Ministry of Trade, Industry and Energy

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

May Car Industry Trend

* Comparison of business days: (May 2013) 21 days → (May 2014) 19 days (two days less) Some plants voluntarily closed on May 2 (Fri): Kia’s Hwaseong Plant, GM’s Gunsan Plant and Renault’s Busan Plant * Exports by GM Korea to EU (From Jan to Apr 2013 → From Jan to Apr 2014): 19,017 units→11,658 units (down 38.3%) Exports by GM Korea to Eastern Europe (From Jan to Apr 2013 → From Jan to Apr 2014): 23,405 units →22,203 units (down 5.1%) ○ 2014 May - Production : 373,470 - Domestic Sales : 137,396 - Domestic Cars : 122,082 - Imported Cars : 15,314 - Export : 255,187 - (Amount) : 41.4 ○ Month-on-Month - Production : -13.9 - Domestic Sales : -7.0 - Domestic Cars : -6.8 - Imported Cars : -8.4 - Export : -14.9 - (Amount) : -12.6 ○ Year-on-Year - Production : -3.0 - Domestic Sales : 3.0 - Domestic Cars : 1.7 - Imported Cars : 14.2 - Export : -5.1 - (Amount) : -0.5     ○ 2014 Jan to May - Production : 1,962,122 - Domestic Sales : 667,199 - Domestic Cars : 590,739 - Imported Cars : 76,460 - Export : 1,342,638 - (Amount) : 214.7 ○ Year- on -Year - Production : 4.1 - Domestic Sales : 6.8 - Domestic Cars : 4.9 - Imported Cars : 23.9 - Export : 2.4 - (Amount) : 6.5       Despite the weak consumer demand and less business days, the domestic sales recorded growth for five consecutive months with year-on-year growth of 3.0% thanks to the effect of the launch of new cars and growing demand for RVs. Meanwhile, the export volume of the automotive sector for May was recorded at 255,187 units, a year-on-year decline of 5.1%, due to the decline in exports by GM Korea to EU and Eastern Europe. date2014-06-13

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

Korea and China Exchanged 2nd Offer of Goods and Made Progress in Regulations

The 11th round of Korea-China FTA negotiations was held in China (Meishan, Sichuan) for five days from May 26 to May 30, 2014. The Korean delegation was led by Woo Tae-hee, Assistant Minister for Trade & Chief Negotiator for FTAs of the Ministry of Trade, Industry and Energy, while the Chinese delegation was led by Wang Shouwen, Assistant Minister of Commerce. During this negotiation, the two parties discussed all of the areas to be covered by the FTA, including offers of goods, services and investments and regulations and cooperation. The two parties exchanged a 2nd offer which was improved from the 1st offer exchanged in December 2013 for the category of goods, and also exchanged the 2nd request for items of key interest to each party. The two parties made meaningful progress in terms of agreement on text of trade in goods, trade remedy, regulations and areas of cooperation. As well, the parties engaged in in-depth discussions on the approach to opening the services and investment sectors, and significantly, exchanged requests and opinions about areas of mutual interest in relation to the services sector for the first time. The negotiations also saw significant progress in areas such as rules of origin, customs procedures and environment, and it was agreed that efforts to reach an agreement on the remaining issues would be accelerated. The two parties also engaged in in-depth discussions on ways to reinforce bilateral cooperation in industry, agriculture, fishery, forestry and government procurement. The 12th round of negotiations will be held in Korea in July, at a date and location to be determined. date2014-06-09

