Having marked its eighth anniversary of designation on August 5, Incheon Free Economic Zone is continuing its tireless efforts to become Northeast Asia’s finest business hub.
IFEZ (Incheon Free Economic Zone) Authority commissioner Lee Jong-cheol, in his New Year’s address this past January, renewed his resolution to further develop the IFEZ in terms of business and tourism, citing an ancient idiom which states “Someone far away will come to befriend you if you please those around you.” Since the declaration, the IFEZ Authority has been busier than ever. It has attracted a number of local and foreign corporations, while setting the stage for building business and research clusters. At the same time, it is doing its utmost to shore up capital liquidity and refine R&D assistance measures in the area by raising IFEZ Funds.
IFEZ Authority Making Full-fledged Efforts for Investment Attraction
The free economic zone was given a green light in August 2003 in compliance with the Act on Designation and Management of Free Economic Zones. The 169.5km2-wide area will house some 640,000 people when all of the three-phase construction processes, which started in 2003, are completed in 2020.
During the first phase, for infrastructure establishment and private construction projects, a total of 46,164.5 billion won was invested, including 26,691.5 billion won for the former. Total investment consisted of government expenditure (9%), municipal expenses (12%) and private capital (79%). During the period, 740,000 jobs were created and production inducement effects worth 90 trillion won were made, respectively. The second stage, which began last year and goes on until 2014, is designed to make full-fledged efforts to attract external investment. Following this, finishing touches will be made during the third stage to finally mark the zone’s grand opening.
The IFEZ’s geographical location is one of its biggest merits. Sitting between the mega-market of China and the high-tech powerhouse of Japan, 61 cities each with a population of more than a million, can be reached within three and a half hours by air. Furthermore, as it is home to the world’s best information technology infrastructure, knowledge-based workers in IT, BT and NT industries can find huge opportunities. The area, building on such advantages, recently won the top spot at the Knowledge Economy Ministry’s performance evaluation.
The ripple effects the zone is expected to bring about are divided roughly into two types. The first is the advancement of industrial structure and competitiveness on the national economy level. According to recent data, the IFEZ is estimated to add one percentage point to Korea’s GDP growth rate, while lowering its unemployment rate by 0.8%. The second has to do with Incheon City’s regional economy. It is anticipated to be a great boon to job creation in the city and contribute to its brand image down the road.
Reviewing latest track records, one can see such positive effects are far from hyperbole. Two months ago, the IFEZ Authority signed an investment MOU with the Chinese photovoltaic company CNPV, which will become the first global enterprise to be housed in the Songdo District. CNPV has 12 sales subsidiaries in 15 countries, the majority of which are in Europe, while its solar cell energy efficiency ranks sixth worldwide.
The Chinese company intends to build solar cell research and manufacturing facilities in the district. The first-phase of investment, worth US$100 million, will begin later this year, with twice this amount expected to follow. CNPV’s investment decision means that more Chinese companies will come to the site, diversifying the nationalities of enterprises in the area from those of the United States and Europe.
“We will continue to work closely with the Korean government’s China Desk, which is dedicated to the attraction of Chinese capital, while further appealing to sovereign funds like Singapore’s Temasek,” said the commissioner, adding, “We will also prepare differentiated and tailored investment attraction strategies for emerging nations so that our activities are in tandem with the government and can therefore yield positive outcomes.”
Real Estate Investment Immigration Program Targeting Chinese Capital
Meanwhile, the agency is focusing on the Yeongjong and Cheongna Districts, which have somewhat fallen behind Songdo in terms of speed of development. One of its tools to that end is the real estate investment immigration program in Yeongjong. The authority is planning to bring in 42 billion won of foreign capital and create 3,000 jobs in the area within the next five years. In this context, a Chinese business team was set up in May and an information session is scheduled to be held in China in December. “The immigration program for real estate investors will be a magnet for foreign capital, particularly from China, and turn the Yeongjong District into North Asia’s service industrial linchpin, surpassing Hong Kong and Macao,” continued the commissioner.
Earlier this month, the IFEZ ann-ounced plans to construct a tourist resort complex in the district. According to the plan, 4.5 trillion won will be invested in a 338,800m2-wide site featuring a foreigner-only casino, hotel, shopping mall and theme park. The organization concluded an MOU for the purpose with Okada Hol-dings Korea. The amount is the largest single sum in the authority’s history.
Development of the Cheongna District is also gaining speed. At the center of this is the suburban shopping and entertainment complex to be built by Shinsegye Group at an expense of 300 billion won, some of which will come from overseas. It is anticipated to be a much-awaited breakthrough for investment promotion and district development there.