Optimum Environment
for Foreign Investors

BJFEZ strives to be a comprehensive logistics center of Northeast Asia

The Busan-Jinhae Free Economic Zone (FEZ) boasts foremost logistics conditions as the organic seaport/airspace/railway link as well as industrial clusters of shipbuilding, automobile and machinery, offering an optimum environment conducive to foreign companies'business activities. The following are the excerpts of an interview with Chang Soo-man, commissioner of the Busan-Jinhae FEZ Authority - Ed.
Question: Two years have passed since the inauguration of the Busan-Jinhae FEZ Authority. Will you summarize the achievements it has made so far?
Answer: Nothing was prepared when the authority was opened in March 2004. The Busan-Jinhae FEZ Authority has been throwing its heart and soul into implementing development projects and attracting foreign investments.
Thanks to these efforts, the authority is now ready to attract FDIs by building up the Busan Science & Industry Park, three piers of a New Port and a 300,000-best (990,000 square meters) hinterland area.
They have led to a $600 million investment plan to expand Renault Samsung Motor's plant and more investments by global automobile, shipbuilding, aircraft parts makers.
The leisure/tourism sector witnessed a $200 million investment by British company SnowBox into projects designed to construct an indoor ski dome and a hotel by agreeing to an MOU on a $160 million investment into an advanced country-style resort with Emerson Pacific and Morgan Stanley.
Besides, DPW/PSA's participation into a stake investment into the construction of the New Port terminal and Fukuoka Transportation's decision to invest into the construction of a logistics center has brought to 26 cases worth $4.31 billion the total investments the Busan-Jinhae Free Economic Zone has so far attracted.
If such projects like the construction of the Hwajeon Industrial Complex and creation of high-tech industry sites for domestic and foreign companies in Myeongdong and Mieum break ground, the development of the BJFEZ and attraction of foreign investments will likely reach the full-fledged stage.
Q: Will you elaborate on the strong points of the free economic zone like the favorable geographical conditions as well as industrial clusters of shipbuilding, automobile and machinery?
A: The BJFEZ has a geographical advantage of serving as a gateway linking ocean and continents, and it has a potential of becoming the starting point of trans-continent railways as well as one of the world's best sea ports.
The free economic zone has industrial clusters of shipbuilding, automobile and machinery to become an optimum environment conducive to foreign occupant companies'business activities.
It offers such foremost logistics conditions as the organic seaport/airspace/railway link, its location on major shipping lines connecting Europe, Southeast Asia, Northeast Asia and North America; its link with such railway infrastructure as the Trans-Siberia Railway, Trans-China Railway and Trans-Manchuria Railway; and Gimhae International Airport's direct flight routes to such major Asian cities as Beijing, Tokyo, Manila and Bangkok.
Korea, which ranks 11th in the world in terms of gross domestic product (GDP), has achieved an average of 9 percent growth rate during the past 20 years. The feast was partly attributable to the Namdong Seashore Industrial Complex, a driving force behind the export-driven economy, and Busan Port, a gateway to the world.
The BJFEZ will serve as a comprehensive logistics center rather than just a transshipment port as it has a population of some 8 million in the neighborhood to offer a profound market and high-caliber labor force.
The Korean shipbuilding industry retained the No. 1 position last year for the third straight year in terms of shipbuilding capabilities. Some 88 percent of the Korean shipbuilding companies are located in Busan, Jinhae, Ulsan and Geojae, while Korean automobile manufacturers, which places sixth in the world with a capability of 3.47 million automobiles, have plants in such neighboring cities as Changwon, Ulsan and Sacheon.
In particular, the Myeongji district, the production base of Renault-Samsung Motor, proves to be one of the best places for foreign investments. Industrial complexes of machinery parts, behind Korea's feat of winning the World Skill Olympics on 14 occasions, are situated in a distance ranging from 30 minutes to two hour-drive from the BJFEZ.
The free economic zone has formed a diverse value chain of profound manufacturing base to provide an optimum investment environment. The area is also well known for its natural and culture/art attractions, including Haeunade Beach, Gwangan Grand Bridge, Pusan International Film Festival and Jinhae Port Festival, offering excellent living conditions for foreigners.
Q: I understand that Pusan National University, Dong-A University and other regional universities held joint meetings designed to attract foreign R&D centers. What steps are you taking to support these efforts?
A: The Busan-Jinhae FEZ Authority is considering options to attract foreign investments after visiting the Ministry of Commerce, Industry and Energy, the Ministry of Science and Technology, regional universities and foreign research institutes to take a look into R&D network as part of its efforts to develop it into a R&D hub.
Regional universities in the Busan area held a collaboration meeting among industry and academy circles and discussed ways of luring investments into the free economic zone. They plan to visit foreign research institutes and think tanks of conglomerates and hold strategic meeting with the goal of attracting foreign companies.
The authority plans to develop a R&D hub in association with industrial policies of conglomerates and the central government as well as industrial strategies of Busan and South Gyeongsang provincial governments.
Q: The opening of three piers at Busan New Port has been getting dynamic. What efforts are you going to make to establish it into a business hub of Northeast Asia?
A: On top of the partial opening of Yangshan port near Shanghai, China has been accelerating its bid to develop ports.
Japan has been carried out a plan to foster three trunk ports since the occurrence of the Kobe Earthquake, joining a fierce competition to gain an upper hand over a port hub of Northeast Asia.
It is an urgent task to secure shipments of New Port to brace for rapid changes in the port and logistics environment of Northeast Asia.
To this end, the Busan-Jinhae FEZ Authority is stepping up a push for the early development of New Port while expanding the incentives of the port.
