Cheongna Project Attracts Indonesian-Based Investment Group

A government official said on October 4, “The Indonesia-based Lippo Group has expressed interest in making large-scale investments in the Cheongna District project,” adding, “We will conclude the investment MOU (Memorandum of Understanding) at the World Chinese Entrepreneurs Convention (WCEC).”

He also said, “Lippo sent a senior executive last week and finished concrete discussions with Ministry of Finance and Economy, the responsible body of Incheon Free Economic Zone.”

An “All-in-one” Business Town-

Although its total investment volume has yet to be confirmed, the Lippo Group has reportedly revealed its intention to develop some 10 percent of the 5.41 million pyeong-Cheongna District.

Unlike government’s plan to develop Asian Village of Cheongna District into a theme park, the firm aims to create an “all-in-one” business town with foreign hospitals, schools, and shopping malls in addition to the theme park.

“The Lippo Group’s investment will reach hundreds of billions of won since it not only invests capital but will take partial charge of the Cheongna District development,” said another government official.

The Indonesia-based group is a financial and real estate development enterprise with over 10 billion dollars in aggregate assets, which has subsidiaries in Hong Kong, China, among others.

The company’s chairman, Lee Wen Zheng, earlier had said at a Southeast Asia investment roadshow organized by the Korean government in August, “The Cheongna District has ample business feasibility,” adding, We are willing to accept deficits for the first four to five years of investment.”

Are Increases in Overseas Chinese Investment Imminent?-

The Lippo Group’s investment in Korea is significant in that the country has attracted overseas Chinese investment in the government-led, large-scale new town development project.

This may trigger a huge inflow of overseas Chinese capital in the future as the firm had succeeded in attracting overseas Chinese investment in the new town development in China and Indonesia based on its networks.

It is also a good sign that overseas Chinese capital that has been controlling the financial and retail industry in Southeast Asia is now looking for new opportunities as it faced limits to growth from the end of the 1990s. It is seeking business opportunities with Korea, motivated in part by the spread of the “Korean Wave” in Southeast Asia.

Recently, Chinese capital has also been making robust steps for overseas investment. The chairman of Korea Chinese Business Association, Yuan Kuo-Tung, said, “China opened up its market in the early period of liberalization to acquire foreign advanced technology, but now it is advancing overseas with its stocks of foreign money.”

Sociology professor Jeong Seong-ho at Kangwon National University expressed his hopes by saying, “Given the nature of overseas Chinese capital closed to investment in those without any connections, the 8th World Chinese Entrepreneurs Convention slated for next week in Seoul can be a major opportunity to create a network with overseas Chinese investors.”

Chang-Won Kim Joong-Hyun Park changkim@donga.com sanjuck@donga.com