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S. Korea to open wider free economic zones, offer equal benefits to local firms

All Headlines 16:07 August 31, 2016

SEJONG, Aug. 31 (Yonhap) -- South Korea will open its free economic zones (FEZs) to renewable energy, biochemical and futuristic vehicle businesses as part of its policy overhaul to attract more investors into the special industrial areas, the trade ministry here said Wednesday.

It will also expand incentives and benefits to local companies as well as foreigners in order to reinvigorate the FEZs.

The Ministry of Trade, Industry and Energy unveiled a plan to revamp its FEZ policy at a deregulation review meeting chaired by Prime Minister Hwang Kyo-ahn in Incheon, west of Seoul.

The scheme came as the FEZs have failed to woo as many foreign investors as hoped due to weaker-than-expected benefits and a delay in the development of facilities.

The country has designated eight FEZs across the country since 2003, including ones in Incheon and Busan, while a total of 2,189 companies do business there with 96,000 employees as of 2015.

The eight FEZs received US$5.6 billion in foreign direct investment (FDI) between 2004 and 2015, accounting for a mere 5 percent of the country's total FDI over the same period.

In particular, the FEZ has been focused on drawing foreign investment, giving more incentives and benefits to overseas companies than to local firms.

The government will prioritize fostering next-generation industries in the FEZs and giving equal benefits to South Korea-based companies who do business in an FEZ.

Sectors of renewable energy, biochemical, futuristic vehicles such as electronic cars and convergence materials will be newly invited to the FEZs, along with the current key industries like steels, shipbuilding and petrochemicals, as part of the government's long-term plan to bolster such potential industries as a new growth engine.

The plan also involves measures to cut red tape and give more incentives to both foreign and local companies.

"The government will foster potential new industries at the FEZs as a first step and help the FEZs become one of the leading industrial clusters," said Vice Trade Minister Jeong Marn-ki. "Based on the renovated FEZ policy, the government will make efforts to lead the FEZs to steer the South Korean economy to further development."

brk@yna.co.kr
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