Act on Designation and Operation of Free Economic Zones. (Republic of Korea)

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1 Act on Designation and Operation of Free Economic Zones (Republic of Korea) By Ministry of Legislation INTRODUCTION Details of Enactment and Amendment Enactment: This Act was enacted as Act. No on December 30, 2002, and enforced from July 1, 2003 in order to swiftly create the foreigner-friendly economic and living conditions in the free economic zones which are intended to be promoted as a part of the schemes to foster the Republic of Korea as the central state for the Northeastern Businesses. Main Contents The Mayor/Do governor shall formulate a development plan for free economic zone for the purpose of designating the free economic zone, and submit it to the Minister of Finance and Economy, and the said Minister shall ensure that the free economic zone is designated by going through a deliberation and resolution by the Free Economic Zone Committee; and where the said Minister deems it necessary to promote the free economic zone on the national dimension, he shall ensure that the free economic zone is directly designated by himself with the consent of the Mayor/Do governor. For the foreign-invested enterprises located in the free economic zone, an exception shall be admitted with respect to the restriction on any participation by large-scale enterprises in the peculiar business category under the Act on the Protection of the Business Sphere of Small and Medium Enterprises and Promotion of Their Cooperation, the paid holiday, monthly paid leave and paid menstrual leave under the Labor Standards Act, and the business category subject to dispatch and dispatch period under the Protection, etc. of Dispatched Workers Act. The Mayor/Do governor shall provide foreign language services, such as the publication, receipt and handling of official documents for promoting the convenience of foreign-invested enterprises located in the free economic zone and the foreigners concerned. Where any foreign school corporation obtains an approval from the Minister of Education and Human Resources Development after going through the Free Economic Zone Committee, it is ensured that it may establish a foreign educational institution in the free economic zone. Where any foreigner obtains an approval from the Minister of Health and Welfare or makes a registration to the said Minister after going through a deliberation and resolution by the Free Economic Zone Committee, he may open a foreigner-only medical institution or a foreigner-only

2 pharmacy; and any holder of the foreign medical license or the foreign pharmaceutical license may be engaged in any foreigner-only medical institution or any foreigners-only pharmacy that is opened in the free economic zone under the standards set by the Minister of Health and Welfare. In order to implement the policies on the free economic zone, the Free Economic Zone Committee shall be established in the Ministry of Finance and Economy, and the Free Economic Zone Planning Team shall be established as a working organization to assist the said Committee. An exclusively-charged administrative organization under the Mayor/Do governor's command shall directly perform the certain affairs from those performed by the head of Si/Gun/Gu within the free economic zone. Dec. 30, 2002 Act No CHAPTER Ⅰ GENERAL PROVISIONS Article 1 (Purpose) The purpose of this Act is to facilitate foreign investments, bolster the national competitiveness and seek the balanced development among regions by improving the management environment for foreign-invested enterprises and living conditions for foreigners through the designation and management of free economic zones. Article 2 (Definitions) The definitions of terms used in this Act shall be as follows: 1. The term "free economic zone" means the zone which is developed with the aim of improving the business environment for foreign-invested enterprises and the living conditions for foreigners, and designated and published in accordance with the provisions of Article 4; 2. The term "plan for developing a free economic zone" means the basic plan for developing a free economic zone that contains the contents provided for in Article 6; 3. The term "foreigner" means the person who falls under Article 2 (1) 1 of the Foreign Investment Promotion Act; 4. The term "foreign-invested enterprise " means the enterprise provided for in Article 2 (1) 6 of the Foreign Investment Promotion Act; and 5. The term "foreign educational institution" means the school (including any branch school) that is established and operated in accordance with foreign Acts and subordinate statutes.

3 Article 3 (Relation with Other Plans) The plan for developing a free economic zone provided for in this Act shall precede any other development plans provided for in other Acts: Provided, That the same shall not apply to any plan that is drawn up under the Act on the Comprehensive Plans for Construction in the National Territory and the Protection of Military Installations Act. CHAPTERⅡDESIGNATION OF FREE ECONOMIC ZONES Article 4 (Designation, etc. of Free Economic Zones) (1) The Special Metropolitan City Mayor, the Metropolitan City Mayor or the Do governor (hereinafter referred to as the "Mayor/Do governor") may ask the Minister of Finance and Economy to designate any free economic zone: Provided, That in the event that any proposed zone overlaps in not less than two Special Metropolitan City, Metropolitan Cities or Dos (hereinafter referred to as the "Cities/Dos"), the relevant Mayors/Do governors shall jointly ask the Minister of Finance and Economy to designate such free economic zone. (2) The Mayor/Do governor shall, when he intends to ask for the designation of any free economic zone in accordance with paragraph (1), draw up and submit a plan for developing such free economic zone. (3) The Minister of Finance and Economy shall make a final decision on the plan for developing the free economic zone that is submitted by the Mayor/Do governor and designate such proposed zone as a free economic zone after going through deliberation thereon and a resolution thereof of the Free Economic Zone Committee established pursuant to Article 25 (hereinafter referred to as the "Free Economic Zone Committee"). In this case, the Minister of Finance and Economy shall hear opinion of the Mayor/Do governor who asks for the designation of such free economic zone in accordance with paragraph (1). (4) The Minister of Finance and Economy may, if he deems it necessary to develop a free economic zone, draw up a plan for developing such free economic zone and designate such zone as a free economic zone after obtaining consent thereto from the competent Mayor/Do governor and going through deliberation thereon and a resolution thereof of the Free Economic Zone Committee. (5) The Minister of Finance and Economy may, if it is deemed necessary when he designates any free economic zone, have the development of such free economic zone implemented on a phased basis. (6) The Minister of Finance and Economy shall, when he designates any free economic zone in accordance with paragraph (3) or (4), publish the contents of such designation in the Official

