Urgent Deregulation
Japan and China are expanding their national strategy and free trade zones for economic deregulation and differentiation. Meanwhile, the Incheon Free Economic Zone (IFEZ) Authority is continuing to fail to designate its deregulation test district due to the lack of communication and consensus.
The Japanese government has recently designated Tokyo, Osaka Prefecture and City, and Aichi Prefecture as national strategy zones. The purpose is to attract more foreign investment and boost business activities in Japan based on a new deregulation policy, so that these zones can accelerate national economic growth in the long term.
The national strategy zones are different from existing economic districts in three aspects: support measures, selection of the regions, and role of the central government in the zones. Specifically, the support measures applied to the national strategy zones are much broader and more comprehensive, covering taxation, financing, and many other fields as well as those for deregulation. Also, assistance is concentrated on the three regions instead of multiple scattered ones. Also, the Prime Minister is slated to exert his leadership in the zones so as to expedite a fundamental reform free from the conflicting interests of different government arms.
The Chinese government is expanding the Shanghai Free Trade Zone to Tianjin, Guangdong, Fujian, and the like. Nationwide expansion implies its second overall economic reform and greater efforts to attract foreign investment. Measures similar to those implemented in Shanghai are expected to be used in the development zones and industrial complexes in the regions so that its reform can be in progress in view of the regional characteristics.
Meanwhile, the Chinese government is going to reduce the negative list of the items that corporations are inhibited from investing in, while easing restrictions to open up the service and manufacturing industries to a greater extent.
Designation of Deregulation Test District Urgently Needed
Accounting for 0.2 percent of Korea’s territory and 0.4 percent of its population, the IFEZ is considered to be the optimal testbed for deregulation and the Creative Economy. Now is the time for the Korean government to strategically distribute national resources and make policy decisions as to its viability in view of the geographical advantages of the IFEZ and its 10-year performance in investment attraction and development.
Regulations on various business factors such as employment should be examined from scratch if the IFEZ is to attract more investment and develop itself at a faster pace. Also, business infrastructure covering customs clearance and immigration control will have to be improved along with the assistance of day-to-day corporate activities.
“The revision to the Special Act on Designation and Management of Free Economic Zones, which was tabled last year with regard to the designation of the deregulation test district, is still pending in the Trade, Industry and Energy Committee of the National Assembly,” said an executive member at the IFEZ Authority, adding, “However, discussions and determinations will have to be made as soon as possible, with Japan and China moving nimbly and pro-actively.”