IFEZ under Development
as Foreign Concerns
'Bridgehead into China

Accelerates steps to induce foreign investments with best investment conditions

A little more than four years have passed since the Incheon Free Economic Zone Authority (IFEZA) was inaugurated amid high expectations and interest over the ambitious goal of making it a hub of Northeast Asia that will play a role as a new growth engine.
The historic scheme, calling for the New Songdo International City-Yeongjong Airport City-Cheongna District Triangle, covering 209.4 sq. km, 70 times the size of Yeouido in Seoul, is becoming a reality.
A view of New Songdo International City, which is being built over reclaimed land, from the top of the 21-story building that accommodates the IFEZA office shows that a state-of-the-art city of the 21st century is shaping up. The Incheon Bridge, the fifth largest cable-stayed bridge in the world, is now under construction. The Songdo International Business District, which will house the 65-story Northeast Asia Trade Tower, the Convention Center, the nation's first International School and International Hospital is also taking shape. The Knowledge-based Industry Complex for u-IT clusters, R&D and high-tech industries, the Biotech Complex with Celltrion, the IFEZ's first FDI company, the High-tech Cluster with Yonsei University, Songdo Landmark City with the planned 151-story Incheon Tower and the Incheon New Port all show visible signs of development.
The Yeongjong Airport City project calls for the development of a free trade zone within Incheon International Airport along with the expansion of the cargo terminal, the world's top-rated Yongyu and Muui Tourism/Leisure Complex, the Unbok Leisure Complex and the development of Yeongjong Sky City, which will include the Yeongjong Logistics Complex.
The Cheongna District is set aside for the Hi-tech Park, a twin-tower 77-story skyscraper for international finance and trade with support from the World Trade Center Association and the City Tower in a move to build up infrastructure for attracting investments from foreign companies.
The IFEZ scheme has been in full swing as South and North Korean leaders declared an eight-point agreement during their summit talks in Pyongyang Oct. 2-4, providing momentum for an era of inter-Korean peace and co-prosperity. The inter-Korean deal promises to be a great boon for Incheon as it calls for the planned designation of a joint fishing zone, a peace zone and the Haeju economic zone in the North, all in close proximity to Incheon. The city will likely emerge as a logistics center with Incheon International Airport and Incheon Port serving as a linkage with the existing light processing industry center in Gaeseong and the planned high-tech industry center in Haeju, both in North Korea.
Additionally, the government's plan to build a road network linking Incheon International Airport and Gaeseong and Haeju via Gangwha Island is expected to boost Incheon's standing as an inter-Korean economic collaboration and logistics center.
Despite these favorable factors, with the Northeast Asian region being one of the world's largest trading spheres, competition among the surrounding nations will become more fierce. China's rapid rise, with the potential for a bountiful market and cheap labor, combined with Japan's turnaround from a long-standing recession, based on a solid manufacturing foundation and excellent technological power, have threatened the Korean economy.
The Incheon Free Economic Zone was inaugurated a little more than four years ago in an attempt to break the stalemate. Capitalizing on its favorable geographical features, the establishment of the IFEZ was aimed at the development of a logistics hub of Northeast Asia by expanding such logistics infrastructure as the existing international airport and seaport as well as developing a Northeast Asian center for foreign investment by creating an optimum climate in which foreigners can do business and live.
The IFEZ's emergence as an economic hub of Northeast Asia ahead of other nations is not easy considering China's cheap and plentiful labor and huge market, Singapore's efficiency and Dubai's willingness to take such steps as dramatically lowering taxes.
What strategy does the IFEZ adopt, then's The IFEZ's best policy is to build up a Northeast Asian hub by making the most of its geographical advantages to induce FDIs. Korea must take advantage of foreign investors'desire to use Korea as a bridgehead for their entry into China, rather than coming to loggerheads with China.
On top of its close proximity to China, Korea has such advantages as a solid high-tech manufacturing foundation and abundant, high-caliber manpower -- an area in which China still lags behind. In fact, China is considerably riskier with its lack of intellectual property rights protection. Overseas Chinese capital is also being used to indirectly advance into China via Korea. A case in point is the Lippo Group, which is developing the Unbok leisure Complex in the Yeongjong Airport City. The second-largest overseas Chinese capital conglomerate is striving to build a world-class "Chinatown"as a bridgehead into China with the inducement of overseas Chinese capital.
As of Dec. 31, 2007, the IFEZ has attracted 34 deals worth $8.97 billion consisting of 23 contracts worth $8.9 billion and 11 MOUs worth $77.4 million. Some say that the attraction of foreign investments is sagging, but the argument is groundless in consideration of the characteristics of the IFEZ projects. Unlike ordinary industrial complexes and foreign-investment areas, the free economic zone has focused on creating an agreeable climate in which foreigners may do business and live without difficulties in order to accelerate the full-blown attraction of foreign investments. That is why the IFEZA has put so much energy into living condition development projects since its establishment.
FULL-BLOWN FOREIGN INVESTMENT ATTRACTION WITH THE WORLD'S BEST INVESTMENT ENVIRONMENT The majority of foreign investments so far have been for development projects. When the New Songdo International School opens and such infrastructure projects as Central Park, the Convention Center and the Incheon Bridge are completed in the next one to two years, it is sure to enter a full-blown stage of attracting foreign investments.
IFEZ has initially attracted foreign investments from such non-profit organizations as research institutes before luring investments from overseas corporations. Currently, the IFEZA is working to improve the investment climate in a step to prepare for the acceleration of foreign investments. It is pursuing an option of raising the profitability of foreign companies through collaboration among industry, academic and research institute circles or by attracting leading world-class corporations. The IFEZA is pursuing such prestigious Korean and foreign universities and research institutions as Yonsei University in an effort to build up an R&D center of an international scale, while striving to strategically undertake large-scale projects that can lead to investments by global corporations.
With such a foundation almost in place, foreign companies'interest about their investments into the IFEZ is expected to sharply mount, and domestic companies are more likely to form joint ventures and sign MOUs with foreign juggernauts.
With the completion of development projects and the aggressive attraction of foreign investments, it will be a sure bet that the IFEZ will be a leading business center in Northeast Asia, particularly the business hub in New Songdo International City. Foreign investors show a keen interest in the development of New Songdo International Business District. For instance, New Songdo International City Development (NSIC), a joint venture between Gale International of the United States and POSCO E&C, is involved in the development of Songdo Section II and part of Songdo Section IV, while Morgan Stanley is participating in a project to develop parts of Songdo Sections I and III.
Incheon is trying to make flawless preparations for the metropolitan city to host the World International City Expo in 2009, serving as a prime opportunity to publicize Incheon's development status and growth potential to the world. New Songdo International School, the Convention Center, Incheon Bridge, Central Park, a hotel and a Jack Nicklaus-designed golf course will be completed before the expo is held.
There will also be the 65-story Asia Trade Tower, scheduled to be dedicated by 2010, roughly 60 office buildings, a western-style downtown borough and the 151-story Incheon Tower, the landmark of the New Songdo International City and the second highest skyscraper. A consortium of Portsman Holdings, Hyundai E&C and Samsung Corp. is undertaking the project in Songdo Sections VI and VIII.
Most of the mammoth development projects will be completed by 2014, redrawing the Incheon skyline. The IFEZ will also be in the global limelight when Incheon hosts the 2014 Asian Games. nw

The Incheon Free Economic Zone will evolve into a state-of-the-art city of the 21st century with super high-rise buildings, parks, leisure and entertainment and other facilities to improve the investment and living conditions for foreigners and (right photo) IFEZA CEO Lee Hwan-kyun.