4 Gazette and serve without delay a notice thereof to the competent Mayor/Do governor under the conditions as prescribed by the Presidential Decree. (7) The Mayor/Do governor shall, upon receiving the notice referred to in paragraph (6), offer the contents of such notice for public perusal for not less than 14 days. Article 5 (Matters to be Taken into Account with regard to Designation of Free Economic Zone) The Free Economic Zone Committee shall take into account the matters falling under each of the following subparagraphs when it makes deliberation and passes a resolution under Article 4 (3) or (4): 1. The possibility of attracting foreign investments and having foreigners settled; 2. The effect on the regional economy and the regionally balanced development; 3. The possibility of securing necessary sites, and development costs; 4. The infrastructures such as international airports, international harbors, metropolitan traffic networks, information and communications networks and the supply of water and electricity, etc.; 5. The possibility of securing the environmentally sound and sustainable development; 6. The system and details of support for local government; and 7. Other matters prescribed by the Presidential Decree. Article 6 (Plan for Developing Free Economic Zone) Every plan for developing each of the free economic zones shall contain the matters falling under each of the following subparagraphs: 1. The name, location and area of the free economic zone; 2. The need to be designated as the free economic zone; 3. The undertaker of the development project inside the free economic zone (hereinafter referred to as the "development project"); 4. Methods of carrying out the development project; 5. Ways of securing financial resources; 6. Program for land utilization and program for a major infrastructure;

5 7. Program for population accommodation and program for installing residential facilities; 8. Program for traffic control; 9. Program for attracting industries; 10. Program for installing health and medical care, educational and welfare facilities; 11. Program for environmental preservation; 12. Program for attracting foreign investments and building an environment in which foreigners settle; and 13. Other matters prescribed by the Presidential Decree. Article 7 (Cancellation, etc. of Designation of Free Economic Zones) The Minister of Finance and Economy may, on his own initiative or at the request of the Mayor/Do governor, cancel the designation of any free economic zone or alter details of the development project of any free economic zone after going through deliberation thereon or a resolution thereof of the Free Economic Zone Committee. In this case, the provisions of Article 4 shall apply mutatis mutandis to procedures for such cancellation or such alteration, and such insignificant matters as prescribed by the Presidential Decree may be altered without deliberation or resolution of the Free Economic Zone Committee. Article 8 (Effect of Designation of Free Economic Zones) When any free economic zone is designated, the decision, approval and designation falling under any of the following subparagraphs shall be deemed to be in existence: 1. The designation of any urban development district that is made under Article 3 of the Urban Development Act or the development of a program for any urban development project that is made under Article 4 of the same Act; 2. The designation of any planned district that is made under Article 3 of the Housing Site Development Promotion Act and approval for a program for developing any housing site that is granted under Article 8 of the same Act; 3. The designation of any national industrial complex, any general local industrial complex and any urban high-tech industrial complex that is made under Articles 6 through 7-2 of the Industrial Sites and Development Act; and 4. The designation of any tourist spot and any tourist complex that is made under Article 50 of the Tourism Promotion Act. CHAPTERⅢUNDERTAKING OF DEVELOPMENT PROJECT OF

6 FREE ECONOMIC ZONE Article 9 (Approval for Implementation Plan) (1) Every undertaker of the development project shall draw up an implementation plan therefor within 2 years from the date of the publication provided for in Article 4 (6) and obtain approval therefor from the Minister of Finance and Economy under the conditions as prescribed by the Presidential Decree. The same shall apply to a case where he intends to change the approved matters: Provided, That in the event that the development of any free economic zone is implemented on a phased basis in accordance with Article 4 (5), an application for approval of the implementation plan for the final stage shall be filed by the time set separately within the range of 10 years from the date of the publication. (2) The Minister of Finance and Economy shall, when he intends to approve an implementation plan or its modification under paragraph (1), go through deliberation thereon or a resolution thereof of the Free Economic Zone Committee. (3) The Minister of Finance and Economy shall, when he intends to approve an implementation plan or its modification under paragraph (1), consult with the competent Mayor/Do governor thereabout: Provided, That the same shall not apply to a case where any insignificant matter prescribed by the Presidential Decree is approved after it is changed. (4) The implementation plan referred to in paragraph (1) shall contain the zone-unit program that is drawn up in accordance with Article 52 of the National Land Planning and Utilization Act. Article 10 (Publication of Approval for Implementation Plan, etc.) (1) In the event that the Minister of Finance and Economy approves an implementation plan or its modification in accordance with Article 9, he shall publish his approval without delay in the Official Gazette and deliver copies of relevant documents to the competent Mayor/Do governor. (2) The Mayor/Do governor shall, upon receiving the copies of relevant documents delivered under paragraph (1), offer the contents thereof for public perusal for not less than 14 days. Article 11 (Legal Fiction of Authorization and Permission, etc.) (1) In the event that any undertaker of the development project obtains approval for the implementation plan or its modification under Article 9, the permission, authorization, designation, approval, consultations, report, etc. (hereinafter referred to as the "permission, etc.") falling under each of the following subparagraphs shall be deemed to be obtained, and the publication of the approval for implementation plant provided for in Article 10 shall be deemed the publication or the public announcement of the permission, etc. under the relevant Acts, which fall under each of the following subparagraphs:

