Korea strives to become a hub country of Northeast Asia business through its free economic zones across the country.
To achieve the ambitious goal, the Seoul government is offering a variety of benefits to free economic zones, including abolishment of many regulations and offering tax incentives, financial assistance and best residential environment.
"To provide free economic zones with freer international business environment, the Free Economic Zone (FEZ) Planning Office is making all-out efforts to achieve the three targets," said Kwon Pyung-Oh, the director-general for free economic zones.
"First, we plan to make FEZs a business hub that is equipped with advanced office buildings, convention centers, and to attract world-famous educational and medical institutions," he said.
"Second, we will exert our best efforts to make FEZs a hub of Northeast Asia logistics by making the finest use of its geographical merits being contiguous to the giant market China and its global logistics infrastructure," said Kwon.
"Third, we hope to foster FEZs as a hub of future growth-engine industries by building clusters of LED, mobile, bio and IT industries and extending active support to the low carbon and green growth industry," said the head of the FEZ Planning Office.
At present, the government is operating FEZs on a total of 478 square kilometers of land in six regions across the country. It plans to finish the development of the three FEZs each in Incheon, Busan & Jinhae, and Gwangyang Bay by 2020. The development of the other three FEZs Hwanghae, Saemangeum & Gunsan and Daegu & Gyeongbuk, will be finished by 2020-2030.
Business environment of FEZs
Korea is located in the center of the economic bloc of the Pacific-rim, which accounts for 576 percent of the world's GDP. It also secures a giant market, which accounts for one-fourth of the world's population, including China and Japan, one-third of the global freight volume and one-fifth of the global GDP within three hours' flight from Seoul, Kwon said.
"Korea has many strong points, which are different from those possessed by other countries, including Incheon International Airport, the world's No. 2 in air cargo; Busan Port, the world's No. 5 in marine cargo; high-speed railway penetrating all regions in the country; the world's top-class IT technology; and abundant talents armed with a global innovation mind and excellent communication ability," said the director-general.
Noting that Korea leads the world in major sectors, including shipbuilding, mobile communication, LED, semiconductors, and information communication technology (ICT), he said, "The country is also emerging as the center of world trade through conclusions or propulsions of FTAs with the U.S., EU, Chile, Japan, China, India, the Middle East and ASEAN."
Residential environment of FEZs
"As part of its efforts to offer the best educational environment in Asia, the government established the Songdo Global University Campus to accommodate some 10,000 students. In the campus, the State University of New York and George Mason University are to be opened by the end of next year.
"In addition, we are aiming to attract 10 top-class universities from the U.S. and Europe, including the University of North Carolina, University of Missouri and Georgia Institute of Technology, to the campus. Meanwhile, Chadwick International School Songdo and Daegu International School have been operating since the latter half of 2010 for primary, middle and high school students," he said.
"Along with this, we are moving to attract the world's top-class foreign hospitals in order to provide best medical services to Korean and foreign residents in free economic zones. In the regions neighboring hospitals, we plan to build hot springs for rest and sanatoriums to help patients recover their health," he said.
Commenting that the government is also creating various tourism, culture and convenience facilities, including top-tier apartments, a golf village, large-scale theme park, a complex leisure town, exhibition halls and shopping malls, Kwon said, "We will also offer ubiquitous information environment in which people can get global information easily at their finger tips."
A variety of incentives are given to foreign-invested companies in FEZs. "For instance, we are offering corporate and income tax exemption or reduction to over US$ 30 million foreign developers, over US$10 million investors in manufacturing and tourism, over US$ 5 million investors in logistics and medical service institutions, and over US$ 1-million R&D investors for five years. Additional two-year tax favors are given to over US$ 30 million investors in manufacturing, over US$ 20 million investors in tourism, and over US$ 10 million investors in logistics," he explained.
Kwon explained, "At the same time, foreign investors in high-tech, parts & material, and R&D sectors can get a cash grant at a minimum of five percent of the total investment. They are also excluded from the regulations related to labor and investment, which are being applied to domestic companies. Moreover, employees at foreign-invested firms can receive such favors as earned income tax reduction and exemption, special rights to buy new apartments, rental houses, and foreign exchange transactions of less than US$ 10,000 without notice."
The FEZ Planning Office is also offering one-stop administration support and official document services in foreign languages through project managers, he expressed.