The Investment of European Companies in Korean Local Autonomies

서지정보

· 발행기관 : 한국지방자치법학회
· 수록지 정보 : 지방자치법연구 / 9권 / 1호 / 21 ~ 36페이지
· 저자명 : 옥무석

초록

European Union has been 50 years since it launched its history as the European Community in 1957. During the period, the identity of the EU has been developed from a single economic market to the unique political empire in the region of Europe-wide. As one of the non-EU countries, Korea has concentrated on its keen interest in the EU in the various aspects. The increasing trades and investments and enlargement of the economic relationship between these two economic markets show these view points. Furthermore EU will be the largest trade and investment partner of the Korea, if the Korea and EU Free Trade Agreement will come true.
It is the worldwide phenomena that the interdependency and cooperation among nations is getting increased because of the countries’ efforts to induce foreign capital and technologies and strengthen competition power of individual countries. Member countries of the EU has authorized the EU Commission the exclusive competence for establishing common trade policies and coordinating the related policies in the level of EU. Thus, the competence for common trade policies belongs to the EU Commission at first instance and
the individual nations would participate in making decisions to trade policies with the same power as the member countries.
Foreign investment policy in Korea has moved with the development of the local autonomy. With the development of the local autonomy, the policy has been established as one of the economic development policies to achieve both competition and harmonization among the local governments. Decentralization in Korea has led each local autonomy make ideal investment environment and induce global entities to invest in their region. As the biggest change, the initiative of establishing the economic development policy has changed from the central government to local governments. This trend will be defined as the decentralized policy making scheme of economic development.
As for the System to Induce Investment in Decentralized Special Districts, Special Act of Nation Balanced Development has the import role of legal system to Induce Investment in Decentralized Special Districts(Art. 20). The central government and the local autonomous governments can enter into the local development investment agreements in order to promote together businesses of balanced nation development(Para.1). The central government and the local autonomous should take measures including the compilation of
the budget in order to businesses according to the agreements(Para.2).
Some commentators mention that the Regional Specific-Special Zone System
(“RSSZs”) was strongly influenced by the contractualisation of planning which was figured out in the 1980's in the process of adapting the decentralisation and region development policy of France.
Local autonomies have the authorities to conclude investment contracts. Although the Local Autonomy Act Art. 11 provides that local autonomies cannot take national affairs related to nation’s existence, such as diplomacy or national defense, the Art. 35 provides that interchange and cooperation with foreign local autonomies are listed as matter for the decision of the congress of local autonomies. Thus, both articles should consistently be
interpreted, and diplomacy should be taken as the meaning of interchanges between central governments and other interchanges should be allowed to local autonomies. In other words, the local autonomies would not be restricted its power to arrange any international affairs as far as the local autonomies does not infringe the negotiation power of the central government.
Decentralized investment inducement should also be supported in the same level with concentrated investment inducement when private capital is brought for local development. The Private Investment Act provides financial support, free usage of national or public property, guarantee of an obligation, and tax exemption as the supportive ways made by the government. Among these various ways, financial support system and tax incentive system are the most effective methods.
As for the tax incentives related to local development, there are some acts such as the Act of Balanced Local Development and local small and medium enterprises development, the Special Act of Jeju International Liberty City, the Act of Free Economy Zone, the Act of Industry Location and Development, the Act to Authorize and Operate Free Trade Zone and Jeju Special Province and the Special Act of Enterprise City Development. There are also policies and rules to develop and support certain areas and industries. However, these acts and rules still have the concentrated character.
In the globalization age, policy to induce investment is a very critical factor when investors choose the safest and most beneficial place to make investment. Thus, it is very important in the case of decentralized investment inducement. However, there is no local tax items related to any business and local government can give tax benefits only with the land related tax items. Therefore, it can be considered to revive the former local business tax or to establish new local enterprise tax, which will improve tax system to derive tax
competition and harmonization among the local autonomies.
The new local tax system will be introduced in the near future to increase the fiscal independent of the local governments. The present national transfer tax, whose main revenue resources derived from the national value added tax, will be placed by the local consumption tax and local income tax will be introduced in stead of inhabitant tax, a surtax which was imposed on national income or corporate tax.
These circumstances require more feasibility studies for the understanding of the Korea’s investment conditions to reduce the investment risks.

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