Ministry of Trade, Industry and Energy

The Ministry of Trade, Industry and Energy (MOTIE) announced today that the enforcement of the amended Foreign Investment Promotion Act (the “Amended Act”) begins August 27. The Amended Act is anticipated to help raise stock return predictability for foreigners investing in Korea, while also regulating foreign investments that pose risks of endangering national security.

The outline of the Amended Act is as follows:

First, the amendment allows administrative agencies to initiate deliberations ex officio, without the requirement of a foreign investor’s voluntary reporting, should there exist concerns of national security risk. However, to raise stock return predictability, deliberations will not be required for foreign investments that have already gone through voluntary screening.

Second, foreign investments in Korean firms with National High-Tech Strategic Technologies will be subject to national security screening to prevent Korea’s advanced industrial competitiveness from being hindered by illegal foreign investment.

Third, the Amended Act provides grounds to ease foreign investors’ double burden by allowing the omission of screening for a foreign investor that has gone through similar deliberation procedures under other acts (Act on Prevention of Divulgence and Protection of Industrial Technology, National High-Tech Strategic Industry Act).

Fourth, the maximum deliberation period for the Expert Committee on National Security Deliberation for reviewing national security risks of foreign investments is to be extended from the previous 30 days to 90 days, and the Foreign Investment Committee’s maximum deliberation period will be reduced from the previous 90 days to 45 days.

Fifth, should a foreign investor make an inquiry prior to submitting a foreign investment declaration on whether the investment is subject to national security deliberation, administrative agencies are to respond to the inquiry within a 30-day period.

The Korean government will continue to improve and modify the national security deliberation system with an aim to secure foreign investments contributing to Korea’s advanced industrial super gaps, while minimizing concerns of foreign investments endangering national security.