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Ease of Doing Business in

Korea, Rep

Korea, Rep Download Profile (1771.7KB, pdf)
Region OECD high income
Income Category High income
Population 50,617,045
GNI Per Capita (US$) 27,440
City covered Seoul

190

1

DB 2017 Rank

1

100

DB 2017 DTF (% points)

  • local_library
  • group
Topics DB 2017 Rank DB 2016 Rank info_outline Change in Rank DB 2017 DTF (% points) info_outline DB 2016 DTF (% points) info_outline Change in DTF (% points) info_outline
Overall 5 4 down
1
84.07 83.86 down
0.21
Starting a Business 11 17 up
6
95.83 94.36 up
1.47
Dealing with Construction Permits 31 28 down
3
77.84 77.83 up
0.01
Getting Electricity 1 1
-
99.88 99.88
-
Registering Property 39 41 up
2
76.34 76.22 up
0.12
Getting Credit 44 42 down
2
65.00 65.00
-
Protecting Minority Investors 13 10 down
3
73.33 73.33
-
Paying Taxes 23 25 up
2
86.56 86.54 up
0.02
Trading across Borders 32 32
-
92.52 92.52
-
Enforcing Contracts 1 1
-
84.15 84.15
-
Resolving Insolvency 4 6 up
2
89.22 88.75 up
0.47

Positive= Doing Business reform making it easier to do business.Negative= Change making it more difficult to do business.

DB 2017 Rank:

31

DB 2016 Rank:

28

Change in Rank:

down3

DB 2017 DTF (% points):

77.84

DB 2016 DTF (% points):

77.83

Change in DTF (% points):

up0.01

STANDARDIZED WAREHOUSE
Estimated value of warehouse KRW 1,546,123,139
City Seoul
Indicator Korea, Rep OECD high income
Procedures (number) info_outline 10 12.1
Time (days) info_outline 28 152.1
Cost (% of warehouse value) info_outline 4.3 1.6
Building quality control index (0-15) info_outline 8 11.3
  • Measure of efficiency
    No. Procedure Time to Complete Associated Costs
    1

    Request and obtain proof of ownership of land

    Agency: Property Register

    BuildCo must obtain proof of ownership from the Property Register to show that BuildCo has the right to construct a warehouse on the land. The issuance date stated in the Land Registry should be within 3 months prior to the date of submitting the application for a building permit. Once the application for a building permit and the relevant documents are filed with the licensing authority, the authority will forward the design drawing to the relevant regulatory agencies, the fire department and the sewage department. It is possible to obtain proof of ownership (from the Court Registry) immediately after applying over the Internet. The fee for issuing certificate of registered items is KRW 1,000 for issuance via internet.

    1 day KRW 1,000
    2

    Purchase National Housing Bonds (NHB)

    Agency: Commercial bank

    To qualify for a building permit, BuildCo must purchase National Housing Bonds (NHBs) at any commercial bank. The NHB is calculated at a rate ranging from KRW 600.00 to KRW 1,300.00 per sq. m., depending upon the structure of the warehouse. If the warehouse is constructed in steel frame, the rate of KRW 1,300.00 per sq. m. is applied.

    BuildCo can either receive the money paid for the NHBs upon maturity or sell them at a discount (the discount is 10%). Upon purchase, the bank issues a receipt, which must then be presented to the Building Authorities. The cost is calculated as follows: KRW 1,300.00 x 1300.6 sq. m. = KRW 1,690,780.00. However, many sell the NHBs immediately at a discount of 10%, which brings the actual cost incurred by the company to KRW 169,078.00.

    1 day KRW 169,078
    3

    Request and obtain building permit

    Agency: County (Ku) Office of Construction

    BuildCo must submit an application for a building permit to the County (Ku) Office of Construction. The application must include:
    • The size of construction lot;
    • Documentation showing BuildCo's ownership or the right to use the construction lot; and
    • Basic design drawings, which must specify the approximate location of the water pipes, sewage, septic tank, electrical facilities, and telephone lines.

    Once the application for the building permit with the relevant documents is filed with the licensing authority, this authority forwards the design drawings to the relevant regulatory agencies (such as the sewerage department and the fire department). Thus, it is not necessary for the company to obtain separate project clearances from these departments.

    Under the Article 10 of the new Building Code, anyone who intends to construct a building may opt for a fast-track procedure and apply for an "advance decision regarding building permit" before applying for a building permit. If an advance decision is obtained for the construction, the builder must separately apply for and obtain a building permit for the construction. However, when the advance decision is obtained, the relevant approval for the development or re-characterization of land (such approval is needed in certain zoning areas under several relevant laws) is deemed to be obtained. This effect of the advance decision is valid for 2 years from the date of issuance, before the builder applies for the building permit itself.

    In addition, it is possible to submit simultaneous applications for an advance decision and for the traffic and environment impact assessment procedures, and the like, if those procedures are necessary. Accordingly, if the builder obtains an advance decision before applying for the building permit, the time before the construction may be reduced more or less. However, this has not worked well in practice and many companies follow the traditional way.

