South Korea on Wednesday began construction of a creative economic zone south of the nation's capital as part of efforts to promote the country's flagship economic policy.

South Korea plans to invest 1.5 trillion won ($1.27 billion) in establishing the 430,000-square-meter Creative Economy Valley in Pangyo, south of Seoul, which aims to host 1,600 companies employing more than 100,000 people.

The plan calls for creating a high-tech industrial park that will be linked to the nearby Pangyo Techno Valley so the entire area can be converted into a South Korean version of California's Silicon Valley.

The companies will be provided with various support from the government, including rent hovering far below the market price.

Creative economy refers to President Park Geun-hye's flagship policy that aims to merge different industrial sectors, mostly with information and communications technologies, to generate new business opportunities and foster the growth of startups.

The valley will also become home to 14 state-run organizations that support start-ups and technology innovations.

The Ministry of Science, ICT, and Future Planning and the Ministry of Culture, Sports, and Tourism will also provide venues to local start-ups to test their achievements in the ICT segment, and foster new business opportunities through convergence with the culture and art industries. (Yonhap)