Korea

Country starter pack
Business practicalities in Korea
57
‘Green growth’: ‘Green growth’ has recently become a
significant focus in Korea as the Government promotes
tax incentives and funding for green technology. ‘Low
carbon, green growth’ is expected to guide the country’s
development over several decades, and the Government
is encouraging foreign participation and expertise in
high tech industries and business services. A variety of
tax and other investment incentives are available and
institutional hurdles and regulations are being removed.
Korea has been participating in the UN Framework
Convention on Climate Change and has in recent years
taken significant steps aimed at reducing its greenhouse
gas emissions. In 2012, Korea became the first country
in Asia to pass laws mandating the launch of an emissions
trading scheme (ETS). To prepare industries for the
ETS, the Environment Ministry launched the voluntary
“cap without trade” Target Management System (TMS)
in 2012. From 2015, participation in the ETS became
mandatory for installations emitting 25,000 tonnes of
carbon dioxide, and for firms emitting 125,000 tonnes
of carbon dioxide annually. Smaller entities continue
with the TMS. The law provides for financial and fiscal
incentives to induce the necessary restructuring in a
cost-effective way.
Overseas remittance: operating funds by local branches
of foreign companies or overseas remittance of profits
must be made through designated foreign exchange
banks. Remittances of gains from: stocks acquired by
foreign investors and stock transactions, principal and
fees paid with respect to a loan contract under the FIPL,
and compensation under a technology import contract
are allowed in accordance with what has been permitted
and reported under the foreign investment technology
import contract at the time of the remittance.
KAFTA Regulations and the Australian Services Sector
The recently enforced Korea Australia Free Trade Agreement (KAFTA) provides Australian
services exporters with the best treatment Korea has agreed to with any trading partner,
matching agreements with the United States and Europe. Key outcomes include:
• Australian law firms are permitted to establish
representative offices in Korea and advise on both
Australian and public international law. Within
two years of KAFTA enforcement, Australian
law firms will be allowed to engage in cooperative
agreements with local firms; and, within five years,
establish joint ventures and hire local lawyers.
• Australian accountants are now permitted to
establish offices in Korea to provide consultancy
services on international and Australian accounting
laws. After five years of enforcement, they will be
able to work and invest in Korean accounting firms.
• Telecommunications providers will be able to
own up to 100 per cent of the voting shares of
a facilities-based telecommunications service
supplier in Korea within two years of KAFTA
coming into force. This is in addition to being
licensed to provide public telecommunications
services and planned reviews of regulatory
decisions and provisions on transparency.
• Australian financial services providers will be
able to supply specified financial services on a
“cross-border” basis without having to open a
full commercial presence. This includes providing
investment advice and portfolio management
services for investment funds, as well as a range
of insurance and insurance-related services in
Korea. Other improvements include increased
transparency and streamlining of licensing
procedures.
• Education, engineering and other professional
services will benefit from Korea’s commitments
to guarantee existing market access for Australian
providers and work towards improving mutual
recognition of qualifications.