The authority is striving to develop four districts, including the Myeongji New Town, a landmark district of the FEZ area beyond the New Port area, without a hitch. It's confident that the attraction of foreign capital would change the free economic zone into a business center of Northeast Asia serving as a gateway in the region.
Q: Will you tell our readers about the outcome of an IR session the Busan-Jinhae FEZ Authority recently organized to attract a target of Japanese logistics companies' What impact the attraction of Japanese companies will bring about to the domestic logistics industry?
A: The Busan-Jinhae FEZ is comprised of five districts ― the New Port area, Myeongji, Jisa, Dudung and Ungdong. It plans to develop a logistics center in a 1.5 million best (4.95 million sq. meters) hinterland area of New Port. The authority intends to complete by 2010 a plan to create a site covering 370,000 best or 1.22 million sq. meters in four stages in a bid to accommodate global logistics companies, including Japanese firms.
The Busan-Jinhae FEZ authority has already held investment sessions designed to attract logistics companies and shippers in Japan and China to the second-stage logistics center site, to be created during this year. Thirty-seven Korean and Japanese companies participated in the investment session held in Tokyo on April 24, while 70 Japanese logistics companies and shippers were on hand at the session held in Osaka on September 12. These efforts have paid off. Forty domestic and foreign companies formed up 17 consortia to apply for their movement into the planned second-stage logistics center. The Busan-Jinhae FEZ authority attracted investments worth $300 million by 7 consortia of 19 companies ― nine domestic companies, six Japanese and three Chinese firms. Many global logistics companies are expected to participate in an application for their movement into the planned third-stage logistics center area covering 108,000 best or 324,000 sq. meters, slated for October, touching off fierce competition.
The attraction of Japanese and other global logistics companies will contribute to repositioning Korea as a logistic hub of Northeast Asia, bringing about high value added and new cargo, particularly transshipment freight, - creating 16,000 to 27,000 jobs and reinvigorating the regional economy by 2011.
Q: I've heard that the Busan-Jinhae FEZ authority plans to develop the Namsan Amusement Park as the Korean version of Venice. Will you elaborate on the current process and other details of investment agreements reached with Morgan Stanley and Emerson Pacific?
A: The authority plans to develop a 220,000 best (726,000 square meter) Namsan Amusement Park area in Jaedeok-dong, Jinhae City as "Namsan Hilton Resort?under the concept "atural Water Garden,"or the Korean version of Venice. The development plan calls for creating artificial lakes, island flora symbolizing the shape of a leaf, grape farms, tea farms, a botanical garden, a zoological garden and condominiums.
Last May, the global financing and service company Morgan Stanley inked an MOU on a 50:50 joint venture with the Korean golf/leisure company Emerson Pacific.
Namsan Hilton Resort, to be dedicated in October 2009, will be operated by Hilton International, and the resort will be linked with the membership of Hilton Namhae Golf & Spa Resort as well as cruises to bring about synergetic effects.
Q: What's the process of a project designed to develop the Ungdong District as a comprehensive tourism/leisure complex?
A: The 1,176,000 best or 3.88 million square meter Undong area has been set aside as a leisure/resort site where leisure and resort facilities can be built in the interests of foreign residents.
The project calls for developing a marine-resort complex designed to accommodate such facilities as marine resorts, condominiums, theme parks, and golf courses with the goal of improving foreign residents'living conditions. The South Gyeongsang provincial government once designated the area as a motor race site under the purpose of hosting an F1 competition, but rescinded the bid in October 2003.
The master plan of the project, which has been already drawn up, will be complete by 2013.
Q: Will you tell the incentives and benefits of foreign investments into the Busan-Jinhae FEZ?
A: Corporate occupants of the free economic zone are offered incentives like an exemption of corporate, income and other taxes, the early supply of infrastructure and financial support of funds for the installation of equipment.
A variety of restrictions are being eased, while preferential benefits in the use and sale of state- and publicly-owned properties are provided. Foreign hospitals and schools will be built within the free economic zone for the convenience of foreign residents and all documents will be supplied in foreign languages.
Besides, the authority is offering one-stop services to the executives and staff members of foreign companies from their entry into the country through the opening of their factory.
Q: What steps are in place to help the Busan-Jinhae FEZ have a competitive edge?
A: The authority is putting more energy into improving geographically inferior factors and beefing up advantages of the free economic zone in an effort to differentiate itself from rival cities and specialize its regional characteristics. It plans to build up the next-generation New Port and specialize in marine logistics industries, attract Northeast Asian headquarters of multinational companies, based on regionally specialized industries and foster regional innovative clusters in the southeastern sphere.
The Busan-Jinjae FEZ authority is making the utmost use of its geographical conditions, ensure sustainable, environmentally-friendly development and implement construction projects in a business-friendly, user-specific fashion.
The authority is focusing on preserving beautiful coastal landscape and attractive living space to expedite an inflow of excellent manpower and foreign investments. It plans to make efforts to protect the afforested area by accommodating the existing development plans as much as possible while minimizing new development projects.
It is striving to create such an environment conducive to the management of domestic and foreign companies as the expansion of diverse preferential incentives extended to foreign investors, conformity of labor policies and working environment to international standards along with one-stop services designed to attract foreign investments and the use of English.
The authority is adopting a development model calling for the construction of a self-sufficient FEZ, with a focus on a function of marine logistics and minimizing the destruction of the natural environment. nw

Chang Soo-man, commissioner of the Busan-Jinhae FEZ Authority

Representatives of Morgan Stanley and Emerson Pacific shake hands with each other after signing on the "Namsan Hilton Resort"project.