In order to lay the foundation of national economic development and to provide the most optimal business environment for the management of enterprises which need to keep up with rapid economic globalization, the Korean government has designated, and c...
In order to lay the foundation of national economic development and to provide the most optimal business environment for the management of enterprises which need to keep up with rapid economic globalization, the Korean government has designated, and currently operates, free economic zones (FEZ), each one equipped with its own unique competitiveness. With the December 2002, "Act on Designation and Management of Free Economic Zones", the Korean government created 3 FEZs (IFEZ, BJFEZ and GFEZ) in 2003, and in 2008 added 3 more (YESFEZ, SGFEZ and DGFEZ) making a total of 6 FEZs in Korea.
566㎢ of land, bigger than the area of Daejeon city, which occupies 540㎢, has been designated as the area that the 6 FEZs occupy. By 2030, the fiscal expense for the development of these 6 free economic zones will reach close to 65.9 trillion Won, and the total central government contribution will amount to approximately 10.5 trillion Won (15.7%). The rest of the budget will be apportioned in the following manner: 26.76 trillion Won from the local governments (21.5%) and 28.6 trillion Won from national or international private investors (61%). Therefore, the 6 FEZs have to maximize the investments from the private sector. From the beginning, however, various regulations and lack of government support have become obstacles to the efficient development of the FEZs. Accordingly, deregulation and the government's substantial support are desperately needed for the efficient development of the FEZs.
Focusing on the Gwangyang Bay Area Free Economic Zone, this paper analyzed the reality and current development status of the FEZs through existing studies of FEZs and compared them with similar systems in other countries in order to explore ways to vitalize their development. Also, through the analysis of current status and development projects (with focus on the GFEZ), this paper theorizes that insufficient land supply brings low investment attraction, which in consequence caused various problems within the FEZs. In order to identify the issues and problems that should be resolved for the development of the FEZs, two times of surveys were undertaken. The first survey identified and collected problems derived from the development projects of FEZs using "Reliability Analysis" methodology. The second survey identified problems of each development phase using "AHP(Analytic Hierarchy Process)" methodology. Issues and problems, inferred from the surveys, have been dividend into 6 groups selected by the importance and priority of the problems and each section offers a comprehensive solution to each problem.
In the stage of designation, the identified issues are: the optimization of FEZ's designation effect, the supply increase of industrial lands for lease, the pilot area designation of the special building area, and the specification of administrative boundary of landfill area. In the stage of designation of developer for the development of industrial complexes, the issues are: the development methods, the developer selection and the incentives for FDI attraction brought by national companies. In the stage of development plan revision and acknowledgement of implementation plan, the issues are: the shorter approval period for the revision of development plan, acknowledgement of implementation plan and the landscape management of FEZ's districts. In the stage of design and construction implementation of the development projects, the issues are: to improve granting right to extract mineral resources in the vicinity of FEZ's, to simplify the approval process for the acquisition of soil and stone, and to expand the range of consigned organization for the compensation services. In the stage of land supply and sales, the issues are: to simplify the revision process of industry type for the attraction, traffic impact analysis, and improvement method within the industrial complexes. Finally, in the stage of securing and operating development funds, excellent staff, the issues are: the differential support of fiscal subsidies to secure development revenue, system improvement to issue bonds, and securing talented personnel.
With the presentation of alternatives to solve the issues derived from each stage, this paper is intended to be helpful for the revitalization of the planned development projects dealing with industrialization, logistics, tourism and community areas within the FEZs, which will eventually lead to provide sufficient and optimal business areas at competitive prices in a timely manner. Providing optimal business areas at competitive prices is believed to be the best driver for national and international business attraction and thus, a driving force for the revitalization of the FEZs.