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IFEZ on Track to Becoming Global Business Frontier
FDI Attraction Doubles Target in 2018
IFEZ on Track to Becoming Global Business Frontier
  • By Jung Suk-yee
  • February 15, 2019, 17:45
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IFEZ Commissioner Kim Jin-young
IFEZ Commissioner Kim Jin-yong

The Incheon Free Economic Zone (IFEZ) is the first-ever free economic zone in Korea. Since its inception in 2003, it has been serving as an excellent role model for free ecnomic zones (FEZs) in Korea and other countries. Last year, it accounted for more than 80 percent of foreign direct investment pledged to FEZs in Korea, demonstrating its unrivaled status. Commissioner Kim Jin-yong is determined to attract more international corporations and organizations to make IFEZ a global business frontier and a hub of high-tech industries, including IT, biotech, renewable energy, artificial intelligence and aerospace. Kim recently outlined his business plans for this year in an interview with BusinessKorea. The following are excerpts of the interview. -- Ed. 

Please tell us about the major projects you are going to pursue for the Incheon Free Economic Zone (IFEZ) this year.

It takes about 30 years for a city to be built. IFEZ has been around for 15 years since its inception. It has passed the half way point, and is now ready to make a new departure for the future. We will do our best this year to make IFEZ a business hub in Northeast Asia by attracting additional international organizations.

I will also endeavor to create a global education city in IFEZ. To this end, we will push for the opening of the Smart City Research Institute, which is affiliated with Stanford University, in the first half of this year, the Millner Institute of the University of Cambridge in the United Kingdom in 2020 and the National Music Institute in Amsterdam, the Netherlands in 2021. We will also promote the opening of 10 universities within the top 50 in the world.

Along with this, we will make Songdo the center of the MICE industry in Northeast Asia by building a mega-scale integrated resort city. This year, ground will be broken for such resort complexes as Paradise City, Caesars Korea and Inspire Integrated Resort.

We will also make IFEZ a high-class cultural and leisure city by making Art Center Incheon a world-renowned cultural attraction.

We will transform IFEZ a hub of Fourth Industrial Revolution technologies by creating the world's best biotech cluster, building “Startup Venture Polis,” and developing a blockchain complex. We will also make IFEZ a smart city and accelerate exports of IFEZ-type smart city models.

IFEZ stood out among free economic zones in Korea last year in terms of foreign investment attraction. Tell us about some of its achievements last year.

First, last year's foreign direct investment (FDI) pledged to IFEZ totaled US$1.33 billion, a 34 percent increase from 2017 and more than double the targeted $630 million. FDI arrivals amounted to US$1.065 billion, more than 10 times higher than the goal of US$92.5 million. FDI pledged to IFEZ accounted for 83.6 percent of the total FDI pledged to the seven free economic zones in Korea. When compared with the nation’s 17 provincial governments, IFEZ came in third following Seoul and Gyeonggi Province

Last year, a large number of foreign companies, including those from Germany, Japan, France, Switzerland and Singapore, joined or signed contracts to enter IFEZ. They included the world's No. 1 company in sheet metal processing, the world's oldest company, a Fortune Global 200 company, Japan's No. 1 machine tool company and one of the world's top three producers of metal processing systems. They also included companies with key technologies of the Fourth Industrial Revolution.

Other achievements made last year, the 15th anniversary of IFEZ's opening, included the construction of a global fashion center by HyungJi Group, the completion of the second stage of Songdo Convensia, which is serving as a catalyst for the development of the MICE industry in Incheon, and exports of IFEZ-type smart city models to other countries.

Last year, many pending issues surrounding IFEZ were resolved. Tell us about some of them.

Last year was a very meaningful year for IFEZ since some of the knotty issues facing it were resolved. First, Art Center Incheon, which suffered from internal conflicts, finally became an asset of 3 million Incheon citizens in two years and five months after completion. The art center is a world-class classical concert venue and will become a landmark representing Korea. It will provide citizens with a wide range of opportunities to enjoy culture and art.

The dispute over Songdo Hanok Village was also resolved as IFEZ signed a new contract with the operator of the traditional Korean house (hanok) village in September last year following the court's recommendation to revise the contract. IFEZ canceled the land lease contract with Entas SD, the operator of the village, in May 2017 after finding that it was not a foreign-invested company. Entas SD filed a lawsuit to cancel the termination of its contract with IFEZ.

