may 23, 2008
DESCRIPTION
May 23, 2008. Do We Need FEZs? Why?. Evaluation of the Past Five Years. What to Do. Do We Need FEZs? Why?. Newly designated FEZs. Existing FEZs. 1. FEZs in Korea. International trade; aerospace logistics. Cutting-edge manufacturing; logistics business with China. - PowerPoint PPT PresentationTRANSCRIPT
May 23, 2008
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Do We Need FEZs? Why?
Evaluation of the Past Five Years
What to Do
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Do We Need FEZs? Why?
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Existing FEZsNewly designated FEZs
Cutting-edge manufacturing;tourism and leisure
Cutting-edge manufacturing; logistics business with China
Service industry;parts and materials
International trade; aerospace logistics
Parts and materials; marine logistics
Advanced materials; marine logistics
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Dubai
Shanghai-Pudong
Shenzhen
Hong Kong
Singapore
Tianjin-Binhai
Korea’s FEZs
Rapidly emerging as China’s economic hub
Symbolizes economic opening of China
Business hub of East Asia
Business hub of Southeast Asia
Aims to be a next Pudong
Rapidly emerging as economic hub of the Middle East
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11 FEZs promote reform of regulations.
Special Act on Jeju Special Self-Governing Province (2006)
Special Act on the Development of Corporate Cities (2004)Special Act on Jeju Special Self-Governing Province (2006)Special Act on Support Measures for Land Returned by USFK (2007)Special Act on the Establishment of Foreign Educational Institutions (2005)
Special Act on Jeju Special Self-Governing Province (2006)Special Act on the Establishment of Foreign Medical Institutions(submitted to the National Assembly in 2007)
Special Act on Jeju Special Self-Governing Province (2006)Special Act on the Establishment of Foreign Medical Institutions(submitted to the National Assembly in 2007)
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Fair Trade Act (revised draft announced in 2008)
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Number of years in existence8 years 12 years 20 years16 years
22 FEZs will help Korea catch up with competitor nations.
Level ofdevelopment
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Favorable living conditions
Attractive investment opportunities
High value added industrial clusters
High profile airports and ports
Foreign investment trends
International educational and medical institutions
High-tech cities and tourism facilities
33 FEZs will boost sluggish foreign investment.
2004 2005 2006 20070
10
20
30
0.4
0.8
1.2
0
US$ trillionUS$ billion
South Korea
World
World
S. Korea
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Evaluation of the Past Five Years
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Stagnant economic growth
Inconvenient transportationand housing
Foreign Hospital Act yetto be enacted
Limits onremitting profits overseas
Insufficient tax cutsand cash grants
High corporate tax rate
FEZs Singapore Hong Kong China
Excessive labor regulations and inadequate English skills
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1. Lack of economic freedom slower development
2. Lack of special incentives insufficient FDI
3. Lack of independence and expertise inefficiency in management
No taxes No labor conflictsNo mandatory employment
of nationalsNo limits on remittance
of funds overseas
80% of players are foreign nationalsExcellent infrastructure and incentives
Swift responseEmphasis on capability
Development ofnew strategies
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What to Do
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Develop sitesAttract FDI
Become international business hub
Measures to Promote FEZs
Acceleratedevelopment
1. Shorten approval period 2. Expedite development of new FEZs 3. Build highly advanced Ubiquitous City 4. Enhance brand value of FEZs
Improveinvestment climate
Enhance management efficiency
5. Build more affordable industrial complexes 6. Improve business environment 7. Lead rest of Asia in education 8. Promote medical services, medical tourism 9. Increase availability of housing for foreigners
10. Promote competition among FEZs 11. Introduce Special Act on FEZs
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Application Local FEZAuthority
Municipal orprovincial leader MKE
Responsiblecommittee orcommittees
FEZ Committee Approval
Concerned central government
agency
Developers can apply directly to MKE for approval
Move from sequential approval process to simultaneous/parallel approval process
Shift to coordinated deliberation systemEstablish joint consultative body
Application MKE
Concerned centralgovernment
agency
Municipal orprovincial leader
FEZ Committee Approval
Currentprocess
Proposedchange
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Prompt establishment of new FEZ Authorities
FEZ Planning Office in each FEZ is preparing to launch FEZ AuthoritiesThree new FEZ Authorities will be launched within Q3 2008
Support to attract investors and developers
Promote and distribute information on best practices
Yellow Sea FEZ to specialize in automobiles, IT, biotechnology, value-added logisticsDaegu-Gyeongbuk FEZ to specialize in knowledge-based services (eg. education, medicine,
fashion), manufacturing (eg. IT, materials)Saemangeum-Gunsan FEZ to specialize in automobiles, shipbuilding, environment, tourism and leisure
Promote Differentiated Growth Model of FEZs
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Build Ubiquitous IT Cluster
Cluster of related industries (22 companies to be established in 2009)
Create Ubiquitous Environment
Gale and Microsoft to build advanced ubiquitous city
Plans include consolidated city operation center, intelligent traffic system