7 1. Permission for changing the form and quality of land under Article 21-2 of the Grassland Act, and permission for diverting grassland to other purpose under Article 23 of the same Act; 2. Permission for diverting any forest preserve to other purpose under Article 18 of the Forestry Act, the cancellation of the designation of any reserved forest under Article 57 of the same Act, permission for performing any act in the area of the reserved forest under Article 62 of the Act, approval for or consent to logging timbers in the national forest under Article 73 of the same Act and permission for logging standing timbers under Article 90 of the same Act; 3. Permission for or consultations about diverting any farmland under Article 36 of the Farmland Act; 4. Approval for using any agricultural infrastructure for other purpose under Article 20 of the Rearrangement of Agricultural and Fishing Villages Act and approval for development project plan of agricultural or fishing village resorts under Article 67 (4) of the same Act; 5. Approval for setting up factory, etc. under Article 13 (1) of the Industrial Cluster Development and Factory Establishment Act; 6. Consultations with or approval by the management agency under Article 6 of the Rivers Act, permission for carrying out any river work under Article 30 of the same Act and permission for occupying and using any river under Article 33 of the same Act; 7. License for reclamation under Article 9 of the Public Waters Reclamation Act, the publication under Article 13 of the same Act, authorization for and the publication of any implementation plan under Article 15 of the same Act and consultations or approval under Article 38 of the same Act; 8. Approval for installing excreta-treatment facilities under Article 21 of the Act on the Disposal of Sewage, Excreta and Livestock Wastewater; 9. Approval for or any report on installing waste-treatment facilities under Article 30 of the Wastes Control Act; 10. Authorization for any general waterworks and industrial waterworks under Articles 12 and 33-2 of the Water Supply and Waterworks Installation Act, and authorization for installing the tap-water system for private use and industrial-water system for private use under Articles 36 and 38 of the same Act; 11. Permission for the power-generation business, the power-transmission business, the powerdistribution business or the power-sale business under Article 7 of the Electric Utility Act and authorization for or report on the plan for installing private power-generation equipment under Article 62 of the same Act; 12. Approval for any project program under Article 12 of the Installation and Utilization of Sports Facilities Act;

8 13. Approval for any program for building any tourist spot and any tourist complex under Article 52 of the Tourism Promotion Act; 14. Permission for occupying and using public waters under Article 5 of the Public Waters Management Act and authorization for an implementation plan under Article 8 of the same Act (excluding any public waters to be reclaimed for which a reclamation license is obtained); 15. Consultations with or approval by any road management agency under Article 8 of the Road Act, permission for carrying out any road work under Article 34 of the same Act and permission for occupying and using any road under Article 40 of the same Act; 16. Decision on a program for the urban management under Article 30 of the National Land Planning and Utilization Act, permission for dividing and changing the form and quality of any land under Article 56 of the same Act, the designation of any undertaker of the urban planning facility project under Article 86 of the same Act and authorization for any implementation plan under Article 88 of the same Act; 17. Permission for carrying out any public sewerage work under Article 13 of the Sewerage Act and permission for occupying and using any public sewerage under Article 20 of the same Act; 18. Permission for reburying any grave under Article 23 of the Funeral Services, etc. Act; 19. Permission for carrying out any harbor work under Article 9 (2) of the Harbor Act and approval for any implementation plan under Article 10 (2) of the same Act; 20. Designation of any undertaker of the urban development project under Article 11 of the Urban Development Act, authorization for forming any association under Article 13 of the same Act and authorization for and the publication, etc. of any implementation plan under Articles 17 and 18 of the same Act 21. Approval for any implementation plan of the housing site development project under Article 9 of the Housing Site Development Promotion Act; 22. Authorization for carrying out any project under Article 28 of the Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for the Residents; 23. Approval for any basic program for developing any apartment complex under Article 20 of the Housing Construction Promotion Act; 24. Permission for opening any private road under Article 4 of the Private Road Act; 25. Permission for logging timbers under Article 14 of the Work against Erosion or Collapse Act, and the cancellation of designation of region for anti-erosion or collapse work under Article 20 of the same Act;

