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Newsletter for the South Korea businesses and investors (Issue 5, 2014)

Seoul to welcome legal seminar on doing business in the Russian Federation

On 17 October 2014, the law firm ART DE LEX will meet in Seoul with members of the Korean International Trade Association (KITA) to discuss how Korean firms may do business in Russia. Within the seminar, the head and partners of ART DE LEX, together with experts in intellectual property, real estate and construction, public-private partnerships, and antitrust legislation, will discuss such matters as:

  • land tenure and town planning, including opportunities for businesses on public land
  • legal regulation of vertical agreements, trade policies, and compliance programs
  • public-private partnership projects in transport and municipal infrastructure investment
  • Russian intellectual property law for Korean companies
  • risks of doing business in Russia under the sanction regimes 

For registration and additional information go to http://www.artdelex.ru/seminar.

Russian and Korean leaders plan a 21st Century "Silk Road"

Ms. Park Geun-hye, the current President of the Republic of Korea and the Chairperson of the Advisory Council on Democratic and Peaceful Unification, has raised the prospect of a Eurasian economic and geopolitical initiative to improve the economic and logistic integration of European and Asian countries. She has focused recently on two inter-related problems: stimulation of further economic integration in Asia; and the peaceful resolution of the conflict between the South Korea and North Korea.

President Park has characterized the peace plan as a new "Silk Road" that will include roads and railways stretching from the city of Pusan in South Korea, through North Korea, and across Russia, China, and Central Asia to Europe. This vision includes consolidated energy infrastructures, such as "highways" for the transmission of electricity, oil, and natural gas. According to President Park, successful integration could decrease transportation costs and could have a positive impact on international trade and world economic growth.

On 7 November 2013, Russian President Putin remarked on South Korean television and radio that the Eurasia Initiative was an interesting and promising project, similar to plans Russia will implement soon.

The Korean International Trade Association and ART DE LEX recently met with other interested parties in Moscow to begin to work of the legal and practical issues for the two countries in implementing the Eurasia Initiative. These included:

  • main goals and direction
  • strategies for a successful launch 
  • impacts of global political and economic processes
  • possible participants 
  • role of the private sector and business organizations
  • cooperation between the Russian Federation and South Korea

The former President of KITA, Han Duck-soo, who also is a former prime-minister of the Republic of Korea, along with the heads of leading companies, and journalists of The Chosun Ilbo, one of South Korea's leading newspapers, were among the participants.

SEZ established in the Vladivostok region

By its decree of 18 August 2014, the Russian government created a Special Economic Zone (SEZ) for the Vladivostok region. The new SEZ is aimed at creating favorable conditions for investment, high-technology production, and new places of employment.

Special zones, such as the one created for Vladivostok, are situated in the most economically developed regions of Russia, which usually already have several industries and a basic transport infrastructure, are rich in resources, and have a high-quality work force. The costs for the economic zone, which is to be funded by the Ministries of Finance and Economic Development of the Russian Federation, will be RUB 5.365 billion. The development of the desired support for innovation, engineering, transport, and social infrastructure will be more than RUB 300 million.

The SEZ will provide special incentives and benefits for investors and residents of the nearby region, such as:

  • a developed infrastructure, built from municipal funds, at a decreasing cost
  • tax benefits arising from the tax-free zone
  • tax preferences for enterprises
  • simplified administration and communication between government and business

Medvedev calls for proposals and plans for Far Eastern development

Following a 2 July 2014 meeting of the Prime Minister of the Russian Federation, Dmitry Medvedev, and heads of relevant federal departments and agencies, Mr. Medvedev called for continued legislative initiatives in the areas of socioeconomic support, tax incentives, and other state support to the development of the Russian Far East.

The Ministry for Development of the Russian Far East, jointly with the Ministry of Finance and the Ministry of Economic Development, were instructed to analyze the amount of the allocated federal funds for the projects of capital construction in the Far Eastern Federal District and to submit proposals to adjust them in order to advance development of the entire region. Those ministries were to submit, by 15 August, legislative and regulatory proposals for the creation of special subroutines in federal programs, with a view to accelerating development.

By 1 September 2014, the Ministry of Culture and Ministry for Development of the Russian Far East were to issue a joint plan for the redistribution of funding of the government programs, "Development of Culture and Tourism" for 2013-2020, and "Culture of Russia" (2012-2018).

The Minister for Development of the Russian Far East, Alexander Galushka, Alexander Golushka reported on the project of federal law, the regions of faster economic and social growth, and other measures of the Far East region’s national support. According to the Minister of Far East Region Development, the proposed regulations have passed the procedure of general agreement with ministries and departments, but they are not yet formally approved by the Ministry of Economic Development, due to reasons of implementation, the Ministry of Transport due to easily-solved technical issues, or the Ministry of Finance due to several disagreements related to tax matters. 

South Korea interested in cooperation in tourism and information technology in the Murmansk region

In 2013, the Russian Federation adopted a strategy for the development of the Arctic zone through 2020. Earlier this year, the government of the Murmansk region set a target to open the Murmansk competence center for the development and exploration of the Arctic between 2020 and 2025.

First Deputy Governor of the Murmansk region, Alexei Tukavin, met with the temporary Consul General of the Republic of Korea in St. Petersburg, Ms. Pyo Jung Hwa. She arrived with representatives of LG Electronics, and Korean Air. She noted that South Korea is ready to begin active cooperation in the fields of tourism and information technology. In addition, she stated that the Republic of Korea is interested in participating in the special exhibition "Sea - Resources - Technology" in 2015.

South Korean Railway Company proposes a joint railway training center with Russia and North Korea

During a 7 July 2014 telephone interview for the program "Voice of America," Korail Lim In Suk, of the South Korean Railway Company announced that the company's president, Choi Yun Hwi, has proposed the establishment of a tripartite training center for South Korea, the Russian Federation, and North Korea. The center would showcase the South Korean experience in the field of rail transport and encourage the exchange of experience with the other two countries.

Representatives of the South Korean Railway Company stated that tripartite training center will be crucial for the operation of a railway connecting the two Koreas and Russia. Standardization of technology and terminology is crucial for successful operations across the three countries, and the training center therefore will give powerful support to cooperation among their three railway systems.