Ministry of Trade, Industry and Energy

Reducing the burden on companies in the Foreign Investment Zone by half

Promotion Division (044- 203-4083) date2014-08-28

Korea’s ICT Exports Continue to Show Robust Growth in the 2nd Half of 2014

date2014-08-07

Export and Import Trends for July of 2014

In 2014, prompted by the recovery of the advanced economies, Korea recorded an export growth and the largest ever import growth. * Export growth rate (%): ('14.3) 3.7 → (4) 8.9 → (5) -1.4 → (6) 2.5 → (7) 5.7 * Import growth rate (%): ('14.3) 3.6 → (4) 5.0 → (5) 0.3 → (6) 4.1 → (7) 5.8 Exports to the US (petrochemicals and mobile devices) and EU (automotive and mobile devices) grew thanks to the recovery of the advanced economies, and exports to Japan in particular (oil products and steel) saw a turnaround towards growth over the three months. Imports of raw materials, capital goods and commodities grew, with raw materials leading the import growth. Among raw materials (61% of Korea’s imports), imports of crude oil (unit price hikes) and oil products (naphtha and bunker fuel oil C) grew. Among capital goods (28% of Korea‘s imports), imports of equipment for semiconductor manufacturing, car parts and parts for mobile devices grew. Among commodities (11% of Korea‘s imports), automotive imports conspicuously grew. Korea’s exports continued to grow in July thanks to robust exports to the advanced economies, although the fact that exports to China have declined for three consecutive years is worrying. As a matter of urgency, government bodies will be working together to respond to the slowdown in exports to China. It is expected that Korea’s exports will continue to grow thanks to the recovery of the advanced economies. date2014-08-04

FDI Trend for the 1st Half of 2014

The amount declared was USD 10.33 billion, with year-on-year growth of 29.2% (from USD 8 billion in the previous year). The amount received was USD 7.2 billion, with year-on-year growth of 55.9% (from USD 4.62 billion in the previous year). The materials and parts sector accounted for 87.0% (USD 3.01 billion) of FDI going to manufacturing, with year-on-year growth of 84.7%. It is expected that FDI will contribute to improvement in the value chain.* ● This is the process whereby value adds are created during business activities. Investments in materials and parts manufacturers in Korea, and in domestic large enterprises that generate demand, are contributing to the creation of a self-contained industrial ecosystem in Korea. FDI from China and the EU grew by 200.2% and 31.1%, respectively, to USD 2.39 billion and USD 3.26 billion, while FDI from the US and Japan declined by 0.4% and 15.2%, respectively, to USD 2.51 billion and USD 1.15 billion. Most notably, as the food industry and the cultural content industry have evolved new investment models in China, it is expected that advances into China by Korean businesses will increase through local cooperation. The M&A and greenfield investment approaches to FDI saw growth of 41.5% and 20.4% respectively, to USD 4.73 billion and USD 5.61 billion. date2014-07-23

Korea Records USD 33.7 Billion in Contracts

Korea Records USD 33.7 Billion in Contracts for Overseas Plants in the 1st Half of 2014 The Ministry of Trade, Industry and Energy (Minister Yoon Sang-jick) announced that Korea had recorded a historic-high contract amount for overseas plants in the 1st half of 2014, amounting to USD 33.7 billion. It is even more meaningful that this achievement was reached considering the numerous challenges, such as political uncertainty in Middle Eastern markets including Iraq and the decline in contracts date2014-07-15

Korea’s ICT Exports Reach Historic High in the 1st Half of 2014

* Adjusted Outlook for 2014 Global ICT Growth Rate (Gartner, %): : Outlook for September 2013: 3.6 → Outlook for May 2014: 3.2%, reflecting the slowdown in the growth rates of emerging economies and the smart devices sector ○ 2012. 2H - Overall ICT Export Growth Rate : 3.4% Key Items - Export Growth/Decline : 1.5% - Percentage of Export : 70.4% - Rate of Contribution to Export Growth : 32%   ○ 2013. 1H - Overall ICT Export Growth Rate : 10.9% Key Items - Export Growth/Decline : 9.8% - Percentage of Export : 69.2% - Rate of Contribution to Export Growth : 63%   ○ 2013. 2H - Overall ICT Export Growth Rate : 7.6% Key Items - Export Growth/Decline : 8.4% - Percentage of Export : 70.9% - Rate of Contribution to Export Growth : 78%   ○ 2014. 1H - Overall ICT Export Growth Rate : 3.2% Key Items - Export Growth/Decline : 6.2% - Percentage of Export : 71.2% - Rate of Contribution to Export Growth : 133%       date2014-07-10

Export and Import Trends for June and 1st Half of 2014

By contrast, exports to China declined due to China’s increased self-sufficiency in petrochemicals and oil products. Exports to Latin America were also weak, due to a sharp decline in the export of ships. In addition to a slight increase in imports of raw materials and capital goods, there was a significant growth in imports of commodities, due mainly to a growth in automotive imports. Despite the unfavorable conditions, Korea recorded historic-high exports in the first half, mostly attributable to the robust performance of SMEs. It is expected that Korea’s exports will continue to grow, especially in the ship and automotive sectors, as global trade volumes increase thanks to the recovery of advanced economies including the US and EU. Risk factors do exist, including uncertainty over the recovery of Chinese exports, which significantly affects the exports of Korea, also the strong Won and the situation in Iraq. Consequently the government will increase monitoring. Deputy Director Song Jeong-hun, Export and Import Division (044-203-4042) date2014-07-02

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

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

Korea’s ICT Exports Reach USD 14 Billion in May

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

Export & Import Trends for May 2014

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