Establish Necessary Facilities
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Landmarks Promote eye-catching landmarks
Songdo’s 151-story Incheon Tower, Cheongna City TowerActively solicit bids from world-famous architects
Tourismand
Leisure
Develop popular tourist destinations Incheon’s Yongyu Muui area, Gwangyang’s Hwayang area, and Saemangeum’s Gogunsan IslandsVarious theme parks and other cultural attractions
ActivePromotion
Publicize FEZs overseas Run ads in overseas broadcasts, journals, and on the InternetAdvance the FEZ brand concept
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Supply will increase gradually, up to 10% of total industrial complexesRental fee: about 1-5% of the total cost of creating the industrial complexRental period: maximum 50 years
Expand supply of industrial complexes on long-term lease for the exclusive use of foreign-invested enterprises
Carry out reclamation work on Section 11of the Songdo area in Incheon
Purchase price of industrial complexes (1,000 won/ ㎡ )
Work on Sections 1-10 is under way or already completed
Section 11 will be developed as an industry/university/research institute cluster
Noksan, Busan
186
Pudong, China106
Shenzhen, China 30
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Greater incentives for foreign-invested companies
Offer more corporate and income tax breaks over a longer period
Ease regulations for the convenienceof foreign investors and workers
Set up special immigration desks for foreign investors
Simplify visa application procedure (Local FEZ Authority will process forms)
100% for 3 Years
100% for 5 Years
50% for 2 Years
Present
Revised
50% for 2 Years
Plan to increase incentive budget for strategic target
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Allow institutions to remit profits overseas
Ease restrictions on the proportion of local students admitted to foreign schools
Current maximum: 2%
Relax qualifications required of those who wish to establish foreign schools
Support the establishment of three outstanding foreign schools
(primary and/or secondary level)
Provide financial support for an elementary and a middle school in Songdo,
where the need is urgent
Target: 5 universities and 10 research institutions by 2012
Attract world-class universities and research institutions to create a knowledge-based economic zone
Attract world-class educational institutionsto improve the living environment for foreign families
Reduce regulations affecting foreign educational institutions
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Legislate Special Act on Establishment of Foreign Medical Institutions that Nurture medical tourism industry
Allows establishment of profit-orientedforeign hospitals
Any business established by a foreign national in accordance with the Commercial Act will be eligible
Allows foreign doctors to provide long-distance medical services
Allows foreign doctors, nurses, and operators of medical equipmentto work in Korea
Contains special provisionsfor the importation of foreign drugs (U.S. FDA-approved drugs only)
Foreign hospitals can offer a wider scope of subsidiary services
Allow profit-oriented medical services to foreign patients
Hot springs, tourism and hospitality,international conferences, etc.
Promote target country-specific marketing
Develop tailored medical tourism products
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Serviced residences, villages equipped with golf courses, and many other diverse choices
Sophisticated exterior and interior design
Various conveniences for foreign residents
High-quality housing complexes
Affordable, comfortable rental accommodation
The government will increase the supply of houses available for rent exclusively to foreigners
Homes will be set aside specifically for rent to employees of foreign-invested companies
Caps on rent and key money will be eliminated
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Encourage competition among FEZs
FEZs will be expanded or dismantled, and projects scaled up or down, based on performance
FEZs will be eligible for operation funds and new project funds
Enhance the expertise and autonomy of FEZ Authorities
Laws will be streamlined to permit hiring of more foreign experts
FEZ Authorities will have greater control over personnel management
Increase rate of support for operation of FEZs based on performance (40%→100%)
Evaluation criteria: amount of FDI attracted, efficient use of funds, number of foreign educational institutions
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Specify more exemptions from currently required procedures
More development planswill automatically beestablished/modified to conformwith FEZ development plans
Specify additional exemptions from other laws
A broader range of provisionswill automatically beapproved/authorizedwhen a development project isapproved
Rental Housing Act: Elimination of caps on rent, key money
Immigration Control Act: Simplify visa application procedure
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Increase funding to attract foreign educational institutions Expand industrial complexes operating under long-term leases Complete reclamation work on Section 11 in Songdo Increase availability of rental accommodation for foreigners
Offer more tax breaks
Shorten approval period
Enact Special Act on Establishment of Foreign Medical Institutions
Strengthen FEZ Authority’s control over personnel management
Simplify visa procedures
Facilitate hiring of more foreign experts
Establish VIP lanes in airports for foreign investors
Establish three new FEZ Authorities
Facilitate operation of FEZ Committee
Create competitive environment for FEZs
Promote FEZs overseas
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