A view of the Incheon Free Economic Zone (IFEZ) in Songdo, Incheon.

Commissioner Lee Won-jae of the Incheon Free Economic Zone Authority. (Photos: IFEZ)

The Incheon Free Economic Zone (IFEZ) Authority announced in late April that it plans to aggressively attract so-called “U-turn” companies that will return to Korea from overseas.

The IFEZ made the move in order to attract companies, as the revised law “Support Korean Companies that Return to Korea from Overseas (U-Turn Act)” was implemented in March. U-turn company support targets have expanded from manufacturing companies to knowledge-based service and information technology companies. Requirements to reduce overseas sites has been eased.

The U-Turn Act, which went into effect to support U-turn companies in 2013, focuses on giving benefits to companies that return to areas outside the Seoul Metropolitan Area. In particular, before the law was revised, the scope of U-turn companies was only applicable to companies when they established or expanded new manufacturing.

Accordingly, the act did not mix well with the IFEZ Authority’s development plans. In addition, the IFEZ Authority cannot practically benefit from the act as the IFEZ Authority concentrated on attracting foreign companies.

However, as the IFEZ secured sufficient competitiveness as target industries expanded with the implementation of the revised law, and the need to secure a stable supply chain overseas and the expansion of support measures at the national level.

The IFEZ Authority will step up its effort to attract U-turn companies, fueled by the need for some companies to return to Korea in the wake of the novel coronavirus crisis.

In particular, the IFEZ Authority can provide support such as 50 percent to 100 percent cut in corporate tax, income tax, custom duties and job creation incentives for up to seven years depending on specific nature of the company returning to Korea.

The IFEZ Authority believes that many U-turn companies will have significant interest in long-term leases of land (50 years), a reduction of rent according to the size of investment, and the possibility of private contracts.

“We will actively support many U-turn companies so that they will be able to return to the IFEZ, the center of the advanced knowledge and service industry through cooperation with related organizations such as the Ministry of Trade, Industry and Energy and KOTRA,” said Kim Se-joon, the head of the Investment Attraction Division at the IFEZ Authority. “We plan to carry out promotional activities to attract U-turn companies during our investment inducement activities.”

Going through difficulties in attracting investment amid the spread of the COVID-19 pandemic, the IFEZ Authority is preparing for a “post-COVID-19 era” by strengthening the capabilities of its project managers (PMs), who are experts in inducing investment.

The IFEZ Authority announced on May 11 that it held the PMs’ Strategies for Investment Attraction Presentation, which appealed to potential investors with the participation of all 22 PMs in the boardroom on the 8th floor of Songdo G Tower on May 7 and 8.

This presentation was prepared for Investor Relations (IR) events expected to concentrate in the second half of this year in case the COVID-19 crisis is prolonged, and to check the PMs’ investment attraction strategies and strengthen their capabilities. PMs made presentations for potential investors at an investment session, and took questions as if they were in front of them.

Each PM explained the IFEZ’s investment conditions and attractiveness, and business proposals for investors in their fields such as education, distribution, logistics, resort complexes, bio-tech and IT among others through PT files submitted in advance for up to seven minutes per person. The PMs spoke in foreign languages including English, Chinese and Japanese.