Pusan to become nation's first tariff-free zone

Pusan will be designated as Korea's first tariff-free zone during the first half of this year.

The Ministry of Finance and Economy (MOFE) announced Tuesday that the Pusan city government and the Ministry of Maritime Affairs and Fisheries (MOMAF) agreed to designate Kamman wharf and Kamchon harbor in the port city as tariff-free zones. The Pusan city administration is scheduled to apply for the designation by next month.

Kamman wharf, completed in 1998, is used exclusively for containers while Kamchon harbor is under development as an integrated fisheries distribution complex and base for deep-sea fishing. Pusan originally hoped to have the entire city declared a customs duty-free zone, but decided to expand the zone after setting aside outlying areas for manufacturing businesses.

MOFE said Inchon International Airport might apply for tariff-free status in the second half of the year at the earliest. Kwangyang harbor is scheduled to be named as a customs duty-free zone this year.

Once a location is designated as a tariff-free zone, indirect taxes such as tariffs, value-added taxes and special excise taxes will be exempted on domestic and foreign goods delivered to the zone.

At the same time, foreign investment companies that invest over $30 million in such zones are entitled to company tax breaks and exemptions on the leasing of national assets.

Choi Young-Hae moneychoi@donga.com