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Fine Chemicals Korea, Where Success Knows No Limits 2 Index Success Cases Investment Incentives 16

3  According to the Small and Medium Business Administration (2013), the global fine chemical industry stood at USD 1 trillion in 2012 and is expected to reach USD 1.2 trillion in 2016, posting a CAGR of 4.7%. (Unit : USD 100 mn) Global fine chemicals market outlook Source: Small and Medium Business Administration (2013), ｢ Technological roadmap for SMEs: Issue No. 7 Chemical Process ｣

4 (Unit: EUR bn) Source: CEFIC (2014), The European Chemical Industry: Facts and Figures Germany149.7 China1,047.3 Japan151.6 USA465.7 Korea th

5  Global fine chemicals market growth by segment: Semiconductor parts materials (10.0%), display parts materials (9.2%) and separators (8.3%) (Unit: USD 100 mn) Global fine chemicals materials market outlook by key segment Source: Small and Medium Business Administration (2013), ｢ Technological roadmap for SMEs: Issue No. 7 Chemical Process CAGR (%) Dye & pigment Semiconductor parts materials ,0091, Display parts materials Eco-friendly fine paint Bioplastics Fine nanofilms Separators Smart fiber Automotive plastic materials ｣

6 Source: Chemical & Engineering News (July 28, 2014), "Cover Story: Global Top 50," p th 23 rd 31 st 7 6

7  By segment, the basic inorganic chemicals segment stood at KRW trillion in 2013, the largest in the fine chemical industry, followed by paint and ink (KRW 6.21 trillion) and pigment and dye (KRW trillion). Production of Korea’s fine chemical industry by segment - Top 3 Note: The chemical industry includes fertilizer, rubber and plastic manufacturing industries, excluding pharmaceuticals Source: KOSTAT, KOSIS DB 7,466,339 KRW mn Basic inorganic chemicals 6,210,604 KRW mn Paint & Ink 2,585,338 KRW mn Pigment & Dye 7

8  Korea’s fine chemicals exports stood at USD billion in 2013, up 6.6% YoY from USD billion in 2012, while Korea’s fine chemicals imports amounted to USD billion in 2013, down 1.7% YoY from USD billion in (Unit : USD 1 mn, %) Export and import trends Note: Based on HS Code Source: KITA, KOTIS DB.

9 Source: KIET; Korea Eximbank Global Economy Research Institute ( ); Naver Search Statistics Global market share in 2012: Key electronic devices & parts DRAM Samsung Electronics HynixDRAM Hynix Display LG Display Small rechargeable battery Samsung SDI, LG Chem Handset Samsung Electronics LG Electronics Pantech

10  Korea boasts advantages thanks to the presence of globally competitive homegrown companies, which have worldwide supply chains with a number of foreign companies, and the Korean market’s role as a test bed. R&D centers with superior talent pool Ability to secure excellent R&D pool

11 Sunchon Yeosu Gwangyang Bay Sihwa Ulsan Banwol Seoul Kyungwon UniversityNanoparticles Soongsil University Molecular design Banwol & Sihwa Industrial Complex Small fine chemicals clusters Greater Seoul Area & central inland Yeosu Petrochemical Industrial Complex Gwangyang Bay Fine chemicals materials cluster Sunchon National University Environment- friendly Materials Process Technology Innovation Jeolla Province Gyeongsang Province - Ulsan Ulsan Petrochemical Industrial Complex Ulsan Fine Chemical Industry Center Ulsan New Chemical Commercialization Center of the Korea Chemical Research Center Korea Testing & Research Institute and Biochemical Commercialization Center Ulsan College (identification of chemicals)

12  Foreign investment in Korea’s chemicals product industry, including fine chemicals, experienced significant fluctuations from 2009 to 2014, and chemicals products accounted for the largest part of the chemical engineering segment until (USD mn, %) FDI trends Source: Ministry of Trade, Industry & Energy ( ) Note: Figures on a notification basis Chemical engineering ,8311, ,178 Chemicals ,7691,

13 $ $ $ $ Sumitomo Chemical Teijin JX Nippon Oil &Energy Ibiden Graphite Korea $ $ $ $ $ $ DuPont Rohm & Haas BASF Dow Chemical Solvay Merck

14 BASF and MOTIE signed a letter of intent on the establishment of its new Electronic Materials R&D Center Asia Pacific. BASF, which is the world’s largest comprehensive chemicals company and headquartered in Germany, operates about 280 production sites and six integrated production facilities in about 200 locations around the world. BASF manufactures fine chemicals, functional chemicals, agricultural chemicals, plastic and much more. InvestmentsInvestments 예정 ▲ BASF researchers at the Electronic Materials R&D Center Asia Pacific Sept R&D Center at Sungkyunkwan University -The 2,400 ㎡ facility is expected to generate production worth KRW 220 bn and many high-skill jobs and employ 42 researchers at the master’s or doctoral level. -The R&D Center will focus on researching inorganic materials and formulations for high- performance applications for LEDs and photovoltaics.

15 Opened the Ewha-Solvay Research & Innovation Center and relocated its global specialty chemicals business to the R&I Center  Solvay SA is a global chemicals company founded by Ernest Solvay, a Belgian industrial chemist, in Belgium in Solvay is listed on the NYSE-Euronext Brussels and Paris The 6,600 ㎡ R&I Center is the fourth such center in Asia. The Center develops OLED display technologies. It serves as a regional center in Asia. Sept.2014Sept.2014 By 2017 Plans to invest KRW 120 bn in the Greater Seoul Area to establish production facilities measuring 99,000 m² To produce ESS, PV, electronic and display materials InvestmentsInvestments

16 Customized efforts to attract investment from major Japanese parts and materials companies Income tax cuts for foreign technicians working at foreign-invested R&D centers will be extended to The government will maintain a flat income tax rate of 17% for foreigners working at headquarters in Korea. This rate was supposed to expire by the end of December, The maximum visa duration for foreign employees working at headquarters has been extended to five years from the current one to three years. R&D centers Target companies Regional headquarters of global companies