Support System

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Gaeseong Industrial Complex Support Act (Effective on August 26, 2007)

  • South Korea’s special law to provide investment security and promote businesses in GIC.
    • The law provides GIC companies with the same types of support offered to domestic small and medium-sized businesses.
      * Various types of loans and support for SME establishment, SME development fund, energy efficiency, industrial safety, and environment protection are available.
    • The law assures that the government provide GIC companies with infrastructures compatible with those enjoyed by small and medium-size businesses in South Korea’s domestic industrial districts.
    • Four major insurances as well as domestic labor laws will be applied to South Korean workers in the industrial district.
      * The workers have enjoyed a 50% discount on health insurance since August 2008.
    • Financial support is provided from Inter-Korean Cooperation Fund to the foreign investors who launched business in GIC.

Economic Cooperation Insurance

The South Korean government compensates businesses in inter-Korean economic cooperation from the Inter-Korean Cooperation Fund up to 90% of the loss incurred by causes they are not responsible for.
* Perils covered: confiscation and deprivation of invested assets by the North Korean authorities, war, rebellion, and the South or North Korean government’s decision to suspend the project

  • Duration of Coverage : Up to 10 years
  • Coverage : Up to 90% of the insured value (contracted and invested amount)
  • Insurance Limit : Up to 7 billion won per company (Up to 10 billion won if necessary, subject to the rating of the Inter-Korean Exchange and Cooperation Promotion Committee)
  • Insurance Rate : 0.5% of the contracted amount per year (0.375% per year for small and medium-sized businesses)

Sponsion

The sponsion policy was introduced to help businesses in GIC borrow funds more easily.

  • Types of Sponsion Fund: Credit Sponsion Fund for companies in general business/ Technology Sponsion Fund for venture companies and innovation businesses
  • Eligibility : All tenant company in GIC
  • Rate : Up to 90% of facility fund. The amount of sponsion for operation fund depends on one’s credit score. (Between 50 and 90%)
  • Maximum Limit : Up to 10 billion won per company (10 billion won for facility and 7 billion won for operation)
    * Sponsion certificates could be issued for less than 70% of the investment fund, including the rest of the money unwarranted by the mother company.
  • Maximum Amount : About 0.5-3% depending on where the borrowed fund is used
  • Period : 7 years for facility fund and 5 years for operation fund

Tax Break for Investment

  • Tax break for job creation : 4-7%
    • ID business operators are regarded as making investment in South Korea. Therefore, they are applied with South Korean business law, benefiting from tax break.
  • Tax cuts for small and medium-sized companies : 15-30%
    • This rule is applied to investments made after January 1, 2008. As GIC is deemed as an industrial district in South Korea, business operators in GIC receive same tax cuts applied to domestic business owners.

Foreign Investment Support Center

  • Foreign Investment Support Center provides comprehensive administrative support aimed at attracting foreign investment and assisting foreign investment companies which launch business in GIC
    • The center is established and in operation under Gaeseong Industrial District Foundation.
    • The center holds investment information briefings and supports one-on-one tailored investment consulting.
    • The center supports business operation of foreign investment companies.