Open Korea / IFEZ IFEZ actively attracting FDI by focusing on speedy urban development in Songdo New City The Incheon Free Economic Zone (IFEZ) has been very active in attracting foreign direct investment (FDI) with its goal of becoming a pivotal business center of Northeast Asia. Despite many difficulties in attracting foreign investment, the IFEZ succeeded in inducing a total of 26 cases of FDI worth $27.4 billion as of the end of April this year, Lee Hwan-kyun, commissioner of IFEZ, said. The total FDI breaks down into $14.7 billion for 11 main contracts, $12 billion for seven cases of memorandums of understanding (MOUs), and $700 million for eight cases of letters of intent (LOIs). This includes an international school and an up-to-date hospital that will be established in the free economic zone. In 2005, the IFEZ attracted large amounts of FDI to build an information industrial training center of United Nations Economic and Social Commission for Asia and the Pacific (ESCAP), R&D center of GM Daewoo and an industrial robot assembly factory of Gudel AG, he said. It also attracted Yonsei University, one of the most distinguished private universities in Korea, to the zone for its separate campus for globalization in January this year. In February, it concluded an MOU with Portman Holdings of the United States for construction of a 151-floor twin tower building. As the infrastructure project for the free economic zone is being carried out, FDI is expected to increase at a faster pace in the future, Lee said. To attract more FDI, the IFEZ is offering a variety of taxation and financial incentives to foreign companies doing business in the zone. For example, foreign companies in the free economic zone are 100 percent free from national and provincial taxes for the first three business years. They are also able to enjoy a 50 percent reduction in the taxes for the next two years. In addition, foreign companies doing business in the zone will receive such favors as a reduction in rental charges of land and financial assistance for establishment of roads and other basic facilities. Asked about the strategy to differentiate the IFEZ from other economic free zones in Asia, Lee said, 'As major cities in Asia are striving to secure an economic hub leadership of Northeast Asia, we plan to concentrate all of our administrative power on speedy city development.' For construction of an international city, we will make best efforts to create foundation for attracting foreign investment this year by carrying out reclamation and infrastructure projects as scheduled, he said. 'In particular, we will make a strong push for construction of a ubiquitous (U)- city for the first time in the world, which will serve as the business center of Northeast Asia,' said Lee. Along with this, we will push ahead with the differentiated four strategies this year to build an international free city of the 21st century in the free economic zone, he said. The four strategies are construction of the state-of-the-art informatization city equipped with ubiquitous systems, construction of a comfortable ecological city with the greenbelt accounting for more than 36 percent of the total land, introduction of an advanced new transportation system armed with new technology transportation systems, including bus rapid transit (BRT), and construction of a high-quality city with fine scenery and high-quality public basic facilities. On the government's plan to make Korea a business center country of the Northeast Asia, the commissioner said, 'The northeast Asian region has emerged as one of the world's three trade blocs, along with the EU and North American Free Trade Agreement (NAFTA). Accordingly, countries in Northeast Asia are staging stiff competition to become a center of Northeast Asia in logistics and business. 'China boasting of an annual average economic growth of 9-10 percent has emerged as the 'factory of the world.' Meanwhile, Japan, the world's No. 2 economic powerhouse, is outpacing Korea in terms of advanced technology. Under these circumstances, Korea may fall into the bottom among the three countries if it fails to secure the position as the business center country of Northeast Asia within the coming 5-10 years, considering the speed development of China,' he said. To effectively cope with rapid changes and flow of the global economy, accordingly, the government announced its ambitious plan to make Korea the business center country of Northeast Asia in July 2002, he explained. Related to this, the government designated Incheon as the nation's first free economic zone in August 2003 to make Incheon a new growth engine of the Korean economy. 'Based on global mind and creative professionalism, the IFEZ will become a value creating partner with global-level enterprises and lead the Korean economy persistently,' said Lee. Noting that three years have passed since Incheon was designated as the free economic zone, he said that construction work would begin this year on the 65-floor Asia Trade Tower, a foreign school, a central park, an ecology hall, a foreign hospital, office buildings, a hotel and a department store. Besides, the IFEZ plans to plant a total of 10 million trees in Songdo by 2013 to make it an environmentally-friendly ecological city.

The following are excerpts from an interview with Lee Hwan-kyun, commissioner of the Incheon Free Economic Zone (IFEZ). Q: Countries in Asia are engaging in fierce competition to grow into a business center of Northeast Asia. What do you think is the strong point of the IFEZ compared with Pudong in China, Hong Kong, and Singapore Geographically, Incheon is the center of Northeast Asia and is located in the best place, which can serve as an international strongpoint city like Hong Kong and Singapore. Incheon is adjacent to China with a population of 1.3 billion and Japan, the world's second largest economic superpower. In addition, people can fly to 51 major cities with a population of over 1 million in Northeast Asia from Seoul within 3.5 hours by plane. Incheon is also equipped with advanced infrastructure of both international airport and harbor. In other words, it boasts of the 'sea & air complex logistics system' by combining the Incheon International Airport with the world's No. 10 in passenger transportation and No. 3 in cargo transportation and the 120-year-long Incheon Harbor. Q: There are three districts -- Songdo, Yeongjong and Cheongna -- in the IFEZ. Would you outline your plan to specialize the districts A: We aim to develop the IFEZ into the best business center city of Northeast Asia by creating most attractive business environment and living conditions. The Songdo district on a land of 16 million pyeong (52.8 million square meters) will be developed into advanced industrial city housing a convention center, the Asia Trade Center, a foreign hospital and a luxurious hotel. The Yeongjong district on a land of 41 million pyeong (135.3 million square meters) will be fostered as the core base of aviation and logistics, and the Cheongna district on a land of 5.3 million pyeong (17.4 million square meters) will be developed into an international tourism and leisure estate housing an Asian village, a theme park, a golf course and R&D center. Q: The IFEZ is exerting best efforts to improve the living environment for foreigners living in Incheon. Would you outline such efforts First of all, we attracted a top-class medical center and an educational institution for high-quality education for foreign businessmen's children and health management. For instance, we selected New York Presbyterian Hospital, one of the U.S. top seven hospitals, as a priority negotiator to attract a foreign hospital to the IFEZ. In March this year, we also held a ground breaking ceremony for construction of the Songdo International School boasting the best educational facilities in Northeast Asian region.