9 26. Permission for carrying out any small-river work under Article 10 of the Small River Maintenance Act; 27. Permission for collecting aggregate under Article 22 of the Aggregate Picking Act; 28. Permission for using and profiting from any state property under Article 24 of the State Properties Act; 29. Permission for using and profiting from any administrative or preservation property under the proviso of Article 82 (1) of the Local Finance Act; 30. Consultations about the validity of supplying any integrated energy under Article 4 of the Integrated Energy Supply Act; 31. Consultations about any program for using energy under Article 8 of the Energy Use Rationalization Act; 32. Consultations about any assessment statement under Article 17 of the Act on Assessment of Impacts of Works on Environment, Traffic and Disasters, etc.: Provided, That consultations about the assessment statement of impacts on environment shall be excluded; 33. Approval for any implementation plan of developing the distribution complex under Article 11 of the Promotion of Distribution Complex Development Act; and 34. Designation of any undertaker of the industrial complex development project under Article 16 of the Industrial Sites and Development Act and approval for an implementation plan of the industrial complex development project under Articles 17 and 18 of the same Act. (2) The Minister of Finance and Economy shall, in the event that he approves any implementation plan or its modification, which include the matters falling under any subparagraph of paragraph (1), in accordance with Article 9, consult in advance with the heads of administrative agencies concerned. In this case, the heads of administrative agencies concerned shall not comply with such consultations in violation of the standards for granting permission, etc. provided for in the relevant Acts. Article 12 (Commencement of Development Project) (1) The time limit for launching the development project of any free economic zone shall be within one year from the date on which approval for the implementation plan is obtained under Article 9 (1): Provided, That in the event that the Minister of Finance and Economy deems it inevitable to extend the time limit for starting such development project, such time limit may be extended only once within the scope of one year. (2) In the event that the development project is not launched within the time limit fixed under paragraph (1), the approval for the implementation plan shall be made invalid on the date following the date on which the time limit expires.

10 Article 13 (Land Expropriation) (1) Every undertaker of the development project may, when it is necessary for carrying out the development project, expropriate (including use; hereinafter the same shall apply) land, goods or rights (hereinafter referred to as the "land, etc.") provided for in Article 2 of the Act on the Acquisition of Land, etc. for Public Works and the Compensation Therefor. (2) In the event that the approval for an implementation plan is published in accordance with Article 10, the approval of project and the publication thereof provided for in Articles 20 and 22 of the Act on the Acquisition of Land, etc. for Public Works and the Compensation Therefor shall be deemed to be in existence, and any application for an adjudication shall be filed within the period of the development project that is fixed in the implementation plan provided for in Article 9, notwithstanding Articles 23 and 28 of the same Act. (3) The land expropriation committee having jurisdiction over the adjudication on the expropriation of the land, etc. referred to in paragraph (1) shall be the Central Land Expropriation Committee. (4) The Act on the Act on the Acquisition of Land, etc. for Public Works and the Compensation Therefor shall apply mutatis mutandis to the expropriation of the land, etc. referred to in paragraph (1) except as otherwise provided for in this Act. Article 14 (Inspection of Work Completion) (1) In the event that any undertaker of the development project completes his development project in whole or in part, he shall promptly have the completion of his development project inspected by the Minister of Finance and Economy under the conditions as prescribed by the Presidential Decree. In this case, the Minister of Finance and Economy shall consult in advance with the heads of administrative agencies concerned. (2) In the event that any undertaker of the development project has the completion of his development project inspected in accordance with paragraph (1), he shall be deemed to have the completion of his development project inspected or have the completion of his development project authorized in accordance with the permission, etc. provided for in each subparagraph of Article 11 (1). (3) Any developed land and any installed facilities shall be prohibited from being used before the completion of the relevant development project is inspected in accordance with paragraph (1): Provided, That the same shall not apply to a case where permission for use thereof is obtained from the Minister of Finance and Economy under the conditions as prescribed by the Presidential Decree. (4) The Mayor/Do governor shall manage any free economic zone for which the development project is completed in accordance with the zone-unit program that is contained in the implementation plan published under Article 10.

