DAEGU < invest Korea

Chapter I. General Provisions

Article 1 (Purpose)

Article 2 (Definition)

1. 1. The term “investment attraction” shall refer to the execution of an investment memorandum of understanding or any similar agreement signed between Daegu Metropolitan City and a company investing in the Daegu City area (hereinafter referred to as the "city area").
2. The term “full-time employee” shall mean refer to the average number of employees in the previous : preceding calendar year who work for the relevant company for wages except for short-term (less than one year) employees, provided that the Full-time Employees shall be proven by the submissions to the Ministry of Employment and Labor as prescribed by Article 13 of the Act on the Collection of Insurance Premiums, etc. for Employment Insurance and Industrial Accident Compensation Insurance, and shall include any dispatched employees whose employment status is proven through objective documentary evidence (e.g. an employee dispatch contract) pursuant to Article 20 of the Act on the Protection, etc. of Temporary Agency Workers).
3. 3. The term “foreign investment” shall mean refer to the investment as stipulated in Article 2(1)4 of the Foreign Investment Promotion Act.
4. 4. The term “foreign-invested company” shall refer to any company to which a foreign investor made a capital contribution in accordance with Article 2(1)5 of the Foreign Investment Promotion Act.
5. 5. The term “reshoring company” shall mean refer to any company entitled to be given any forms of support stipulated in Article 7 of the Act on Assistance to Korean Off-shore Enterprises in Repatriation
6. 6. The term “place of business” shall refer to any place in which a company conducts production activities to maintain its business. In case of manufacturing industry, the term shall stand for a factory as prescribed in Article 2(1) of the Industrial Cluster Development and Factory Establishment Act.
7. 7. The term “new construction” shall refer to the construction of a new business facility, altering an approved use of the existing premise to another use: a place of business or purchasing an abandoned building for the purpose of a business space to be invested.
8. 8. The term “expansion” shall refer to building out business facilities by making the gross (floor) area of an existing place of business greater in size.
9. 9. The term “business commencement date” shall refer to the date on which the manufacture of goods commences (or the factory registration date) or the date on which the supply of services commences (or business registration date).

Chapter II. Support System for Investment Attraction (Business Attraction Committee, etc.)

Article 3 (Installation and Functions of Business Attraction Committee)

1. (1) The Daegu Metropolitan City Business Attraction Committee (hereinafter referred to as the “BAC”) shall be formed for efficient investment attraction from and the provision of support for domestic and foreign businesses.
2. (2) The BAC shall advise and deliberate on the followings:
   1. 1. Matters related to the investment attraction policy such as the business category, the industry with focus on investment attraction, and investment attraction strategies;
   2. 2. Matters related to domestic and foreign investment attraction activities;
   3. 3. Matters related to support schemes such as the selection and evaluation of the attracted companies and the provision of subsidies;
   4. 4. Matters related to the resolving complaints or grievances faced by the attracted companies;
   5. 5. Matters related to rewarding monetary payment when attain the goals to attract investment; and
   6. 6. Any other matters referred to the BAC by the Mayor of Daegu Metropolitan City (hereinafter referred to as the “Mayor”) concerning investment attraction.

Article 4 (Composition of the BAC, etc.)

1. (1) The BAC shall consist of up to 20 members, including one chairperson, who shall be the Vice Mayor of Economy, and one vice chairperson, who shall be the head of the Job Investment Office.
2. (2) Committee members shall be appointed or commissioned among the following by the Mayor, provided that the composition of commissioned members shall not be such that a particular gender makes up over 60% of the group unless there are unavoidable reasons such as unequal gender ratios in member composition.
   1. 1. City council members recommended by Daegu Metropolitan City Council;
   2. 2. Former and incumbent executives of an institution, association or a company related to investment attraction;
   3. 3. Certified public accountants, lawyers, university professors in the field of investment attraction;
   4. 4. Technical/management experts and city, gu/gun officials related to the proposed agenda;
   5. 5. Any other person with abundant knowledge and experience about investment attraction.
3. (3) The term of the BAC member shall be two (2) years with two (2) consecutive term limit, provided that any member appointed or dismissed under paragraph (2)4 shall be deemed dismissed or retired upon closing the relevant meeting.
4. (4) The BAC shall have one (1) administrative secretary performing administrative and secretarial duties for the BAC, who shall be the manager in charge of municipal investment attraction.

Article 5 (Duties of the Chairperson)

1. (1) The chairperson of the BAC shall represent and generally oversee the business and operations of the BAC.
2. (2) If the chairperson is unable to perform his/her duties due to unavoidable reasons, the vice chairperson shall act on his/her behalf.