    According to the Standard for Civil Petitions Treatment published by the Korean Government on December 30, 2005, the duration for obtaining a building permit for a two-story, 1,300-square-meter building is estimated to be 3 -- 14 days, subject to certain circumstances, including whether the work is performed by an agent (a certified architect). The duration can take a few days longer, as the case may be.

    Before construction work begins, the company informs the authority thereof. BuildCo must present a notification application, including:
    • A copy of all relevant contract(s) between the relevant parties (owner, construction company, architect, building inspector, etc.)
    • The design drawings, which must specify the location of the water pipes, sewage, septic tank, electrical facilities, and telephone lines.

    9 days KRW 121,500
    4

    Hire a certified inspector

    Agency: Private Company

    A certified inspector conducts inspections throughout the period of construction. If the company does not hire a certified inspector during construction, there is a penalty of up to 2 years’ imprisonment or a fine of up to KRW 10 million. The inspector is independent of the company. The frequency of inspections varies depending on the size and cost of construction. Generally, an inspection takes place if the inspector and the company deem it necessary. However, in some instances, the contract between the company and the inspector contains a clause specifying the frequency of inspection. There must be at least two inspections throughout the construction, during which the construction work does not stop.

    The cost of is calculated by multiplying the value of the project by the relevant rate of 1.29%, in accordance with the Regulation for Scope of Architect Services and Fee Standard.

    1 day KRW 19,944,988
    * 5

    Request water and sewage and occupancy permit inspections certificate

    Agency: Public Sewer Management Agency

    When installing drainage facilities in a building, the type, size, and other features of the drainage facilities must be reported pursuant to the Sewage Act to the Public Sewer Management Agency. According to the Act’s enforcement provision, the time to complete the inspection should be 14 days, and the cost is KRW 40,000.00. There is no penalty for the authorities if the time line is missed, but they generally meet the deadline.

    1 day KRW 40,000
    * 6

    Request and obtain fire inspection certificate

    Agency: Fire Department

    When BuildCo applies for an occupancy permit, the approval authority will ask the Fire Department to inspect the building. The Fire Department will issue an inspection certificate after inspection of the premises. The average waiting time is one week.

    1 day no charge
    7

    Obtain occupancy permit certificate

    Agency: County (Ku) Office of Construction

    BuildCo must apply for an occupancy permit within 7 days of the completion of construction. The occupancy permit is issued after the fire inspection mentioned in the previous procedure.

    7 days no charge
    * 8

    Receive final inspection from local government

    Agency: Local Government

    1 day no charge
    9

    Obtain connection to water and sewage services

    Agency: Korea Water Company

    7 days KRW 2,600,000
    * 10

    Register the building with the Court Registry

    Agency: Court Registry

    An acquisition and stamp tax must be paid within 30 days of receiving the occupancy permit. The acquisition tax is 2.8% of the value of the property without surcharge (3.16% with surcharge) and the stamp tax is KRW 15,000.00 per land parcel.

    Once the tax is paid, BuildCo must register the warehouse within 60 days from the inspection completion date.

    4 days KRW 43,306,448

    * Takes place simultaneously with previous procedure.

  • Measure of quality
    Answer Score
    Building quality control index (0-15) 8.0
    Quality of building regulations index (0-2) 2.0
    How accessible are building laws and regulations in your economy? (0-1) Available online; Free of charge. 1.0
    Which requirements for obtaining a building permit are clearly specified in the building regulations or on any accessible website, brochure or pamphlet? (0-1) List of required documents; Fees to be paid; Required preapprovals. 1.0
    Quality control before construction index (0-1) 0.0
    Which third-party entities are required by law to verify that the building plans are in compliance with existing building regulations? (0-1) Civil servant reviews plans. 0.0
    Quality control during construction index (0-3) 2.0
    What types of inspections (if any) are required by law to be carried out during construction? (0-2) Inspections by in-house engineer; Inspections by external engineer or firm; Inspections at various phases. 1.0
    Do legally mandated inspections occur in practice during construction? (0-1) Mandatory inspections are always done in practice. 1.0
    Quality control after construction index (0-3) 3.0
    Is there a final inspection required by law to verify that the building was built in accordance with the approved plans and regulations? (0-2) Yes, final inspection is done by government agency; Yes, in-house engineer submits report for final inspection; Yes, external engineer submits report for final inspection. 2.0
    Do legally mandated final inspections occur in practice? (0-1) Final inspection always occurs in practice. 1.0
    Liability and insurance regimes index (0-2) 1.0
    Which parties (if any) are held liable by law for structural flaws or problems in the building once it is in use (Latent Defect Liability or Decennial Liability)? (0-1)  Architect or engineer; Professional in charge of the supervision; Construction company; Owner or investor. 1.0
    Which parties (if any) are required by law to obtain an insurance policy to cover possible structural flaws or problems in the building once it is in use (Latent Defect Liability Insurance or Decennial Insurance)? (0-1) No party is required by law to obtain insurance . 0.0
    Professional certifications index (0-4) 0.0
    What are the qualification requirements for the professional responsible for verifying that the architectural plans or drawings are in compliance with existing building regulations? (0-2) Being a registered architect or engineer; Passing a certification exam. 0.0
    What are the qualification requirements for the professional who supervises the construction on the ground? (0-2) Being a registered architect or engineer; Passing a certification exam. 0.0