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Korea’s Ministry of Knowledge Economy (MKE) has steadily maintained its moves to designaten Free Economy Zones (FEZ) in the nation since its first FEZ designation of IFEZ in 2003 in order to strategically respond to anticipated economical difficulties especially in the regional market and thus secure new growth engines.
Korea needed a catalyst to return to economic growth and stability, in the aftermath of the 1997-1998 financial crisis and being sandwiched between China and Japan, which are the world’s second and third largest economies, respectively. Against this backdrop, the Korean government began the FEZ initiative. The FEZs in South Korea are specific areas dedicated to providing the best environment for business and living to attract leading multinational companies and business to make Korea the business hub for Northeast Asia.
Now, a total of six FEZs are operating across the nation - IFEZ, BJFEZ, GFEZ, DGFEZ, SGFEZ, and YESFEZ. And the MKE has recently made a decision to add two FEZs, in Chungbuk and Gangwon Provinces, in efforts to fully meet the growing demands of the multinational companies. The two additional FEZs are already raising expectations of boosting the overall Korean economy in spite of their central government-led preliminary step. Following the appearance of the IFEZ, other Korean FEZs have also made their each timely advent speed based upon their respective evident competitive edge including industrial infrastructures.
The Korean FEZs offer the best business and living conditions in Northeast Asia. They have been established with the goals to create an ideal center for business by establishing high-tech cosmopolitan cities with state-of-the-art infrastructure, create a logistics matrix based on world-class airports and ports, and to utilize Korea’s strength in IT, biotechnology and other knowledge-based service areas to build a strong base for value-added, high-tech industries of the future. Their mission is to provide an optimal business environment through deregulation and by ensuring that Korean institutions meet or exceed global standards and to provide a comfortable living environment for foreign investors and their families.
Multinational companies willing to invest in Korean FEZs can take advantage of various types of relatively competitive incentives for doing business in the FEZs. Each provincial government controlling the region- based FEZ may provide financial support for the development of land and the establishment of amenities. Central and local governments may provide financial support for the construction of factories and research centers.
The Korean FEZs allows foreign companies to enjoy the world’s best airport facilities, particularly Incheon International Airport, and globalleading ports including Busan Port, the world’s No. 5 in terms of freight capacity.
The six Korean FEZs geographically feature strategically positioned within Northeast Asia, between China and Japan, accessible to fifty-one cities with populations of at least one million located within a 3.5-hour flight of Seoul.
Korea’s recent continuous remarkable economic performance considerably helps such local FEZs facilitate expansion of their respective presence in the regional market. In spite of the sluggish recovery of global overall economic growth, the Korean economy is maintaining steady growth trends. This means the six FEZs have also strong potential, enough to seek the win win growth strategy with foreign investors.
Rich infrastructures of the six FEZs are also a very attractive factor worthy to be considered for foreign investors to decide whether to invest. The world’s best air, sea and ground transportation facilities are good examples. Furthermore, the world’s highest-level IT competitive-edge - which could enjoy steady growth through proactive governmental policies - enables local FEZs to demonstrate their conspicuous competencies in attracting domestic and foreign companies who are willing to do businesses there.
The nationwide beautiful natural environment with access to beaches, mountains and forests surrounding most of the six FEZs are becoming major attractions for companies in considering doing business there. Renowned cultural and tourism events including the annual Busan International Film Festival and Jinhae Cherry Blossom Festival and a wide choice of sightseeing opportunities attesting to Korea’s long history and rich cultural heritage are appealing to foreign enterprises.
There is no need to worry about access to top-quality educational services. High quality international schools (K-12) and foreign university campuses affiliated with top universities. The graduates will have excellent employment opportunities thanks to collaboration between universities and industries.
Various kinds of efficient administrative support systems are ready. The FEZ Committees composed of government vice ministers, provide overall support. The six regional FEZ Authorities provide one-stop administrative services. The project manager residing in each of the FEZs will take charge of each FEZ’s investment project to ensure its success. This month’s Korea Buyers Guide covers four of the six local FEZs - IFEZ, BJFEZ, GFEZ, and DGFEZ.
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