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.

10 Responses

  1. SeoulBigChris says:

    have you heard anything formally (or otherwise) about D8 partnerships? Your article seems to say they are allowed at first, then that they are prohibited a few sentences down.
    In my case, they explained that I would have been allowed to keep my existing D-8 partnership with no change of investment, and it seemed that they still allowed D-8 partnerships to be formed (although now they would require $100K or soon to be $300K).

  2. I’m afraid I don’t have any particular information about partnerships. Apparently there are so few of them in Korea involving non-Koreans, the authorities haven’t really thought through that side of things carefully.

  3. Ahmad says:

    Dear Steven
    what ll say about this news
    2013-04-15 19:27
    Park addresses foreign businesses’ grievances
    President Park Geun-hye smiles at National Security Office chief Kim Jang-soo (unseen in the photo) at a meeting with senior secretaries in Cheong Wa
    Dae, Monday. / Yonhap
    By Cho Mu-hyun
    President Park Geun-hye is getting friendlier with foreign businesses operating here.
    In the latest case, her administration has scrapped plans… to increase the minimal capital requirement for foreigners looking to start business here from 100 million won to 300 million won.
    The move came after Park met with foreign business leaders Thursday and listened to their complaints about the business environment here. The Ministry of Trade, Industry and Energy (MOTIE) recently planned to increase the minimal capital requirement, but decided to retain the current one after the meeting.
    The ministry is currently putting the last touches to revisions to the law on foreign investment, something it expects to finish this month. It aims to put it into effect starting in June after the revision is approved by the National Assembly.
    Overseas businesspeople, who’ve voiced strong opposition to the increase, are showing slight optimism to “the start of change.”
    James Rooney, CEO of Market Force, who has been doing business in Korea since 1996, personally attended the meeting at Cheong Wa Dae and said Park’s stance was “very constructive.”
    “Let’s give credit where it is due. I think the style she has demonstrated during the meeting was positive, much similar to previous President Kim Dae-jung,” said Rooney. “The conversations were very constructive. All sides believed there were being listened to.”
    According to Rooney, the past two administrations — accounting for a decade — lost the way for dialogue with not just the foreign community, but also people in general. He said Park’s gesture was the start of change.
    “The problem with the previous administrations was that they didn’t engage properly both emotionally and logically in economic development,” said the CEO. “Foreigners meeting with Park felt they were on a level playing field to make an emotional connection with the new administration.”
    “You’re just shooting yourself in the foot if the new capital regulation had been passed,” said Bryan Hopkins, a professor at Sejong University business school.
    The professor agreed with Rooney that the regulation would have had a bad effect on small- to mid-sized companies, businesses the new government has vowed to help.
    “When a foreigner sets up a business elsewhere the first thing they look at is cost. They can go to Singapore; they can go to Myanmar and other Southeast Asian countries. The new regulation would have made them choose alternative markets that are friendlier towards starting business,” he said.
    A ministry official directly involved in the matter defended the now discarded initiative.
    “The ministry believed that considering the size of the Korean economy, 300 million won was the requisite amount businesses needed to function normally and contribute to the market,” he said.
    The official said the government’s own survey drew the conclusion that most foreign businesspeople were self-employed, and moved out of the market as soon as they earned profits.
    “Hong Kong is bigger than Korea. The U.S. is bigger than Korea. In any of these countries, they don’t have a minimal requirement,” retorted Rooney. “When an entrepreneur comes in, he will start small, and grow large and start hiring and open other business, which will ultimately help the Korean economy.”
    Rooney stressed the need for Korea to engage more with the outside world to do better, and to do that the best way would be to connect with foreigners already here.,

  4. Philipp Grunwald says:

    How does “to maintain visa eligibility, the business will be expected to achieve certain minimum business results, such as in terms of sales” fit together with “for the D-8 visa, a businessperson was not required to invest in a corporation”, i.e. assuming that one may not want to run a business that requires certain minimum sales, wouldn’t it make sense to invest the same 300 Mio KRW to obtain the same (or a similar) visa instead?

  5. As I understand, regardless of whether it’s a corporation or not, the government will want evidence that the business is a going concern and not just an excuse for a visa.

  6. Seb says:

    As of January 2014 any information on whether it is $100K or $300K I too am looking for information on partnerships and can’t find anything!

  7. Seb says:

    As of January 2014 is there any more information on whether it is $100K or $300K?
    Also, I haven’t been able to find any information on partnerships . . . Does anyone have any threads or links to info

  8. Freelancer says:

    I believe the current amount is only around $45,000


    I’m interested open a retails business in south korea please guide me how much money do I need to invest for this purpose please also mention me what is the latest investment required for D 8 investor visa ? in my case for the above business what visa do I need ?
    Thanks &regards !

  10. RASHID says:

    I want to establish/incorporate a company mainly for the purpose of export from Korea. Currently I’m on C-3 Visa, Can I initiate the process from here while I’m in Korea and secondly I want to know On investment of 100 Million Wan, only one D-8 visa is granted or more than one visas are possible in case of more than one partners? and if more are possible then how many?