Article 6 (Meeting)

1. (1) A meeting of the BAC shall be convened by the chairperson if deemed necessary in his/her sole discretion, and the quorum for the convening of a meeting shall be a majority of all of the BAC members and the quorum for the voting shall be a majority of the members present.
2. (2) The chairperson may allow a non-member to be present and to have a right to speak at a meeting or to submit documentation if necessary.
3. (3) In any extra ordinary case when an agendum to discuss at a meeting of the BAC is so urgent that there is maybe practically no time to convene a meeting or when a meeting cannot be convened due to inevitable reasons, a deliberative meeting may be convened in writing.
4. (4) A meeting of the BAC may be held in confidence if deemed necessary by the chairperson or requested by a majority of the members present.

Article 7 (Allowances, etc.)

1. (1) Attendance allowances, review allowances and travel expenses may be paid to BAC members within the relevant budget in accordance with the Daegu Metropolitan City Committee Composition and Operation Ordinance.
2. (2) Attendance allowances and travel expenses may be paid to those other than BAC members who are present in a meeting of the BAC within the relevant budget.

Article 8 (Appointment of Investment Attraction Advisor)

1. (1) The Mayor may appoint an investment expert to be the Investment Attraction Advisor to make the most of the investment attraction capacity in the private sector and pay advisory fees, travel expenses, and allowances to the Investment Attraction Advisor within the relevant budget.
2. (2) The Investment Attraction Advisor shall conduct investment attraction promotion activities, collect and provide information, and advise the Mayor.

Article 9 (Dispatch of Private Sector Experts)

1. (1) The Mayor may request the dispatch of an expert affiliated with a company or an institution and organization related to investment attraction or otherwise mutually consult with such expert for more efficient investment attraction.
2. (2) The Mayor may allow private sector experts dispatched under paragraph (1) to use the common properties of Daegu (including accommodation facilities) to the extent that the use of such properties is complied with and pay subsidies for investment attraction activities within the relevant budget.

Chapter III. Support for Businesses

Article 10 (Provision of Industrial Site)

1. (1) The Mayor may supply land within an industrial complex at a price lower than the cost of creation or may subsidize part of purchase price within the relevant budget to a business prescribed by the Rules which specifies the target, deemed necessary to be attracted specially for the development of the local economy.
2. (2) The Mayor shall take necessary measures to achieve to attain the goal of support, such as restricting the disposal of land for which the construction cost or the sale price has been subsidized under paragraph (1) for a certain period of time.

Article 11 (Discount of Lease Fee, etc.)

1. (1) If a common property is used, profited or leased to a foreign invested company or reshoring company for the purpose of investment attraction (hereinafter referred to as the “Lease”), the lease fee shall be an amount calculated by applying a rate of 10/1000 or higher to the value of the relevant land, etc.
2. (2) The discount rates of common properties for reshoring companies pursuant to Article 11-2(4) of the Enforcement Decree of the Act on Assistance to Korean Off-shore Enterprises in Repatriation shall be as follows:
1. 1. The lease fee shall be exempted in case of any of the following hereunder;
   1. A. A business whose investments exceed KRW 20 billion or more
   2. B. A business whose average number of employees for a day is 300 or more
   3. C. A business that exports 50% or more of its total production, and has a 100% procurement ratio of domestic parts, raw and side materials
   4. D. A business that exports 100% of its total production
2. 2. The lease fee shall be discounted by 75% in the case of any of the following hereunder:
   1. A. A business whose investments are KRW 10 billion or more and less than KRW 20 billion
   2. B. A business whose average number of employees for a day is 200 or more, and less than 300.
   3. C. A business that exports 50% or more of its total production and has a 75% or higher and less than 100% procurement ratio of domestic parts, raw and side materials
   4. D. A business that exports 75% or more and less than 100% of its total production
3. 3. The lease fee shall be discounted by 50% in case of any of the following hereunder:
   1. A. A business with an investment amount of KRW 5 billion or more and less than KRW 10 billion whose investments are KRW 5 billion or more and less than KRW 10 billion
   2. B. A business with the one-day average number of employees of 100 or more and less than 200
   3. C. A business that exports 50% or more of its total production and has a 50% or higher and lower than 75% procurement ratio of domestic parts and, raw and side materials
   4. D. A business that exports 50% or more and less than 75% of its total production
3. (3) The businesses subject to the discounts of lease fees for foreign-invested companies and the discount rates pursuant to Article 19(12) of the Enforcement Decree of the Foreign Investment Promotion Act shall be in accordance with the Daegu Metropolitan City Common Property Management Ordinance.

