IFEZ's Bid to Attract Foreign
Investments Likely to Gain Momentum
Striving to develop as the logistics and int'l biz center of Northeast Asia

Two years have passed since the Incheon Free Economic Zone (IFEZ) was Korea's first free economic zone under the government's vision of developing IFEZ as the logistics and international business hub of Northeast Asia.
Lee Hwan-kyun, commissioner of Incheon Free Economic Zone Authority (IFEZA), said his authority is employing three strategies designed to differentiate IFEZ from its rival cities - Ubiquitous City, Eco-friendly City and High-tech New Transportation City.
In an interview with NewsWorld, he enumerated such advantages as its geological location at the heart of the booming Northeast Asia, and advanced infrastructure offering comprehensive sea & air logistics system on top of its excellent transportation network connection with the populous Seoul metropolitan area.
"Despite external and internal worse economic conditions, IFEZ has chalked up success in attracting as many as 17 cases of foreign investments worth $16.8 billion, including seven contracts and two MOUs, since the inauguration of IFEZ," he said. IFEZ Commissioner Lee predicted that construction of IFEZ would gain momentum around the end of this year with upcoming groundbreaking of such convenience facilities as a foreign hospital and a foreign international school. The following are the excerpts of the interview.
Question: Would you tell our readers about the steps to publicize Songdo, the home of international business and high-tech industry complex, whose international profile is lower compared to its rival cities, on the occasion of the second anniversary of the establishment of Incheon Free Economic Zone Authority (IFEZA)?
Answer: Northeast Asia has emerged as one of the world's top three economic spheres along the North American and European markets thanks to remarked strides by the Chinese economy. Major cities of Asian countries are scrambling for the hegemony of the region.
IFEZA is now celebrating the second anniversary of its inauguration on October 15, 2003 under a vision of developing the IFEZ area into the logistics and international business hub of Northeast Asia. Even though IFEZ is launched later than rival cities, IFEZA plans to develop IFEZ into an advanced city surpassing Hong and Singapore by employing three strategies to differentiate itself from others. In another word, Songdo International City will be constructed into the world's top "Intelligent city,"furnished with a ubiquitous system, an environmentally-friendly ecological city with a pleasant environment - park and forested area accounting for 40 percent of the total area - and an advanced city with new transportation systems under the differentiation strategies designed to raise its international profile.
Q: Would you elaborate on infrastructure projects like the Incheon Bridge Project, which has recently broken ground, and Incheon International Airport Expansion Project and their spillover effects?
A: The 12.3 km-long Incheon Bridge, which will connect Incheon International Airport on Yeongjong Island and Songdo International City, will be the longest one in Korea with completion slated for 2009.
When completed, the Incheon Bridge will reduce the traveling time between the airport and Songdo to 15 minutes. The bridge will serve as the shortest road network between Incheon Int'l Airport and the Seoul metropolitan area south of the Han River and Chungcheong provinces. It will contribute to easing congested traffic snarls through effective distribution of traffic volumes and reducing corporate logistics costs, while playing the role as a key infrastructure piece aimed at expediting development projects in Songdo and raising the brand value of the entire city.
An annual report released by the international airline association ACI in 2004 showed that Incheon Int'l Airport has grown into a global major airport to rank 10th in the world in the passenger transportation category and 3rd in terms of cargo transportation. The second Incheon Airport expansion project calls for the construction of such logistics infrastructure as a second runway, a passenger terminal and Incheon Airport Free Zone by 2008.
With the completion of the first phase of South Port Container last September 5, Incheon Port has been reborn into an international port with a competitive edge since July 2004 when Incheon Container Terminal was opened, ushering in an outer port era. These infrastructure development projects will set the stage for helping Incheon grow into the Northeast Asian logistics hub with Korea's only combination of sea and air logistics transportation systems.
Q: Would you envision the future of Songdo when a project to reclaim a 2-million pyeong area in Songdo is complete?
A: The sections 5 through 7 of the Songdo reclamation project, calling for reclaiming 1.98 million pyeong, will be completed by 2007. One pyeong equals to 3.3 sq. meters. The construction will increase to 5.81 million pyeong the size of reclaimed area in the sections 1 through 7, and Phase I of the project will likely finish by the end of 2008.
Songdo International Business District will house the 65-story Asia Trade Tower, foreign schools, foreign hospitals, deluxe hotels, a golf course, ecological facilities, a cultural center, Central Park and public housing, and the relocation of multinational corporations'regional headquarters will take the shape of an international business city. The IT/BT Complex and Techno Park, which will house global IT firms, bio companies and R&D centers, is expected to emerge as Korea's next-generation high-tech industrial center.
Q: Would you speak about favorable foreign investment environment IFEZ can offer in geological and industrial aspects while at the same time providing incentives for foreign investors?
A: Incheon is situated at the heart of Northeast Asia, as one of the best places for becoming international centers like Hong Kong and Singapore. The city is a gateway to Northeast Asia suitable for creating foreign-friendly management and living environment.
The first and foremost advantage of IFEZ is about the geological location. Incheon is the closet to China, a giant market with a population of 1.3 billion.

