Foreign investment issues

Investment restrictions

What restrictions, fees and taxes exist on foreign investment in or ownership of a project and related companies? Do the restrictions also apply to foreign investors or creditors in the event of foreclosure on the project and related companies? Are there any bilateral investment treaties with key nation states or other international treaties that may afford relief from such restrictions? Would such activities require registration with any government authority?

There is no fee or tax imposed on foreign investment.

There are no special treaties only applicable to project finance. However, if a free trade treaty has been executed between Korea and a specific country (eg, Chile, Peru, the US and the member states of the EU), a large project must involve international bidding process and the bidding must be implemented in a fair manner to the international bid participants.

Insurance restrictions

What restrictions, fees and taxes exist on insurance policies over project assets provided or guaranteed by foreign insurance companies? May such policies be payable to foreign secured creditors?

Under the Insurance Business Act, an insurance business licence must first be obtained to sell insurance policies in Korea and, as such, a foreign insurer without a Korean insurance business licence cannot sell insurance policies in Korea. Generally the process used is where a Korean insurance company that has obtained an insurance business licence in Korea sells insurance products to the project company and the Korean insurance company buys reinsurance from a foreign insurance company. In fact, Korean insurance companies sell insurance products in Korea by using the terms of the insurance policies of foreign insurance companies as they are.

There is no discrimination per se in relation to a foreign lender being paid with insurance proceeds. There is no restriction on overseas remittance of insurance proceeds. However, this may be subject to a prior foreign exchange report being filed with the relevant authorities.

Worker restrictions

What restrictions exist on bringing in foreign workers, technicians or executives to work on a project?

A foreign worker coming to Korea must obtain a residence visa under the Immigration Control Act. A foreign investor or foreign workers of an invested company (officer, senior manager, specialist, etc) may obtain a company investment visa. A company investment visa may be issued to specialised foreign workers who intend to work in management, administration, manufacture, technology or R&D of a foreign-invested company. A foreigner may reside in Korea to the extent permitted under the relevant visa. A person who wishes to stay 91 or more days in Korea must be registered as a foreigner, which requires submission of an application for registration together with other requisite documents to the head of the Immigration Office or a branch having jurisdiction over the foreigner’s residence within 90 days from his or her entry into Korea. Any change in the foreigner’s registered information, visa status or period, workplace or residential location must also be reported under the Immigration Control Act.

Equipment restrictions

What restrictions exist on the importation of project equipment?

There is no special restriction related to import of equipment.

Nationalisation laws

What laws exist regarding the nationalisation or expropriation of project companies and assets? Are any forms of investment specially protected (from nationalisation or expropriation)?

In the absence of extreme circumstances (eg, war, etc), there is no law that provides for any forcible nationalisation or expropriation of business facilities.

Obviously, if a concession agreement is terminated, the agreement may require the concessionaire to return its concession rights to the government.