The Incheon Free Economic Zone has gained momentum through attracting foreign investment and international firms to the area, stepping closer to its goal of becoming a major Northeast Asian economic hub.

The IFEZ, South Korea’s first free economic zone, has strengthened its foothold as an international business-friendly zone for knowledge and technology-based business, tourism and the service industry since it was designated in 2003.

“It certainly has been transformed from empty reclaimed land into a global business city,” said the IFEZ Authority commissioner Lee Jong-cheol.

“The IFEZ has been developed as a distribution and logistics industry mecca, and is playing a central role in knowledge service, education, medical (research and business), tourism and leisure,” Lee said.

Since the IFEZ attracted the Green Climate Fund and the World Bank’s regional office to the Songdo area last year, the zone has drawn keen attention from other international organizations and overseas investors.

In addition, the government’s recent announcement that it will relax regulations on casinos and for-profit hospitals in the IFEZ, under President Park Geun-hye’s economic policy of nurturing promising service industries, is spurring the development of the zone.

Foreign direct investment in the IFEZ reached $1.5 billion during the first half of this year, surpassing the target of $1 billion for 2014.

As of July, the free economic area had wooed $6.67 billion in accumulated FDI over the past decade, the largest among the nation’s nine FEZs. The zone is home to a total of 1,147 businesses including 66 foreign-invested companies.

The Korean government has been offering deregulation policies to compete with other free economic zones in Asia. It offers corporate and income tax reduction and real estate for foreign invested companies, foreign educational and medical institutions, and R&D facilities at prices below cost.

It also boosts an advantageous location for both businesspeople and tourists.

“The IFEZ holds strategic geographic and economic positions, acting as a gateway to Seoul and the capital area, a point of departure in the west coast region, and a pillar of economic and industrial development with a large-scale potential market of up to 23,000 people,” an IFEZ Authority official said.

The IFEZ is divided into three administrative districts ― Songdo, Yeongjong and Cheongna ― which were each designed with distinct features in mind.

“Incheon has differentiated its business positioning and strategies from (those of) other competitors to attract interest from foreign investors,” the official said.

Songdo was designed to be a bio and education cluster while Yeongjongdo Island, the home of Incheon International Airport, is focused on tourism and the logistics industry. Projects are underway to transform Cheongna into a finance and leisure city.

Yeongjongdo Island is making a new leap forward, with the government having given LOCZ Korea a green light to invest 2.3 trillion won ($2.2 billion) to build a casino complex resort in the area in March.

Along with the casino, two five-star hotels, a convention center and performance facilities will be constructed to lure overseas tourists, especially those from China and Japan.

The government plans to build a 2.4 trillion won tourism and leisure mega complex to attract foreign tourists using the Incheon International Airport. The project will be completed in 2020.

In August, BMW opened its first driving center in Asia, located on Yeongjongdo Island.

The Korean unit of the German automaker expects some 200,000 people, including travelers from China and Japan, to visit the center annually.

In Songdo, high-tech clusters, a medical and bio complex and a global university campus are attracting local and international companies and offering convenience for foreign residents.

Songdo’s Bio Research Complex is being established to create an R&D complex in partnership with IBM, Siemens and the Ludwig Institute for Cancer Research. Cooperation with various global institutions will result in a comprehensive process for medical research and business in the IFEZ.

The Northeast Asia Trade Tower, the tallest skyscraper in Korea, was completed in July. With 68 floors above ground and three underground, it has become another landmark for the district.

In the Cheongna zone, Hana Financial Group signed a contract to transfer its headquarters to the area to build Hana Dream Town, which will be completed in 2017.

Several other projects, including ones to build a Shinsegae complex shopping mall and a robot theme park, are underway.

By the end of 2020, the IFEZ plans to attract 512,000 residents to the three districts in Incheon and invest 21.4 trillion won in infrastructure construction.
By Park Han-na  (hnpark@heraldcorp.com)