Status of Industrial complexes in Korea

I. Introduction
Korean industrial complexes consist of general industrial complexes and industrial
complexes for foreign companies. Industrial complexes for foreign companies such as foreign-exclusive industrial complexes, foreign investment zones and free trade zones are provided to promote industrial advancement through foreign investment. In addition, a few free economic zones as well as Jeju Free International City were recently designated by the government.

II. General Industrial Complexes
Based on who owns the right of management, general industrial complexes can be classified into National Industrial Complexes, Regional Industrial Complexes, and Agro-Industrial Complexes. National Industrial Complexes are designated for regions that are underdeveloped, or areas covering two or more special or metropolitan cities or provinces. They can accommodate national core industries, state-of-the-art science and technology industries, or free export areas. Regional Industrial Complexes are designated to promote appropriate distribution of industries in local areas as well as to activate local economy. Agro-Industrial Complexes are designated to nurture industries for improving the incomes of farmers and fishermen.

Tenants of industrial complexes usually consist of Korean companies, although foreign companies can also occupy them. However, the latter cannot enjoy discounts for rent as they do in Foreign Exclusive Industrial Complexes designated within industrial complexes.

III. Industrial Complexes for Foreign Companies
1. Foreign Exclusive Industrial Complexes
Foreign exclusive industrial complexes are designated by the government to attract
foreign-invested companies with a high competitive edge and technological strength by
providing factory sites at low prices. The prices of factory sites in Korea acted in the past as a barrier to foreign investment due to the high cost of building factories. In addition, even though foreign companies prefer renting to buying factory sites, sites for rent were not sufficient. In order to resolve this problem, the government purchases parts of industrial complexes with central and regional government funds, and provides them to foreign-invested companies at low rents. Foreign-exclusive industrial complexes are located within industrial complexes

2. Foreign Investment Zones
In the past, the central and regional governments built industrial complexes before attracting foreign investors. However, foreign investors had difficulty in finding industrial parks to meet their needs. The 'Foreign Investment Promotion Act' was enacted in 1998 to solve this problem, and now foreign investors can request the Foreign Investment Committee to designate a specific area they want as a foreign investment zone (FIZ). Thus, Foreign investment zones are designated where the investors want to locate to.

3. Free Trade Zones
In 2004, the government revised the ‘Act on Designation, etc. of Free Trade Zones’ to
consolidate manufacturer-centered ‘free trade zones’ and logistics-centered ‘customs-free zones.’ In the past, only the foreign investors who focus on exports could enter free trade zones, but now other companies can also move into the zones. In the past, only cargo handling and storage and simple processing companies could enter the duty free zones, but now manufacturers are also allowed. Furthermore, State-owned or public-owned land or factories are now available for long term rent (50 years) at low prices, which can be utilized to attract large-scale foreign investments. Free trade zones are located near a port, airport, or within an industrial complex.

4. Free Economic Zones
Free economic zones are designated to provide an improved management environment
and living conditions for foreign investors, to promote foreign investment, reinforce
national competitiveness, and encourage balanced development among regions. They are
given not only the infrastructure to attract foreign capital and technologies, but also exceptional tax and administrative benefits.

5. Jeju Free International City
Jeju Free International City is designated to systematically guarantee the ‘free movement of people, products and capital’ and facilitate business activities by developing Jeju Island as the core economic center of the Northeast Asia. It is based on the tourism industry, taking advantage of the unspoiled natural environment of Jeju Island. A total of 29 trillion won will be invested until 2011 in the development of Jeju Free International City as a first-class international city. Jeju Free International City is expected to be comparable with Hong Kong and Singapore.