The city is in close proximity not only to 51 Northeast Asians, each with a population of more than 1 million, located within three and half hours of flight from Incheon Int'l Airport, but also to the Seoul metropolitan area with a population of 22 million. Its closeness to the Gaeseong Industrial Complex in North Korea is expected to serve as a bridgehead in inter-Korean exchanges.
IFEZ has advanced infrastructure combining Incheon Int'l Airport and Incheon Port. Incheon Int? Airport, offering comprehensive sea & air logistics system on top of its excellent transportation network connection with the Seoul metropolitan area.
It can make the most of its proximity of high-tech manufacturing complexes in Incheon and Seoul metropolitan area and better conditions of securing manpower in such sectors as IT and BT.
Foreign corporate investors into IFEZ are entitled to such investment incentives as corporate tax reductions, cash allowances, rent deductions, and other incentives, including the ones making an exception in the application of labor and other laws.
Q: Would you explain the IFEZ? efforts in attracting foreign investments?
A: Despite external and internal worse economic conditions, IFEZ has chalked up a success in attracting as many as 17 cases of foreign investments worth $16.8 billion, including seven contracts and two MOUs, since the inauguration of IFEZ.
Leading the pack of foreign investors is Gale Co. of the United States, which has signed a $12.7 billion contract to construct the International Business District in Songdo.
IFEZA has concluded a $150 million contract with Celltrion, a joint venture between VaxGen of the United States and a group of Korean companies, including K&G of Korea, which moved into the high-tech biologics complex in Songdo under the first-phase of the project. Celltrion, a global biological pharmaceutical company set up in Korea to produce protein vaccines, began operations last July. What? more, Celltrion inked a 10-year, $2 billion deal with Bristol-Myers Squibb (BMS) Company to make biological new medicines. Celltrion has a second-phase expansion plan starting in 2009, which is likely to make additional foreign investments.
An inflow of foreign capital worth $1.2 billion is expected under a deal with AMEC of United Kingdom to construct Incheon Bridge linking Incheon Int? Airport and Songdo.
Last May, IFEZ made a feat of attracting an ICT development center for the Economic Social Commission for Asia and Pacific (ESCAP), an affiliate of the United Nations, to solidify its status as a global IT powerhouse. Last June, Incheon City signed a contract of investment with GM Daewoo for establishment of its research center in Chengna District, part of IFEZ, laying a foundation for developing Incheon into an automobile manufacturing base. Capitalizing on the foundation established for the past two years, IFEZA plans to put more energy into accelerating its bid to attract more foreign investments, and such efforts with determination are expected to pay off.
Q: Will you introduce your authority? mid- and long-term strategies designed to attract foreign investments?
A: Incheon City, putting top priority on "Buy Incheon" during 2005, is making its utmost in attracting corporations, foreign and domestic, in a bid to make IFEZ a success story.
Under the mid- and long-term foreign investment attraction strategies, each project manager has been appointed to target corporations with an investment potential, while concentrating on such institutions as the Ministry of Finance and Economy, the Ministry of Commerce, Industry and Energy, Invest Korea, Korea Land Corp. and Gale Co. and investors' foreign networks to maximize their foreign investment attraction efforts.
A focus for foreign investments will be initially put on hosting the so-called anchor facilities with industrial spillover effects and involving many moving population, then the impact of investments will be spread in conjunction with IT, distribution and net-generation industrial development strategies.
Q: What progress have you been made in your authority's bid to host foreign hospitals and other convenient facilities and what future plans do you have?
A: IFEZ is exerting itself to create living conditions so as not to cause any inconveniences to foreign residents by building such convenience facilities as hospitals and schools for foreigners.
Philadelphia International Medicine (PIM), an association of nine hospitals in Philadelphia, is seeking to construct a foreign hospital, an equivalent to a deluxe hotel, at a cost of $860 million in the Songdo District. The projected hospital will be opened initially as a 300-bed one, to be manned by 285 doctors, including one-third filled with foreigners, and about 800 nurses.
Harvard Advisory Group, a U.S. consulting company, is working on a project to establish Songdo International School. The HAG plan calls for constructing two schools, offering schooling ranging from kindergarten to high school on a lot of 20,000 pyeong in the Songdo International Business District. The projected international school will be opened for the 2007 academic year with about $20,500 in tuitions with an enrollment of 2,100 students. The ratio of students is 60 percent to 70 percent for foreigners and 30 to 40 percent for Koreans.
Q: Would you give the details of the IFEZ? development strategies and current progress?
A: According to industrial special-ization, we plan to develop the Songdo District into an international business and high-tech industrial city; the Yeongjong District into an airline and logistics center; and the Cheongna District into an international tourism and leisure complex.
Out of the Songdo reclamation area, Section 1 through 4, covering 3.83 million pyeong have been almost finished, and Section 5 through 7, covering 1.98 million pyeong, broke ground last May. IFEZ witnessed the Convention Center project in Songdo International Business District and Incheon Bridge project breaking ground last May and last June, respectively. Last July, Celltrion dedicated manufacturing facilities and launched operations. Now that projects for an Asia Trade Center, a foreign international school and a hotel are to be launched by the end of the year, construction of IFEZ will gain momentum.
Q: Could you comment on your request for cooperation from the central government and the general public in consideration of the success of foreign IFEZs?
A: The central government's special concern and inter-ministry support are badly needed for the construction of IFEZ under a next-generation development strategy. The central government needs to pay a more aggressive concern and put more capabilities into the construction of IFEZ by extending massive financial support and solving administrative regulations.
Considering construction projects in IFEZ as state ones with large-size investments and the local autonomous body lacking budgetary resources to finance construction of infrastructure suiting a city of an international size, the central government has to raise its allotment to the local government from current less than 50 percent of total budget to 70 to 80 percent.
In an effort to help IFEZ chalk up a success in attracting foreign investments, the IFEZ area needs to be excluded from restrictions imposed on the government's policy to decentralize the Seoul metropolitan area.
Domestic firms will have to be given the same incentives as foreign concern's within the IFEZ to attract Korean companies, as foreign countries do. nw

Lee Hwan-kyun, commissioner of Incheon Free Economic Zone Authority (IFEZA)

An aerial view of New Songdo City Designed by KPF