vehicles and housing
from the City of
Beijing.
No separate
incentives are
offered to foreign
investors, but
some local
governments
provide incentives.
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Support Organizations
Law Firms
Name Website Address Phone Number
Kim & Chang www.kimchang.com
Seyang Building, #223, Naeja-dong, Jongno-gu,
Seoul
02)3703-1101
Lee & Ko www.leeko.com/ #118, 2-ga, Namdaemunno, Jung-gu, Seoul 02)772-4377
Bae, Kim & Lee www.bkl.co.kr/ #647-15, Yeoksam-dong, Gangnam-gu, Seoul 02)3404-0138
Shin & Kim www.shinkim.com #1-170, Sunhwa-dong, Jung-gu, Seoul 02)316-4275
Yulchon www.yulchon.com/ #944-31, Daechi 3-dong, Gangnam-gu, Seoul 02)528-5237
Jisung Horizon www.jipyong.com/ #45, 4-ga, Namdaemunno, Jung-gu, Seoul 02)6050-1635
Hwang Mok Park www.hmpj.com/
Shinhan Bank Building, #120, 2-ga, Taepyeo-
ngno, Jung-gu, Seoul
02)772-2702
Lee International www.leeinternational.com/ #60-1, 3-ga, Chungmuro, Jung-gu, Seoul 02)2262-6030
Chungjin lawcj.net/ n/a
02)735-5370
(~5376)
Kim & Jung www.yjlaw.co.kr/ #647-9, Yeoksam-dong, Gangnam-gu, Seoul 02)552-7249
Kim & Kim www.kimkimlaw.com/ #10, Da-dong, Jung-gu, Seoul 02)755-2980
Hanol www.hanollaw.com/ #159-9, Samsung-dong, Gangnam-gu, Seoul 02)6004-2531
Darae www.daraelaw.co.kr/ #647-9, Yeoksam-dong, Gangnam-gu, Seoul 02)3475-7700
Sigong www.sigonglaw.com/ #677-25, Yeoksam-dong, Gangnam-gu, Seoul 02)565-3131
Mirae www.lawbjp.com/ #1706-10, Yeoksam 1-dong, Seocho-gu, Seoul 02)3482-1121
Sojong www.sojong.com/ #737, Yeoksam 1-dong, Gangnam-gu, Seoul 02)2112-1144
Darwin www.dawinlaw.com/main.htm
Lv 2, Daeryun Building, #828-25, Yeoksam-dong,
Gangnam-gu, Seoul
02)537-1807
Sunmyung www.smlawyer.co.kr #157-27, Samsung-dong, Gangnam-gu, Seoul 02)559-0946
EYP www.laweyp.com/ #720-4, Yeoksam-dong, Gangnam-gu, Seoul 02)531-8062
Lian www.lianlawyers.com/ #51-7, Banpo 4-dong, Seocho-gu, Seoul 02)535-5217
Support Organizations
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Name Website Address Phone Number
Price Water
house Coopers
Korea
www.pwc.com/kr/ko/ Lv 21, LS Yongsan Tower, #191, Hangangno 2-ga, Yongsan-gu, Seoul 02)709-3369
Deloitte Anjin www.deloitteanjin.co.kr/ Lv 14, Hanhwa Securities Building, #23-5, Yeouido-dong, Yeongdeungpo-gu, Seoul 02)6676-2530
KPMG
Samjung
www.kpmg.com/kr Lv 10, Star Tower, #737, Yeoksam 1-dong, Gangnam-gu, Seoul 02)2112-0922
Ernst & Young www.ey.com/kr Lv 3-8, Taeyong Building, #10-2, Yeouido-dong, Yeongdeungpo-gu, Seoul 02)3770-0921
Woorim www.wrac.co.kr Lv 2, Donghun Tower, #702-19, Yeoksam 1-dong, Gangnam-gu, Seoul 02)566-4126
Daejoo www.bdodaejoo.co.kr Lv 3, Dongha Building, #629, Daechi-dong, Gangnam-gu, Seoul 02)3452-2869
Woori www.wooricpa.co.kr/ 14F, H-Tower 192-19 Nonhyeon-dong, Gangnam-gu, Seoul, Korea 02)6052-4005
Sungto www.sungto.co.kr/ Lv 17, Kunseol Hoigwan, #71-2, Nonhyun 2-dong, Gangnam-gu, Seoul 02)513-0208
Dasan
www.dasantax.com.
ne.kr/
Lv 5, KM Building, #967-3, Daechi 3-dong, Gangnam-gu, Seoul 02)2193-0141
Il Shin N/A Lv 4, KM Building, #130-10, Samsung-dong, Gangnam-gu, Seoul 02)567-9100
Han Kyung hko.co.kr/ Lv 4, Taewha Building, #996-15, Daechi 3-dong, Gangnam-gu, Seoul 02)552-2671
E-Hyun www.ehyunac.com Lv 13, Dongkying Building, #824-19, Yeoksam 1-dong, Gangnam-gu, Seoul 02)3011-1156
G-Pyung www.g-pyung.co.kr/ Lv 14, Wonbang Building, #143-42, Samsung 2-dong, Gangnam-gu, Seoul 02)3420-3371
Sebit www.sebit.co.kr/ Lv 2, Kunseol Hoigwan, #71-2, Nonhyun-dong, Gangnam-gu, Seoul 02)3438-2401
Dongnam www.dongnamcpa.com/ Lv 4-5, KL Net Building, #748-14, Yeoksam 1-dong, Gangnam-gu, Seoul 02)501-0024
Lian www.lianits.co.kr/ Lv 8, Haesung Building, #51-7, Banpo 4-dong, Seocho-gu, Seoul 02)537-1807
Daemyung
Grant Thorton
www.dmgt.co.kr/ Lv 3, Dongshin Building, #140-30, Samsung 2-dong, Gangnam-gu, Seoul 02)2056-3701
Taeyoung www.tya.co.kr/ Lv 9, Youngpoong Building, #142, Nonhyun 1-dong, Gangnam-gu, Seoul 010)4660-2093
Samwha shcpa.co.kr Lv 9, Inwoo Building, #539-11, Shinsa-dong, Gangnam-gu, Seoul 02)554-6960
Horwath
Choongjung
www.crowehorwath.
net/KR/
Lv 9, Korea Chamber of Commerce and Industry Building, #45, Namdae-
munno 4-ga, Jung-gu, Seoul
02)3166-641
Sunmyung www.smcpa.co.kr Lv 11, Kyungam Building, #157-27, Samsung-dong, Gangnam-gu, Seoul 02)559-0946
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