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

Korea and China Move Closer to FTA

date2014-05-23

Fifth Round of Korea-Vietnam FTA Negotiations to be Held

The Korean delegation will be led by Director General for FTA Policy from the Ministry of Trade, Industry, and Energy, Kim Hak-do, and will include representatives from relevant Ministries, including the Ministry of Strategy and Finance, the Ministry of Agriculture, Food and Rural Affairs, and the Ministry of Oceans and Fisheries. For Vietnam, Director General for Vietnam Trade Promotion Agency (Vietrade), Ministry of Industry and Trade, Bui Huy Son (former Director for Asia-Pacific Market) will lead the delegation. During this fifth round meeting, the two government delegations will have in-depth discussions regarding goods, services, and investment, country of origin, customs and cooperation. Last year, government leaders from both countries had agreed to sign a comprehensive, wide-ranging FTA before the end of 2014. Vietnam is an important trade and investment partner to Korea, as well as an economic cooperation partner among ASEAN countries. With the signing of a Korea-Vietnam FTA, more meaningful free trade and investment will be feasible compared to under the existing Korea-ASEAN FTA, thus reinforcing the bilateral economic and trade relationship. * As of 2013, Vietnam is Korea’s 9th largest trading partner and its 4th largest target of investment. (Korea’s 2nd largest trade partner and biggest target for investment in ASEAN) date2014-05-22

Sales Trends of Major Retailers for April 2014

Non-Foods ○ Electronics & Cultural Goods - Year-on-Year : 3.1 - Month-on-Month : -20.9 - Year-on-Year (From January to April) : 3.5 ○ Apparel Goods - Year-on-Year : -3.9 - Month-on-Month : -7.6 - Year-on-Year (From January to April) : -6.7 ○ Home Supplies - Year-on-Year : -5.7 - Month-on-Month : -16.4 - Year-on-Year (From January to April) : -4.6 ○ Sports Goods - Year-on-Year : -0.8 - Month-on-Month : -8.4 - Year-on-Year (From January to April) : -1.6 ○ General Merchandise - Year-on-Year : -5.9 - Month-on-Month : -14.8 - Year-on-Year (From January to April) : -5.1 ○ Sub Total - Year-on-Year : -2.9 - Month-on-Month : -15.7 - Year-on-Year (From January to April) : -2.8     ○ Foods - Year-on-Year : -5.3 - Month-on-Month : -11.8 - Year-on-Year (From January to April) : -3.5 ○ Total - Year-on-Year : -4.1 - Month-on-Month : -14.3 - Year-on-Year (From January to April) : -3.5         Revenues of department stores also declined by 1.4% year-on-year, and by 7.2% month-on-month. Revenues of clothing, general merchandise and foods declined year-on-year due to less PR activities and weaker consumer confidence, while the sales growth of foreign brands, which had been thriving, was slowed down, leading to a slight decline in overall sales. Sales of all categories, especially sales of foreign brands, declined month-on-month, with the exception of the menswear and kids sports categories which showed sales growth. The revenues growth rate of department stores by product is as follows: Non-Foods ○ General Merchandise - Year-on-Year : -3.9 - Month-on-Month : -5.8 - Year-on-Year (From January to April) : -2.0 ○ Women’s Suit - Year-on-Year : -4.1 - Month-on-Month : -12.1 - Year-on-Year (From January to April) : -4.0 ○ Women’s Casual - Year-on-Year : -5.2 - Month-on-Month : -14.3 - Year-on-Year (From January to April) : -2.0 ○ Menswear - Year-on-Year : -0.4 - Month-on-Month : 3.0 - Year-on-Year (From January to April) : -2.8 ○ Kids Sports - Year-on-Year : 5.1 - Month-on-Month : 0.8 - Year-on-Year (From January to April) : 2.5 ○ Home Supplies - Year-on-Year : -0.8 - Month-on-Month : -5.3 - Year-on-Year (From January to April) : 3.5 ○ Foreign Brands - Year-on-Year : 0.9 - Month-on-Month : -15.4 - Year-on-Year (From January to April) : 8.0 ○ Sub Total - Year-on-Year : -1.3 - Month-on-Month : -7.5 - Year-on-Year (From January to April) : 0.3     ○ Foods - Year-on-Year : -0.8 - Month-on-Month : -4.4 - Year-on-Year (From January to April) : 2.3 ○ Total - Year-on-Year : -1.4 - Month-on-Month : -7.2 - Year-on-Year (From January to April) : 0.5             The reve date2014-05-22