11 Article 15 (Reduction or Exemption of Taxes and Charges) (1) The State and local governments may, in the event that it is required for smoothly carrying out the development project of any free economic zone, may grant any undertaker of the development project the reduction or the exemption of taxes such as the corporate tax, the income tax, the customs, the acquisition tax, the registration tax, the property tax and the composite land tax, etc. as prescribed by the Restriction of Special Taxation Act, the Customs Act and the Local Tax Act. (2) The State and local governments may, in the event that it is required for smoothly carrying out the development project of any free economic zone, grant any undertaker of the development project the reduction or the exemption of development charges, the cost of developing farmland, the cost of developing substitute grassland, the cost of creating substitute forest, traffic-incurred charges, the cooperation contributions for the preservation of ecosystem, occupation and use fees of public waters and environment improvement charges as prescribed by the Restitution of Development Gains Act, the Farmland Act, the Grassland Act, the Forestry Act, the Urban Traffic Readjustment Promotion Act, the Natural Environment Conservation Act, the Public Waters Management Act and the Environment Improvement Expenses Liability Act. CHAPTERⅣASSISTANCE ASSISTANCE IN MANAGEMENT ACTIVITIES OF FOREIGN-INVESTED INVESTED ENTERPRISES Article 16 (Tax and Financial Assistance) (1) The State and local governments may grant every foreign-invested enterprise that is located in any free economy zone (hereinafter referred to as the "foreign-invested enterprise located in free economy zone") the reduction or the exemption of national and local taxes as prescribed by the Restriction of Special Taxation Act, the Customs Act and the Local Tax Act. (2) Local governments may develop sites to be rented to foreign-invested enterprises located in free economy zone, grant them the reduction or the exemption of the rentals of the land, etc. and provide funds needed to install medical, educational and other convenience facilities and to build housing for foreigners with the aim of attracting foreign-invested enterprises. (3) The State shall, if any local government provides the funds referred to in paragraph (2), financially support such local government under the conditions as prescribed by the Presidential Decree. (4) The State and local governments shall grant every foreign-invested enterprise located in free economy zone the reduction or the exemption of the rentals of national and public properties under the conditions as prescribed by the Presidential Decree, notwithstanding the provisions of State Properties Act, the Local Finance Act and other Acts and subordinate statutes. (5) The State and local governments may permit any undertaker of the development project or any foreign-invested enterprise located in free economy zone to use or profit from national and

12 public properties owned by the State or local governments, or rent or sell such national and public properties to such undertaker of the development project or such foreign-invested enterprise located in free economy zone through a free contract, notwithstanding the provisions of the State Properties Act, the Local Finance Act and other Acts and subordinate statutes. Article 17 (Exclusion of Application of Other Acts, etc.) (1) The provisions of Article 31 of the Act on the Honorable Treatment and Support of Persons, etc. of Distinguished Services to the State, Article 24 of the Employment Promotion and Vocational Rehabilitation of Disabled Persons Act and Article 12 of the Employment Promotion for the Aged Act shall not apply to any foreign-invested enterprise located in free economy zone. (2) The provisions of Articles 4 and 12 of the Act on the Protection of the Business Sphere of Small and Medium Enterprises and Promotion of Their Cooperation shall not apply to any foreign-invested enterprise located in free economy zone. (3) The provisions of Articles 7, 8, 12, 18 and 19 of the Seoul Metropolitan Area Readjustment Planning Act shall not apply to any foreign-invested enterprise located in free economy zone. (4) Any foreign-invested enterprise located in free economy zone may grant its workers unpaid days-off and its female workers unpaid physiologic leaves, respectively, notwithstanding the provisions of Articles 54 and 71 of the Labor Standards Act, and the provisions of Article 57 of the same Act shall not apply to such foreign-invested enterprise located in free economy zone. (5) The Minister of Labor may expand the work of seconding workers who are engaged in the expert types of business only to any foreign-invested enterprise located in free economy zone after going through deliberation thereon and a resolution thereof of the Free Economic Zone Committee and extend their seconding period, notwithstanding the provisions of Articles 5 and 6 of the Protection, etc. of Dispatched Workers Act. (6) The rental period of national and public properties for any foreign-invested enterprise located in free economy zone may be determined within the scope of 50 years, notwithstanding the provisions of Articles 24 (3), 27 (1) and 36 (1) of the State Properties Act and the provisions of Articles 82 (2) and 83 (2) of the Local Finance Act, and permanent facilities may be installed by such foreign-invested enterprise. In this case, the term may be laid down taking into account the kinds of the relevant facilities that requires the relevant foreign-invested enterprise to donate such facilities to the State or the local government concerned or to return such facilities after restoring them to their original state when the rental period expires. Article 18 (Preferential Assistance in Infrastructure) The State and local governments shall provide preferential assistances in the construction of infrastructures such as roads and water supply to vitalize the free economic zones under the conditions as prescribed by the Presidential Decree.

13 Article 19 (Maintenance of Industrial Peace) The employer of every enterprise located in every free economic zone and his workers shall endeavor to maintain the industrial peace by strictly abiding by the procedures provided for in relevant Acts for labor disputes. CHAPTERⅤIMPROVEMENT OF LIVING CONDITIONS FOR FOREIGNERS Article 20 (Provision of Foreign-Language Services) (1) The Mayor/Do governor shall render foreign-language services through the publication, receipt and handling of official documents in foreign languages with the aim of enhancing conveniences for foreign-invested enterprises located in free economy zone and foreigners. (2) Necessary matters concerning the scope and methods of rendering the foreign-language services referred to in paragraph (1) shall be prescribed by the Presidential Decree. Article 21 (Payment in Ordinary Transaction) Within any free economic zone the price in the ordinary transaction whose scale is smaller than that prescribed by the Presidential Decree may be paid directly by means of the foreign exchange between the parties of such transaction in accordance with Article 3 (1) 4 of the Foreign Exchange Transaction Act. Article 22 (Establishment and Operation of Foreign Educational Institutions) (1) Notwithstanding the provisions of Article 3 of the Private School Act, any foreign school corporation may establish a foreign educational institution in any free economic zone after obtaining approval therefor from the Minister of Education and Human Resources Development. (2) The Minister of Education and Human Resources Development shall, when he intends to grant approval for the establishment of any foreign educational institution in accordance with paragraph (1), go through deliberation thereon and a resolution thereof of the Free Economic Zone Committee. (3) Necessary matters concerning the establishment and operation of a foreign educational institution under paragraph (1), including qualifications for any foreign school corporation entitled to establish such foreign educational institution and conditions for granting approval for establishing such foreign educational institution, shall be prescribed by separate Acts. (4) The provisions of Articles 7, 8 and 18 of the Seoul Metropolitan Area Readjustment Planning Act shall not apply to any foreign educational institution established pursuant to paragraph (1).