Article 12 (Support for Facilities to Improve Foreign Investment Environment)

1. 1. Facilities under Article 2(9) of the Enforcement Decree of the Foreign Investment Promotion Act
2. 2. Foreign educational institutions under Article 22(1) of the Special Act on Designation and Management of Free Economic Zones

Article 13 (Support for Foreign Investment Zone)

Article 14 (Subsidies including Facility Costs)

1. (1) The Mayor may provide subsidies for the following costs and expenses up to KRW 5 billion for each company within the relevant budget for companies that move their place of business from outside the city district into the city jurisdiction (hereinafter referred to as the “non-Daegu company”) or companies that newly construct or expand their place of business to maintain any of the core businesses deemed essential to Daegu by the Mayor within the city area (hereinafter referred to as the “Daegu company”).
   1. 1. Land purchase or lease costs;
   2. 2. Construction costs or lease costs of the investment establishment;
   3. 3. Equipment and mechanical equipment purchase costs; and
   4. 4. Equipment and mechanical equipment relocation and installation costs
2. (2) Businesses eligible for subsidies under paragraph (1) shall be any of the following businesses stipulated hereunder and shall be determined by the Mayor after deliberation by the BAC.
   1. 1. A non-Daegu company with investments that amount to KRW 2 billion or more, or with 30 or more full-time employees
   2. 2. A non-Daegu company with investments that amount to KRW 1 billion or more, or with 10 or more full-time employees and fall under any of the following:
      1. A. A company engaged in businesses under Article 2(1) of the Framework Act on the Promotion of Cultural Industries or Article 2(2) of the Act on the Promotion of the Software Industry; or
      2. B. A company-affiliated research institute under Article 14-2 of the Basic Research Promotion and Technology Development Support Act
   3. 3. A non-Daegu company engaged in business support service and information service (e.g. call centers and telemarketing) with 50 or more of full-time employees, provided that, in case of new construction/expansion of the place of business of a Daegu company with 50 or more full-time employees, the Daegu company may apply for subsidies only when he number of new full-time employees to be hired exceeds 20.
   4. 4. A company newly constructing or expanding its place of business in the city area or moving its place of business into the city area that is engaged in any of the core businesses as deemed essential to Daegu by the Mayor with a business history of 3 years or longer and with an investments that amount to KRW 10 billion or more, as a result of which the number of full-time employees to be employed by the new place of business is at least 10% or 10 people more than the number of full-time employees of the existing place of business, provided that, facility subsidies may be provided to companies moving into and newly investing in the city area only for the increased building floor area compared to existing place of business as well as new purchase costs for equipment and machinery.
   5. 5. A reshoring company with investments that amount to KRW 2 billion or more or with 20 or more full-time employees.
   6. 6. Any other business deemed necessary by the Mayor for the promotion of local economic development and employment.
3. (3) When providing subsidies to businesses, the Mayor shall first consider the availability of national subsidies under the provisions specified in National Fiscal Fund Support Regulations for Local Governments for Attraction of Local Investment Companies, the Act on Assistance to Korean Off-shore Enterprises in Repatriation, and the Foreign Investment Promotion Act.
4. (4) The detailed criteria and scope of eligibility for subsidization under this Article 14 shall be prescribed by the Rules.

Article 15 (Special Support for Large-scale Investment Companies)

1. (1) Notwithstanding the provisions of the latter part of Article 14(1), the Mayor may provide special support for domestic and foreign large-scale investment companies that are deemed to have material effects on the local economy within 50% of the total investment amount subject to the consent of the city council.
2. (2) Special support for large-scale investment companies shall be provided only for the attracted companies prescribed by the Rules, and matters related to the special support, such as the scope of eligibility, shall be determined by the Mayor after deliberation by the BAC in consideration of the ripple effects on the overall local economy, the effect of creating jobs in Daegu, the growth potential of the relevant company, and the feasibility of the business plan.

Article 16 (Provision of Employment Subsidies)

1. (1) The Mayor may provide employment subsidies and employee training subsidies within the relevant budget in case when a company creates a certain number of new jobs.
2. For reshoring companies among the attracted companies that receive hiring incentives from the Ministry of Employment and Labor, the Mayor may provide a municipal hiring incentives in lieu of the subsidies under aforementioned paragraph (1)
3. (3) The detailed criteria, procedures, and other matters for the provision of employment subsidies, employee training subsidies and hiring incentives shall be prescribed by the Rules.

Article 17 (Support for Employee Accommodation)

Article 18 (Subsidization of Costs and Expenses, etc.)

1. (1) The Mayor may receive advice from investment attraction-related companies or investment experts on areas requiring expertise, such as large-scale investment projects, social overhead capital facilities, technology introduction, and investment attraction activities, and pay consulting fees, advisory fees and other expenses for such advice within the relevant budget.
2. (2) The mayor may subsidize part of the expenses within the relevant budget when a domestic or foreign investor or an investment company starts a business after conducting a feasibility study for new or increased investments within the city area.
3. (3) The Mayor may entrust public institutions, corporations and organizations to conduct projects such as attracting activities to discover investment companies and consulting for smooth investment support of attracting companies, and may subsidize the project costs within the relevant budget.

