The Incheon Free Economic Zone (IFEZ) was designated as the first free economic zone in Korea in August 2003, and it is scheduled to be completed in 2020. With a population of two billion just a three-hour flight away, the zone is aiming to become the best business city in Northeast Asia.
The project has had its own ups and downs over the past 10 years, due to regulations and financing difficulties. Nevertheless, the IFEZ has achieved some desired results. A number of skyscrapers have been built on formerly empty ground, and global enterprises have moved in one after another. Lots of people stroll along the Canal Walk and the Songdo Central Park, which turn into carless streets each weekend. The Good Market event attracts people to the point of causing severe traffic jams. It is not called a ghost city any longer.
The number of companies housed there has increased from 294 to 1,147, and the number of foreign companies investing in the zone has skyrocketed from three to 70. The foreign direct investment invested in the zone has amounted to over US$6.6 billion as of the end of April this year.
Appealing Investment Destination
Last year, the Green Climate Fund (GCF) Secretariat and the World Bank Group Korea Office were opened in the IFEZ to worldwide attention. More and more investors are now focusing their eyes on it as a highly attractive investment destination.
The GCF is a fund dedicated to the fight against climate change and greenhouse gas emissions. In fact, there have been a series of funds in operation, such as the Global Environment Facility, to serve the same goal, but they have been limited in size and provided support for specific fields only. The purpose of the GCF is to take a comprehensive role in helping developing countries deal with climate change. The World Bank Group Korea Office, in the meantime, is a combination of the five international organizations, including the International Bank for Reconstruction and Development (IBRD), and assumes a pivotal part of cooperation projects for investment in lessdeveloped nations.
Up to now, a total of 13 international agencies have been housed in the IFEZ, including the Association of World Election Bodies (A-WEB) and the United Nations Economic and Social Commission for Asia and the Pacific (UNESCAP). Even more international bodies are expected to come to the district down the road.
The high popularity of the region can be attributed to Incheon International Airport, which has been picked as the airport with the best service in the world for nine consecutive years. Just a 20 minute drive away from Songdo International City, the airport is a hub of transportation, connecting 61 cities with at least one million residents each within a three-hour flight. In addition, the IFEZ provides easy access to the metropolitan area, and ensures the supply of highly-educated manpower. World-renowned educational institutions like the Chadwick International School can now be found there, along with expat-friendly residential environments.
Compact, Smart, Green City
At present, the IFEZ is moving ahead with various cityimprovement projects. For example, it is digitalizing city management and daily living services as a whole in the framework of the U-City Project, while planning to reduce annual carbon emissions by at least two million tons by 2020 in the Eco Green City Project. The Songdo Waterfront Project is making better use of the abundant water resources in the district, and the Cultural City Project is adding flavor and color to the economic zone.
Foreign investors are particularly interested in the IFEZ’s transformation into a compact, smart, green city. A compact city can be defined as a place where all urban resources can be found within a 30 to 40 minute walk. Songdo is a futuristic self-sufficient city in which this idea is made real. A wide variety of facilities for everyday living and business, ranging from leisure and education to shopping, conventions, and medicine, are provided within a 5 km radius.
A smart city is an environment where networks and computers are available everywhere. In Songdo, wired and wireless networks linked to smartphones and the Internet form the foundation of real-time convergence services for telecoms, traffic, water, electricity, medicine, and many other purposes in the most advanced city management system.
The IFEZ Low Carbon Green City Declaration of June 2011 has been a starting point to turn Songdo into an ecofriendly city. Having a green area ratio of 30 percent, the district runs its own automated waste disposal systems and is well known as a city without a need for garbage trucks. Also, used water is treated and recycled for restroom cleaning, landscaping, and street sweeping. Incidentally, the Songdo Central Park is the world’s first park with flowing seawater.
At the same time, the IFEZ is in pursuit of a unique method of development based on convergence among service sectors such as education, knowledge services, leisure, and MICE. Songdo is expected to be a global linchpin of the biotechnology industry by 2016. The city has already attracted 657 companies and three research institutes hiring 5,940 employees in the IT and semiconductor industries, including Amkor Technology and the BMW Driving Center. The Shinsegae Complex Shopping Mall in Cheongna, Lotte Shopping Town, E-Land Shopping Mall, and the Hyundai Department Store Outlet in Songdo will turn it into a global shopping hub. Hana Financial Town with 5,800 potential employees and the MIDAN City Casino Resort, estimated to create 35,000 jobs, are just two examples of its successful outcomes. To sum up the business environment, out of the 80 Most Respected Companies selected by Fortune magazine, 10 percent are found in the IFEZ. It is the perfect incubator for convergence services.
Driver for Growth of Service Industry
The economic zone’s next goal is to become the global center of the service industry. This plan is likely to be bolstered by the Park Geun-hye administration’s strong drive for the growth of the service sector by means of deregulation.
“The endeavor for the promotion of the service industry for economic growth and job creation starts from the IFEZ,” said Lee Jong-cheol, commissioner of the Incheon Free Economic Zone Authority. He added, “Accounting for 0.2 percent of the national territory and 0.4 percent of the population, the region is a perfect place for the testing of diverse industrial systems, development models, and urban planning schemes, as well as the most suitable testbed for deregulatory policy measures.”
He continued to emphasize that the IFEZ is a new economic growth engine of Incheon City, the cornerstone for its urban renovation, and the hope and pride of the city. “We will turn the IFEZ into an international business capital by attracting service sectors and providers through creating high added value,” he explained.