Korea Customs Service Innovates Bonded Factory Regulations... Removing 'Pebbles in Shoes' for Semiconductor Industry

Yoon Tae-sik, Commissioner of the Korea Customs Service (first from the left in the left row), visited Samsung Electronics Hwaseong Plant on the 15th to meet with representatives of semiconductor export companies and listen to their on-site difficulties and suggestions. Photo by Korea Customs Service

[Asia Economy (Daejeon) Reporter Jeong Il-woong] The Korea Customs Service is pushing for regulatory innovation throughout the bonded factory process. The aim is to help national advanced industries such as semiconductors break free from regulatory constraints and focus on business activities. This regulatory innovation is expected to have the effect of removing stones from inside the shoes for companies that need to be proactive.

The Korea Customs Service announced on the 15th that Commissioner Yoon Tae-sik visited Samsung Electronics Hwaseong Campus in Hwaseong, Gyeonggi Province, and held a meeting with the semiconductor industry.

At the meeting, Commissioner Yoon announced the "Support Measures for Customs in National Advanced Industries such as Semiconductors" (hereinafter referred to as the Support Measures). The main points of the Support Measures include ▲regulatory innovation of the bonded factory system ▲creation of a business-friendly domestic and international customs environment ▲establishment of a robust economic security system.

The bonded factory system allows foreign raw materials to be brought into domestic factories for manufacturing and processing without import declaration (without paying customs duties, etc.), and is mainly used in key national industries such as semiconductors and bio.

As of last year, the export ratio using the bonded factory system was highest in semiconductors at 96%, followed by displays at 88%, and bio at 50%.

These industries have benefited from the bonded factory system by omitting customs procedures such as import declaration, taxable customs clearance, and refund application and receipt throughout the entire process of importing raw materials, processing, production, export, and domestic import, as well as reducing financial costs (deferred payment of customs duties, etc.).

Status of bonded factory export share among major domestic industry export amounts as of last year. Provided by Korea Customs Service

However, the "bonded factory goods export/import and transportation procedures," which restrict unauthorized export or use of goods in customs clearance or tax suspension status, have acted as hurdles to business activities.

For example, semiconductor manufacturer Company A enjoyed benefits such as deferred payment of customs and value-added tax on imported raw materials using the bonded factory system, but the adjacent research and development (R&D) center, which is not a bonded factory, had to file import declarations with customs every time semiconductor products were delivered to the R&D center for performance testing, causing inconvenience.

The Korea Customs Service plans to resolve these regulations within the year and support the transportation of goods produced in domestic bonded factories to R&D centers without import customs procedures. The intention is to remove restrictions on activities for national key industry companies where speed must come first.

Summary of Key Tasks for 'Support Measures in Customs for National Advanced Industries such as Semiconductors.' Provided by Korea Customs Service

Additionally, the plan is to minimize government intervention and maximize corporate autonomy by significantly relaxing restrictions on imported goods, expanding the range of items that can be used immediately upon import, allowing constant export/import of tax-suspended goods at R&D centers and omitting export/import declarations, simplifying bonded transportation, and supporting the use of the bonded factory system by upstream and downstream related companies.

Furthermore, to create a business-friendly domestic and international customs environment, the Korea Customs Service will strengthen external cooperation activities to resolve overseas customs difficulties such as product classification disputes and support reducing customs costs and shortening time in the domestic import process.

To establish an economic security system, the focus will be on preventing national advanced industries from falling into raw material supply crises due to global supply chain instability or losing international competitiveness due to the leakage of advanced technology overseas.

Commissioner Yoon Tae-sik said, "We will swiftly implement the support measures and continuously discover tasks reflecting the voices from the industrial field so that domestic advanced industries such as semiconductors can strengthen their competitiveness in the international community by concentrating the capabilities of the Korea Customs Service."

Meanwhile, at the meeting, Commissioner Yoon met with 11 representatives from four companies, including Park Hak-gyu, President of the DX Division at Samsung Electronics; Kim Hong-kyung, Vice President of the DS Division; Lee Chae-soo, President of Lam Research Manufacturing Korea; Kim Jeong-ryeol, Executive Director of Steco; and Kim Yong-su, Executive Director of Nepes, to listen to the on-site difficulties of the semiconductor industry.

This content was produced with the assistance of AI translation services.