14 (5) In the event that people at home intend to get into any foreign educational institution located in any free economic zone or any foreigners' school established in accordance with Article 60-2 of the Elementary and Secondary Education Act, the State shall not restrict their admissions on the grounds of the requirements of foreign residence. (6) The State and local governments may provide any foreign educational institution established in any free economic free zone with funds needed to purchase sites, install facilities and operate itself, or with sites themselves. (7) Any high school that is located in any free economic zone and established with the aim of graduating internationally and professionally trained students through the education on international relations and specific foreign region, etc. (hereinafter referred to as the "international high school") may stipulate contract terms that include appointment qualifications, appointment period, salaries, work conditions and the records and achievements of teaching, etc. and appoint foreign teachers needed to operate its curriculums, under the conditions as prescribed by the Presidential Decree, notwithstanding Article 21 of the Elementary and Secondary Education Act, Articles 6 and 32 (1) of the Public Educational Officials Act and Articles 52 and 54-4 (1) and (3) of the Private School Act. (8) The provisions of Articles 23, 24, 26, 29 and 46 of the Elementary and Secondary Education Act shall not be required to apply to the international high school. (9) The director of the international high school may permit any foreigner with academic attainments equal to or higher than the graduation of any junior high school to be admitted to his international high school, notwithstanding the provisions of Article 47 of the Elementary and Secondary Education Act. Article 23 (Opening of Foreigner-Only Medical Institutions or Foreigner-Only Pharmacies) (1) Any foreigner may open a foreigner-only medical institution in any free economic zone after obtaining permission therefor from the Minister of Health and Welfare. In this case, the kinds of such foreigner-only medical institution shall be a general hospital, a hospital, a dental clinic and a medical care hospital provided for in Article 3 of the Medical Service Act. (2) Any foreigner may open a foreigner-only pharmacy in any free economic zone after having such pharmacy registered with the Minister of Health and Welfare. (3) In the event that the Minister of Health and Welfare grants permission for opening any foreigner-only medical institution in accordance with paragraph (1), he shall go through deliberation thereon and a resolution thereof of the Free Economic Zone Committee. (4) Any foreigner-only medical institution or any foreigner-only pharmacy that is opened under this Act shall be deemed the medical institution or the pharmacy that is opened under the Medical Service Act or the Pharmaceutical Affairs Act.

15 (5) Any foreigner-only medical institution or any foreigner-only pharmacy that is opened in accordance with paragraphs (1) and (2) shall not be deemed any medical care institution that is established pursuant to the National Health Insurance Act, notwithstanding the provisions of Article 40 (1) of the same Act. (6) Any holder of the foreign medical license, the foreign dental license or the foreign pharmaceutical license may, if he is in conformity with the standards set by the Minister of Health and Welfare, work for any foreigner-only medical institution or any foreigner-only pharmacy that is opened in any free economic zone. In this case, the holder of the foreign medical license or the foreign dental license may not render his medical or dental services beyond the scope of duties permitted under Article 2 of the Medical Service Act. (7) Any doctor, any dentist or any pharmaceutist who works for any foreigner-only medical institution or any foreigner-only pharmacy shall be prohibited from rendering medical or pharmaceutical services for local people. (8) Any opener of the foreigner-only medical institution or the foreigner-only pharmacy shall put up any signs, inside and outside such foreigner-only medical institution or such foreigner-only pharmacy, that serve for local people to easily understand its exclusive medical services only for foreigners. (9) In the event that the Minister of Health and Welfare prescribes separately matters necessary for the application of the relevant regulations to foreigner-only medical institutions and foreigner-only pharmacies, he shall go through deliberation thereon and a resolution thereof of the Free Economic Zone Committee. Article 24 (Retransmitting of Foreign Broadcasts) Any integrated broadcasting business operator who runs his broadcasting business covering free economic zones may constitute and operate the number of channels used to retransmit foreign broadcasts to such free economic zones within the scope prescribed by the Presidential Decree, notwithstanding the provisions of Article 70 (1) of the Broadcasting Act. CHAPTERⅥFREE ECONOMIC ZONE COMMITTEE, ETC. Article 25 (Establishment and Operation) (1) The Free Economic Zone Committee shall be established under the Ministry of Finance and Economy to deal with affairs involving free economic zones. (2) The Free Economic Zone Committee shall deliberate and resolve on the matters falling under each of the following subparagraphs: 1. Matters concerning the basic policy and the system with regard to free economic zones;