Construction of Songdo Severance Hospital is also gaining momentum. Yonsei University disclosed last year a plan to complete the establishment of Songdo Severance Hospital, a research-oriented hospital, by 2024 to create synergy in the biotech field.

Along with this, the development of Eulwangsan Mountain in Yongyu, the southern tip of Yeongjong Island, is also speeding up. The area was designated as a free economic zone (FEZ) but the designation was canceled in February last year. IFEZ is pushing for “Eulwangsan IFUS HILL" project in cooperation with SG Industrial Development Co. to make the area an FEZ again. SG Industrial Development is planning to invest 230 billion won to build “Incheon Film United Studio, Hallyu Imagine Leisure Landmark (IFUS HILL)” in an area near Incheon International Airport by 2024.

Analysts point out that the business environment surrounding IFEZ is not favorable this year. What is your view and how are you going to attain your goal in attracting foreign investment?

According to the OECD's economic outlook for 2019, which was released in November last year, the global economy is expected to slow down due to the expansion of protectionism, financial instability in emerging economies, and China's economic slowdown.

The Korean economy is expected to grow at 2.9 percent despite the sluggish global trade, on the back of robust export growth and an expansionary fiscal policy. But the reform in the government's support system for attracting foreign investment is expected to make it more difficult for us to attain our goal. The government has abolished the corporate and income tax cuts that were provided to foreign-invested companies. This year, we are planning to focus on companies that can create high quality jobs. We will also use the regulation sandbox system to attract companies that provide innovative products and services using key technologies of the Fourth Industrial Revolution.

What plans do you have to make Songdo International Business District (Songdo IBD) a global biotech hub?

Currently, Songdo IBD has the world's largest biopharmaceuticals production capacity as a single city. It produces seven licensed biopharmaceuticals, four by Samsung Bioepis and three by Celltrion, the largest number among Korea's biotech clusters. Last September, the government announced a basic bioengineering development plan and designated Songdo as a “production and global expansion cluster” for the development of Korea's biotech industry. It illustrates the high profile of Songdo in Korea’s biotech industry.

In April last year, IFEZ Authority announced that it will secure 990,000 square meters of industrial estate in Songdo IBD 11th District to expand its biotech cluster. The expanded Songdo Bio Cluster will strengthen its capabilities in R&D, manufacturing and processing of biopharmaceuticals. In addition, we intend to complete a sustainable organic ecosystem by attracting global anchor companies in advanced biotech fields such as customized medicine and regenerative medicine and expanding its infrastructure for biotech development.

The proposed G-City project is of high interest to the residents of Cheongna International City. Has the development plan for it been finalized?

The G-City project has received much attention because global companies such as Google and LG Electronics are willing to invest in it. Since the project can generate huge profits through changes in urban planning, which are required to create an international business zone, it should be promoted in a fair and transparent manner and offer equal opportunities for participation to companies. IFEZ has requested LH Corp., the project manager, to establish measures to prevent favoritism and collusion, and submit a revised development and implementation plan to ensure fairness.

IFEZ has suggested that if large-scale accommodation facilities with 8,000 rooms are built in the proposed city, various problems could occur, including excessive pressure on urban infrastructure, such as water supply, roads, and transportation, damage to the residential environment, a fall in the prices of nearby apartments, and a shortage of school facilities. LH Corp. has decided to prepare an alternative plan and told us that it would take about two months to revise its current plan.

The Startup Venture Polis plan is drawing attention as it can create high-quality jobs. How is it being pushed?

The project is intended to accelerate the growth of promising startups and venture companies based in Incheon. We are planning to create the startup/venture cluster by 2023. We will prepare a comprehensive startup nurturing program to help companies grow fast based on Incheon’s smart city infrastructure and data. We will focus on companies specializing in information technology (IT), biotech (BT), smart city, aerospace and MICE.

We will provide customized service and office space to startups and aspiring startup entrepreneurs. We will also set up a one-stop support system and help companies attract funding for commercialization of their ideas and technology development. We will also create funds to foster startups on our own. Our ultimate goal is to create a startup and venture ecosystem to make IFEZ a mecca of IT, BT and smart city.