First Economic Free Trade Zone Designated

The first economic free trade zone was designated in Incheon City, covering an area of 19,004.7m2 in Songdo, Yeongjong, and Cheongrah.

Additional areas in Busan City and Gwangyang City will also be designated as such as early as October.

The Ministry of Finance and Economy convened the Committee on Economic Free Trade Zone yesterday, and passed the bill authorizing the designation of the zones in Inchecon City.

Under the bill, the Songdo zone is intended to accommodate the international business processing and the cutting-edge technology-oriented industries, the Yeongchong zone is proposed to serve as the center for navigation and international logistics, and the Cheongrah as that for international financing and tourism.

To materialize the project, the government and the city will construct more roads and extend the metro-rail lines. Therefore, the Incheon Subway Line 1 will be extended, and the Third Gyeongin Highway will be built up to facilitate the traffic in and out of Songdo. Furthermore, another bridge will be constructed, connecting Yeoungjong with the "mainland" Incheon City, and a new subway line is to be built up, which will run to Cheongrah. Once the development project is completed by 2020, according to the government estimation, 490,000 people are expected to move into the areas.

Incheon City will also construct 180,000 houses in total, including condos, apartments and single houses. 10% of them will be earmarked for employees of the multinational companies, including Korean nationals.

The South Korean government offers various incentives to lure foreign corporations. For example, a multinational company that moves into one of the zones will be exempted from income and corporate taxes for the first three years, and will have to pay only half of the levied taxes for the next two and a half years.

In addition, people can freely trade up to ten thousand dollars in the zones without any regulations. Furthermore, foreign companies will also receive other benefits in terms of leasing.

Moreover, various regulations imposed in other parts of South Korea will not be enforced in the zones.

Hospitals and pharmacists owned and run by foreign entities will also be allowed in the zones, and all government documents will be published and processed in English.

Incheon Mayor Ahn Sang-Su stated, "To entice prestigious foreign universities into the zones, we are contacting Stanford and MIT. At the same time, we are also conducting preliminary negotiations with Johns Hopkins University and Harvard to have them set up their branch hospitals here."

To curb the growing real estate speculation, the South Korean central government will adopt and enforce more measures in addition to the diverse regulations already imposed on the zones.

Kwang-Am Cheon iam@donga.com