16 2. Matters concerning the designation, the cancellation of designation, and the alteration of designation, of any free economic zone; 3. Matters concerning any plan for developing free economic zone under Article 6; 4. Matters concerning the provision of administrative services needed by foreign-invested enterprises to run their businesses in free economic zones; 5. Matters concerning the development of free economic zones; 6. Matters concerning the coordination of opinions with the heads of central administrative agencies and the Mayor/Do governor in connection with free economic zones; and 7. Other necessary matters concerning the designation and operation of any free economic zone, which are prescribed by the Presidential Decree. (3) The Free Economic Zone Committee shall consist of one chairman, one vice chairman, ex officio members and not more than 10 commissioned members. (4) The Minister of Finance and Economy shall be the chairman and the vice chairman shall be the person who is elected from among the commissioned members referred to in paragraph (6). (5) The ex officio members shall be the persons prescribed by the Presidential Decree from among the heads of central administrative agencies and the heads of institutions corresponding to the former. (6) The commissioned members shall be commissioned by the chairman from among the persons of profound knowledge and experiences contributable for the development and operation of the free economic zones, who are not public officials. (7) Necessary matters concerning the composition and operation of the Free Economic Zone Committee shall be prescribed by the Presidential Decree. Article 26 (Free Economic Zone Planning Group) (1) The free economic zone planning group shall be established under the Ministry of Finance and Economy to perform the work of assisting the Free Economic Zone Committee at the working-level. (2) The free economic zone planning group shall perform the tasks falling under each of the following subparagraphs: 1. The formulation and planning of policies and systems with regard to the free economic zones; 2. The operation of the legal system with regard to the free economic zones;

17 3. Consultations about any plan for developing any free economic zone; 4. The assistance in the operation of the Free Economic Zone Committee such as preparation of the agenda, etc.; 5. The survey of materials, public relations and international cooperation with regard to the free economic zones; and 6. Other matters prescribed by the Presidential Decree. (3) Necessary matters concerning the composition and operation of the free economic zone planning group shall be prescribed by the Presidential Decree. Article 27 (Special Case of Administrative Affairs by Local Governments) (1) The Mayor/Do governor shall perform administrative affairs with regard to free economic zone falling under each of the following subparagraphs for himself from among the administrative affairs that the head of Si/Gun/autonomous Gu is mandated to perform: 1. Administrative affairs involving the supply of housing, etc. under Articles 32, 33-2, 44 and 44-3 of the Housing Construction Promotion Act; 2. Administrative affairs involving permission for construction and the management of buildings under Articles 4, 8, 9, 10, 12 (3), 14 through 16, 18, 23, 25, 25-2, 27, 29, 35, 36, 69, 72, 74 and 83 of the Building Act; 3. Administrative affairs involving the assessment of impacts on environment under Article 6 of the Act on Assessment of Impacts of Works on Environment, Traffic and Disasters; 4. Administrative affairs involving the recycling of resources under Articles 7, 15, 32, 34 and 42 of the Act on the Promotion of Saving and Recycling of Resources; 5. Administrative affairs involving the installment and management, etc. of waste-treatment facilities under Articles 5 through 7, 13, 15 and 24 of the Wastes Control Act; 6. Administrative affairs involving the conservation of soil under Articles 11 and 12 of the Soil Environment Conservation Act; 7. Administrative affairs involving the conservation of water quality under Articles 38-2, 38-4 and 60 of the Water Quality Conservation Act; 8. Administrative affairs involving the treatment of sewage, excreta and livestock wastewater, etc. under Articles 4-2, 10, 12, 14, 14-2, 16, 18 through 20, 26, 28, 32, 34, 35, 45 and 51 of the Act on the Disposal of Sewage, Excreta and Livestock Wastewater;

18 9. Administrative affairs involving the management of drinking water under Articles 6 and 7 of the Management of Drinking Water Act; 10. Administrative affairs involving the installation and management of wastewater reclamation and reusing system under Articles 11, 21-2, 32, 38-2, 59 and 65 of the Water Supply and Waterworks Installation Act; 11. Administrative affairs involving anti-pollution measures under Article 50 of the Prevention of Marine Pollution Act; 12. Administrative affairs involving the management of sewerage, etc. under Articles 7, 20 through 24-2, 26 through 29, 32, 37, 37-2, 38, 39 and 40 of the Sewerage Act; 13. Administrative affairs involving the finding and utilization of groundwater under Articles 7 through 10, 13 through 17, 20, 21, 31 through 35 and 41 of the Groundwater Act; 14. Administrative affairs involving the management and utilization of forest, including permission for logging standing timbers, the alteration of form and quality of any forest and the collection of stones, earth and sand under Articles 90, 90-2 and 90-6 of the Forestry Act; 15. Administrative affairs involving the development of any plan for creating urban parks or the creation and management, etc. of urban parks under Articles 4 through 9, 11 through 16, 18, 20, 21, 23-2, 26, and 29 of the Urban Park Act and Article 86 of the National Land Planning and Utilization Act; 16. Administrative affairs involving permission for and consultations about the diversion of farmland and the development of any plan for utilizing farmland under Articles 8, 10, 11, 13, 14, 19, 37, 38, 45 through 48, 51 and 52 of the Farmland Act; 17. Administrative affairs involving permission for the business of installing amusement park facilities and the management of such facilities under Articles 5, 33 through 36, 72, 73 and 81 of the Tourism Promotion Act; 18. Administrative affairs involving permission for outdoor advertisements, etc. and their control, etc. under Articles 3, 7 through 10-2, 13, 15, 20 and 20-2 of the Outdoor Advertisements, etc. Control Act; 19. Administrative affairs involving permission for occupying and using public waters and their management, etc. under Articles 5 through 10, 12 through 14, 16 through 19 and 24 of the Public Waters Management Act; 20. Administrative affairs involving application for the designation of any urban development district, etc. under Articles 3, 7, 10, 11, 25, 28 and 45 of the Urban Development Act;

