Reasons for Proposal
Reason for proposal
The current law prescribes that foreign investments satisfying certain conditions established by the country and local governments may receive cash support to promote foreign investments, and foreign-invested companies also get benefits such as easing of various regulations, relief of rental, etc.
Meanwhile, the current law imposes liability on the country and local governments to cancel or withdraw support or reduce or redeem the supported money if foreigners request cash support using fraudulent or unfair methods; as the detailed procedure for the redemption of support money has not been prescribed, however, supplementation of such regulations was pointed out.
Moreover, as there are cases wherein foreign-invested companies do not fulfill their social responsibilities considering the benefits they received in cases such as one-sided business closure resulting in large-scale mass unemployment, the need for systematic measures was raised so that, if foreign-invested companies close business for reasons of deterioration of business, etc., the fact may be checked.
Therefore, the purpose of the proposal is to prescribe the procedure for redeeming support money in case of cash support for foreigner investments, to stipulate the social responsibility of foreigner-invested enterprises, to impose liability on certain scale of or larger foreign-invested companies to report business closure, and to review and investigate the reported contents and order corrections in order to supplement insufficient points of the current law and enable foreign-invested companies to fulfill their social responsibility.
Main content
A. The procedure for redeeming the cash support for foreigner investments should be prescribed in Presidential Decree, and the country or local governments should be able to redeem the support money by referring to the practices of dispositions on default of national (local) taxes or in accordance with the Act on Local Administrative Regulation and Collection of Dues, etc. (Draft: establishment of Article 14-2.5 and Article 14-2.6).
B. If certain scale of or larger foreign-invested companies close business, they should report the plans to the Minister of Trade, Industry and Energy for review by the Committee on Foreign Investment (Draft: establishment of Articles 21.7 and 21.8, Articles 7.1.10-2 and Article 37.1.4-2).
C. If certain scale of or larger foreign-invested companies close business, they should try to fulfill their social liability (Draft: establishment of Article 21.2).
D. The Minister of Trade, Industry and Energy should review the content of report on business closure and, upon finding it to be false, order corrections or take measures (Draft: establishment of Article 28.2.3 and Article 5.1.20.
