Background: In 2013, the filing company relocated its car office from Region A to an industrial complex located in Region B. The Board of Audit and Inspection (BAI) took a disciplinary action against the officials of the Ministry of Trade, Industry and Energy (MOTIE) and Korea Industrial Complex Corporation (KICC) for approving the move-in of the office in October 2014.

The BAI’s position is that the car office of the filing company is a simple repair business and not a manufacturer as recognized by MOTIE, the condition for granting the approval under the Article 2 of the Industrial Cluster Development and Factory Establishment Act.

Major issues: As for the filing company, however, it was notified by MOTIE and the KICC that sheet metal and coating is categorized under the manufacturing sector when the office moved in to the industrial complex back in 2013. In order to comply with the BAI’s opinion, the office should move out of the industrial complex, which will incur damages to the filing company with massive relocation costs. The filing company asked for the Office of Foreign Investment Ombudsman (OFIO)’s support.

Follow-up measures: OFIO visited the filing company’s office and found out that the office hires about 100 employees in a three-storey-building with 3 levels of basement floors. Not only providing repairing service using sheet metals and coating process, the office is also equipped with and uses highly advanced reproduction equipment such as car frame distortion correction device rarely owned by ordinary auto repair centers.

OFIO delivered authoritative interpretation of numerous public organizations such as MOTIE, Statistics Korea, MOLIT and Korea Electric Power Corporation stating that “sheet metal repairs, coating jobs and other car repair activities fall under the category of automotive manufacturing business.” OFIO also explained the economic impact (job creation, increased export) that the filing company has in Korea and requested re-deliberation and more thorough investigation on the matter.

Conclusion: The BAI replied that it will take measures to conduct more thorough investigation and re-deliberate on the matter and OFIO will provide continued support until re-deliberation is completed.