19 21. Administrative affairs involving the imposition and collection, etc. of any fine for negligence incurred by a delay in the registration of real estate under Articles 3 through 5 and 12 of the Act on Special Measures for the Registration of Real Estate; 22. Administrative affairs involving permission for the acquisition of land and the report thereon by foreigners, etc. under Articles 4 through 6 and 9 of the Foreigner's Land Acquisition Act; 23. Administrative affairs involving permission for land transaction and the imposition and collection of fine for negligence, etc. under Articles 118 through 124 and 144 of the National Land Planning and Utilization Act; 24. Administrative affairs involving the collection of development charges, etc. under Article 23 (2) of the Restitution of Development Gains Act; 25. Administrative affairs involving the carrying out of any urban planning project, the opening, repairing and maintaining of local roads and Si/Gun roads, the determination of road boundary, the determination of any urban planning and the management of roads, etc. under Articles 19, 20, 23-2, 24, 25, 28, 39, 50 and 54-5 of the Road Act; 26. Administrative affairs involving the imposition and collection of any local tax, etc. under Articles 2 and 6 of the Local Tax Act; 27. Administrative affairs involving the delegation and entrustment of authority under Article 104 of the Road Traffic Act; 28. Administrative affairs involving permission for business, the revocation of any permission and the imposition of fine for negligence under Articles 22, 25, 55 through 59, 62, 64, 65, 67, 69 and 78 of the Food Sanitation Act; 29. Administrative affairs involving report on any public sanitation business and the closure of any public sanitation business establishment under Articles 3, 11, 11-2, 12 and 23 of the Public Health Control Act; and 30. Administrative affairs involving the preparation of medicines, the making of dispensary preparations and the sales of medicines under Articles 21, 23, 41 and 42 of the Pharmaceutical Affairs Act. (2) The Mayor/Do governor shall establish an administrative body in charge of dealing with the administrative affairs referred to in paragraph (1) (hereinafter referred to as the "administrative body"). In this case, if any free economic zone overlaps in not less than two Cities/Dos, the relevant Mayors/Do governors shall establish a joint administrative body through consultations. (3) The Mayor/Do governor shall appoint the head of the administrative body after consulting with the Minister of Finance and Economy thereabout in advance. In this case, if any free economic

20 zone overlaps in not less than two Cities/Dos, the relevant Mayors/Do governors shall jointly appoint the head of the administrative body through consultations. (4) The State shall financially support part of the expenses needed to operate the administrative body. Article 28 (Ombudsman, etc.) (1) An ombudsman shall be appointed in the administrative body with the assignment of resolving bottlenecks to the management of any foreign-invested enterprise located in free economy zone and to living conditions of foreigners. (2) A branch office of any incorporated association that performs commercial arbitrations designated by the Minister of Commerce, Industry and Energy under Article 40 of the Arbitration Act shall be set up in the administrative body with the assignment of settling fairly and speedily any commercial dispute and keeping international transactions in order in any free economic zone. CHAPTERⅦSUPPLEMENTARY PROVISIONS Article 29 (Publication) (1) The Minister of Finance and Economy may publish any type of business or any facilities prescribed by the Presidential Decree from among the types of business or facilities, which are judged inappropriate to be located in any free economic zone in the light of the operational objective of the free economic zones (hereinafter referred to as the "inaccessible type of business, etc.") after going through deliberation thereon or a resolution thereof of the Free Economic Zone Committee. (2) In the event that any inaccessible type of business, etc. is located in any free economic zone, the Minister of Finance and Economy may order the relevant enterprise to suspend the business or shut down the facilities. The same shall apply to a case where any person who is located in any free economic zone converts the type of his business to the inaccessible type of business and installs facilities for such business, which are both published in accordance with paragraph (1). (3) The Minister of Finance of Economy shall, when he intends to order the type of business suspended and the facilities shut down under paragraph (2), hold a hearing. (4) In the event that any person under orders given in accordance with paragraph (2) fails to execute the orders, the Minister of Finance and Economy may vicariously execute such orders under the Administrative Vicarious Execution Act. (5) The provisions of paragraphs (2) through (4) shall not apply to any inaccessible type of business, etc. that is already located in the relevant free economic zone at the time of the publication referred to in paragraph (1).