Minister Joo Hyung-hwan of the Ministry of Trade, Industry and Energy presided over a meeting of commissioners of seven free economic zones (FEZs), research institution experts and senior company officials in Songdo, Incheon, on Aug. 19 to lend an ear to grievances, complaints and voices of FEZs.
The latest meeting, designed to lend an ear to the voices of experts of the private sector, came after the ministry came up with steps in July to restructure FEZ areas, which have seen development and attraction of foreign direct investments fail to achieve desired achievements.
MOTIE Minister Joo said, “In reality, FEZs have played a part in attracting Korean and foreign companies, creating jobs and attracting FDIs, but they have failed to achieve expected outcomes.”
As of June, eight FEZ areas across the nation stand at 321 sq. km in size. They have attracted 2,189 companies — 1,952 Korean companies and 237 foreign investment companies. The FEZs employ a combined 96,449 people — 69,668 employed by Koreans companies and the remaining 26,781 people by foreign investment companies. They attracted $5.6 billion between 2014 and 2015, accounting for 5 percent of the nation’s total FDIs. They have a target of completing development by 2022, but progress stands at 66.4 percent.
The FEZs have been diagnosed with such woes as a delay in development in excessive designation area, insufficient control tower functions, overlapping of similar FEZ areas, a lack of deregulation and incentives, and insufficient formation of industry clusters stemming from discrimination against Korean companies.
Such countries as China, Japan and Singapore have been rushing to set up special zones to break through low growth rates. Participants have shared the view that Korean FEZs need to implement their development strategies to develop them into centers to attract FDIs and nurture strategic industries. The participating FEZ commissioners recommended that Korean companies are given the same treatment to foreign investment companies in terms of incentives like tax credits and location.
Tenant foreign investment companies of the FEZ areas benefit from such incentives as a reduction in corporate tax, a 50-year lease of state and publicly-owned land sites, and exceptions on labor regulations, but Korean companies do not enjoy such incentives. Minister Joo said his ministry plans to hold close consultations with such government organizations as the Office for Policy Coordination at the Prime Minister’s Secretariat and the MOSF to work on ways of reinvigorating the FEZ areas so that they can establish themselves as centers of economic growth momentum.
Minister Joo called for each FEZ to differentiate itself from others through each city and provincial government’s making the most of policies, institutional systems and incentives that the central government offers.
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MOTIE Minister Joo, FEZ commissioners and civic experts pose for a group photo at a meeting in Songdo, Incheon, on Aug. 19. (Photos: MOTIE)
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