Article 19 (Administrative Support)

1. (1) The Mayor shall actively support all administrative matters such as land sales and factory establishment of the host company, in cooperation with gu/gun and concerned organizations, so that all administrative matters can be quickly and collectively processed.
2. (2) The administrative matters under paragraph (1) shall include, but not limited to, the following:
   1. 1. Sale of land by lot, supply of land for lease, execution of an occupation agreement, registration of a factory;
   2. 2. Handling of civil complaints regarding the establishment, new construction and expansion of a factory; and
   3. 3. Other difficulties and suggestions of investing companies.

Article 20 (Financial Support)

Chapter IV. Ex-post Management of Attracted Companies

Article 21 (Ex-post Management)

1. (1) The Mayor shall actively support the investment and business activities of attracted companies including, but not limited to, identifying and resolving any grievances faced by attracted companies in the course of such activities.
2. (2) The Mayor shall keep a management ledger of companies to which subsidies have been paid under this Ordinance (hereinafter referred to as the “subsidized company”) and track and inspect the implementation of their investment projects.
3. (3) The Mayor may order a subsidized company and its stakeholders to submit any documents and have a public official inspect such documents if necessary for ex-post management.
4. (4) If the subsidized company does not carry out the project in accordance with the business plan and conditions of support, the Mayor may request the performance or order correction within a fixed period of time.

Article 22 (Duties of Subsidized Company)

1. (1) A company that has been selected to receive subsidies shall submit the security for the subsidies claim, including, but not limited to, documents for the creation of a pledge, a performance guarantee bond, and a written payment guarantee.
2. (2) A subsidized company shall implement its business in accordance with the business plan it submitted, and shall receive the prior approval of the Mayor for any change of the business plan for any unavoidable reason.
3. (3) A subsidized company and its stakeholders shall submit documentary evidence for follow-up management, such as annual investment plans and performance results, and willingly cooperate in on-site inspection by related public officials.
4. (4) A subsidized company shall faithfully implement its investment project during the project implementation period (5 years from the business commencement date, hereinafter the same) in accordance with the business plan and the conditions of support, provided that when the project implementation period is defined otherwise in any other law, such project implementation period shall apply.

Article 23 (Cancellation and Restitution of Subsidies)

1. (1) The Mayor may suspend support to any company received subsidies under this Ordinance who fails to meet the performance criteria compared to the annual investment plan during the support period, and in any of the following cases, may cancel the support and collect all or part of the subsidies already paid;
   1. 1. where the company received support by fraud or other fraudulent means;
   2. 2. where the company uses the subsidies for any other purpose than according to the investment plan;
   3. 3. where the company leases, reduces, suspends or closes, moves its place of business to another si (city) or do (province) in which investment is made without the approval of the Mayor;
   4. 4. where the company abandons or cancels the project for which subsidies were paid;
   5. 5. where the company fails to operate the business facility within two (2) years after its completion of the facility construction without any justifiable reason (or any other period provided for in any other law);
   6. 6. when the purpose of the subsidies is regarded as unattainable
   7. 7. where the designation of a reshoring company is revoked in accordance with Article 8 of the Act on Assistance to Korean Off-shore Enterprises in Repatriation; or
   8. 8. where the company, after receiving subsidies for the construction of an employee accommodation facility, suspends the operation of or uses for any other purpose such employee accommodation facility during the mandatory operation period.
2. (2) Companies that receive employment subsidies and employee training subsidies must maintain the number of employees subject to subsidies for at least 3 years, and if the number of employees is reduced within three 3 years, the Mayor may collect all or part of the subsidies in proportion to the number of reduced employees.
3. (3) With respect to the rules applicable to restitution of subsidies, the National Fiscal Fund Support Regulations for Local Governments for Attraction of Local Investment Companies may apply provisions mutatis mutandis, in which case such mutatis mutandis application shall be specified in the relevant agreement on the provisions of subsidies, provided, however, that the relevant official notice of the Ministry of Employment and Labor may apply to restitution of employment creation incentives paid to companies in accordance with Article 16(2).
4. (4) In cas that a subsidized company fails to return subsidies required to be returned within a fixed period, the Mayor may collect the unreturned amount as a local tax.

Chapter V. Supplementary Rules

Article 24 (Rewards for Successful Attraction of Investment)

1. (1) The Mayor may pay a certain amount of a reward to an individual, entity, group and public official that is recognized to have given a significant contribution to the attraction of domestic and foreign investment and businesses within the relevant budget, and, in the case of a public official, may give additional points for promotion.
2. (2) The payment standards of a reward under paragraph (1) shall be prescribed by the Rules.

Article 25 (Application of Other Ordinances, etc.) )

Article 26 (Enforcement Rules)