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Information for Entrepreneurs and Investors about Changes to the Korean D-8 Visa Rules

The D-8 visa has been a good visa for non-Korean investors and entrepreneurs wishing to live and work in Korea over the long-term. 

Basically, since opening a corporation in Korea had previously required W50 million in paid-in capital, non-Koreans setting up such a corporation in Korea who made the investment to set up a corporation had also been able to apply for and receive a visa to live and work in Korea over the long-term. There was a little paperwork involved, but by following the rules, the initial investment burden wasn't excessive. Furthermore, after jumping through the hoops to set things up, as long as the business remained in legal compliance, the visa continued to be renewed, even if the initial investment ended up getting spent on things like living expenses and/or the business did not actually make much money.

Unfortunately, this approach attracted "investments" from non-Koreans (primarily from other Asian countries, I'm told) who would bring in money to set up the corporation in order to get the visa to live in Korea, but without intention of actually running a profitable company. Furthermore, the W50 million bar was so low that not a lot of economic activity was generated by vibrant businesses set up with such small amounts of capital. Not just that, in 2010, the minimum capital amount in Korea for setting up a corporation (both Koreans and non-Koreans) was reduced to just W1 million, making it necessary to separate the visa and capital requirements.

The government increased the FDI required for D-8 visa eligibility to W100 million a few years ago in order to sift out investors that the government perceived were not providing adequate economic value to the nation. Along with that, by meeting the W100 million FDI threshold for the D-8 visa, a businessperson was not required to invest in a corporation; sole-proprietorships and partnerships were permitted, too.

However, things are still changing. At the end of 2012, new rules went into effect requiring all D-8 visa holders to convert their sole-proprietorships into corporations, and any new D-8 visa applications would require the corporate form of business. Perhaps an added benefit of this approach (from the government's view) was that it would be easier to monitor the viability of a business run along corporate lines, than a sole proprietorship or partnership where business and personal fund mixing makes it difficult to analyze objectively. 

Now the government is raising the minimum initial investment amount to W300 million in order to qualify for the D-8 visa, a considerably higher amount than before. As far as I know, this hasn't been announced formally, but based on my discussions with the foreigner ombudsman's office at KOTRA, it's not a rumor. I understand that the new FDI requirements will go into effect in mid-2013. Furthermore, just bringing in the W300 million won't be enough; to maintain visa eligibility, the business will be expected to achieve certain minimum business results, such as in terms of sales.

For sure, the Korean economy is one where small companies struggle and large conglomerates run the show. Some are considering that these new rules reflect a lack of interest by the government in supporting foreign small businesses. However, it seems likely to me that the government is more concerned about closing loopholes that some foreigners have been using to live in Korea under visas that don't reflect the purpose of those visas. The government's decisions are probably helped by a belief that many of these small foreign businesses are not much of a contributor to the Korean economy.

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