This year in March marked the 12th anniversary for the Busan-Jinhae Free Economic Zone (BJFEZ) Authority. Until now, the authority has attracted US$1.9 billion (2.18 trillion won) from 123 foreign investment companies in the high-tech and ports and logistic industries, obtaining good results. In particular, it lured US$170.4 million (195.62 billion won) of foreign capital last year alone. BusinessKorea had an interview with Jin Yang-hyun, commissioner of the BJFEZ Authority, about its achievements so far and future plans.
Please give us a brief introduction about the BJFEZ and explain its strengths.
The BJFEZ is located on 51.2 square kilometers of land stretching over the cities of Busan and Changwon in South Gyeongsang Province, and is currently divided into five areas, including New Port and Myeongji, broken down into 19 districts.
The BJFEZ has a strong geographical advantage. As it is a gate linking the Pacific Ocean and the Eurasian continent, it has a big emerging market of Northeast Asia. It also has abundant tourism and cultural resources, including Eulsukdo Island, the largest habitat for migratory birds in Northeast Asia, Jinhae Gunhangje Festival, Geoje Haegeumgang Island, Hallyeosudo, Haeundae and Busan International Film Festival.
Moreover, the BJFEZ has ports, airports and railroads clustered around Busan New Port, making it the best environment for a distribution hub. Thus, Busan New Port already accounts for more than two thirds of Busan Port’s cargo volume and the transferring pace continues to accelerate. As a result, its role as the gateway of Southeast Ocean Economic Belt becomes important.
What kind of priority projects does the authority have in mind this year?
This year marks the 12th anniversary for the BJFEZ. We will evaluate our results achieved so far, find what we lack and reflect them in future priority projects this year.
We are trying to find concrete ways to realize the so called “3+1 Core Values,” which connects the high-tech industry with three core values – the International logistics hub, international business environment development and tourism & leisure complex development.
In particular, Myeongji International New City will play a crucial role in developing the international business environment. With an area twice the size of Haeundae New City, it is becoming a key district of education, medical care and international business in order to serve as the center of the free economic zones.
The 3+1 Core Values is to create an upgraded high added value by connecting advanced manufacturing firms in parts and equipment for shipbuilding and automotive components at existing industrial complexes, such as Sinho Industrial Complex, Busan Jisa Science Industrial Complex and Namyang District, with the Internet of Things (IoT) and information and communications technology (ICT).
How does the BJFEZ attract foreign investment?
The BJFEZ Authority is involving in investor relations (IR) activities overseas in a bid to attract global companies in Asia, including Japan and China, Europe and the Americas.
Last year, the authority visited the nation’s conglomerates such as Hanwha, Lotte and Doosan, as well as the European Chambers of Commerce and Industry and the United States Chamber of Commerce. It also held an investment promotion event in Busan for member companies of the European Chamber of Commerce in Korea (ECCK). The event was attended by 80 people, including officials from major member firms of the ECCK, such as Geislinger, Rolls Royce Marine Korea, BNCT and Wilo Pump, CEOs and executives from potential investment companies, officials from the U.S. Embassy and the Netherlands Embassy in Korea, and Consulate-General of the People's Republic of China in Busan. Many companies showed special interests in incentive programs and the investment environment and positive reactions to making new and additional investments.
This year, the authority is considering hosting investment promotion events in Japan and China as well as Korea.
What kind of incentives does the authority offer to foreign investors?
In a bid to support foreign investment firms, the BJFEZ Authority provides three main incentives – tax reduction, land arrangement and subsidy.
When a foreign investment firm invests over US$10 million in manufacturing and tourism sector, US$5 million in the ports and logistics sector and US$1 million in the R&D sector, it will get a reduction in national taxes, including corporate taxes, income taxes and tariffs, and local taxes, including acquisition and registration taxes and property taxes. It will also be offered land arrangement support like the rent reduction on government-owned lands, and various subsidies for location, employment, land purchase and training programs.
In addition, the authority seeks to improve the living conditions for foreigners, including the education environment and medical treatment system, to relieve regulations and burdens and to streamline administrative procedures. It also provides foreigners with apartments first in the international new city in the Myeongji District within 10 percent.
Moreover, the authority is making every effort to create a good environment for business by running a special team to visit and communicate with companies and addressing inconveniences and problems
How is the current condition of foreign industrial complex and foreign companies in the free economic zone and what are the strengths of the complex?
For the BJFEZ Authority, 18 foreign investment companies are located in 701,000 square meters of three areas – the Mieum District in Busan, Jisa Foreign Investment Zone and the Nammoon Foreign Investment Zone in South Gyeongsang Province.
Most of them are advanced machine component manufacturers. Norway’s paint producers and Sweden’s automotive components makers are located in the Jisa Foreign Investment Zone, while Germany’s oil hydraulic equipment manufacturers and Germany’s pump producers are located in the Mieum District. Moreover, Japan’s automotive components makers and Denmark’s ship components manufacturers are in the Nammoon Foreign Investment Zone.
One of the strengths of the BJFEZ Authority’s foreign investment industrial complex is its geographical location. It is located at the center of Northeast Asia connecting China, Japan and Russia. Since it has the excellent infrastructures for logistics and transportation, it is the best spot for global business. Busan Gimhae International Airport operates 41 international lines from 11 countries and Busan New Port currently operates 23 berths. In addition, its transportation infrastructures, such as railways for Busan New Port, the Geogadaegyo Bridge and highways, give the zone an edge over the logistics competitiveness.
Connecting with the auto industry in Busan, the machinery industry in Changwon and the shipbuilding industry in Geoje, the high-tech components industrial cluster will be created. Currently, the Mieum Foreign Investment Zone and the Nammoon Foreign Investment Zone are designated as the components and materials-only complex, and there are numerous advanced components and materials manufacturers in the zones.
What kind of efforts does the authority make to improve the residential environment for foreigners?
In order to build an attractive investment environment for foreign companies, the BJFEZ Authority is making an effort to attract global leading education and medical care institutions improve the residential environment for foreign talent so they can settle down in the region.
Myeongji International New City is one of the authority’s priority development projects. Facilities which are needed for investment and residency such as global campus town, medical center, R&D center and hotel will be established soon in the city. Then, it will be the most important hub of global business.
To this end, the authority is in talks with foreign educational institutions and research institutions, and seeking out hospital operators and medical care investors at home and abroad in a bid to attract foreign medical institutions. Moreover, it is developing the Woongdong District into a resort complex which includes hotels and a golf course. As an outstanding tourism and leisure complex mingling with the wonderful natural environment, such as Haeundae and Geoje Haegeumgang Island, the district will be a tourist attractions visited by foreigners as well as residents in Busan and South Gyeongsang Province.