Busan is good

Busan-Jinhae FEZ on track to investment hub

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The strategic location of the Busan-Jinhae free economic zone is enough reason to attract foreign investments to Korea, says Chang Soo-man, commissioner of the authority.
"We have foreign companies lined up seeking to enter our free economic zone because of its strategic location, which has been empowered by the recently opened Busan New Port," the official told The Korea Herald. "The problem is that we don't have enough land space to accommodate them all."

The FEZ, located on the southeast coast of Korea, boasts that its "ideal" location can serve as a launch pad for foreign investors seeking to enter China and Japan. Korea, which has such tough competitors as Hong Kong, Singapore and Shanghai in attracting foreign investment, has to overcome problems posed by overregulation and weak infrastructure to become a regional logistics and business hub.

All of Hong Kong is a free economic zone, and Singapore, which is 100 times smaller than the U.S. state of Georgia, has benefited significantly from an FEZ.

But Chang emphasized that Busan-Jinhae's strength in matters of logistics is attracting companies related to the auto, machinery and shipbuilding sectors. These are key industries of Korea, which also offer the chance to benefit from a synergy effect. He noted that rapidly growing China is also seeking entry to Korea to cut distribution costs and raise the competitiveness of its goods abroad.

"Many Chinese companies have become keen on raising the image of their products overseas and raising the value of their exports by two times by having 'made in Korea' tagged on their goods," said Chang. He explained that some Chinese companies run manufacturing facilities in their homeland to have 80 to 90 percent of their products completed and another facility in Korea to have the finishing touches done, such as packaging and labeling.

"The Chinese companies can raise the prices of their goods because Korean-made products carry a better image than Chinese-made goods in the overseas market," the commissioner said.

He highlighted that a U.S.-Korea free trade agreement would only increase Korea's chances of attracting foreign investors, especially from China.

Washington hopes to seal an FTA with Seoul before the expiration of the Bush administration's trade negotiation authority, or Trade Promotion Authority, in July 2007.

"Chinese companies getting more from their goods by shipping it from here can also benefit from the FTA with the United States," Chang said.

As for when all of Korea could become a free economic zone like Hong Kong, the official predicted about 2030.

The Busan-Jinhae FEZ is to be completed by 2020. This includes plans to establish living conditions on par with advanced economies, which would include setting up international schools and hospitals.

"We need the time and money to spread out internationally recognized schools, hospitals and expand and strengthen the labor pool, as well as work out foreign exchange regulations," Chang said.

The source of news : The Korea Herald  2006.04.08