ΆΓ  [Cholla-pukto]Land of New Opportunities for Foreign Investors

KoreaTimes 2000.10.24  

Cholla-pukto is strategically located in the southwestern part of Korea, about 240 kilometers from Seoul, uniquely situated to live up to the provincial motto "Advancing Into the World."

This province is one of the fastest growing regions in Korea, renowned for its cultural heritage and natural beauty. However, due to a relatively underdeveloped industrial structure, the gross regional domestic product (GRDP) of Cholla-pukto still accounts for a mere 3.6 percent of the national total, while the per capita GRDP is equivalent to only 85.5 percent of the national average.

From a different perspective, however, one can clearly see how the province's current situation, as numeric data indicate, presents much room for development opportunities.

With the aim of creating a ``Land of New Opportunities,'' the local government and people have been working very hard to transform Cholla-pukto into an international investment haven. As a result, the province's GRDP and per capita GRDP have increased steadily, while solid physical and technological infrastructures have also been established.

The existing Honam and 88 expressways both run through the province, and construction of three additional highways will soon be completed. Ultimately, in the near future, seven expressways will criss-cross Cholla-pukto, connecting the province with the rest of Korea. Also, two additional lines will soon be constructed to the three current railroads in the province in order to handle increasing rail freight.

For cargo that must travel by air or sea, Cholla-pukto currently has one airport and one seaport, and will soon have another domestic airport and seaport each. In addition, plans have been drawn up for a new international airport and seaport to support the massive Saemankum Reclamation Project, which will create new industrial zones and occupy an area equal to one third the size of Hong Kong, including a 33-kilometer-long sea dike.

Despite all the benefits, most foreign investors will tend to ask the question: why choose Cholla-pukto while there are alternatives galore? Several very unique features about our province help answer this question.

Firstly, Cholla-pukto is the closest province to Mainland China. This strategic location makes this region an ideal shipping hub not only to the world's larges and fastest growing markets, but also to the emerging markets of Southeast Asia Secondly, the Korean government has officially designated Cholla-pukto as a region for the machinery industry including auto parts. A recent research report suggested that the Kunsan Free Trade Zone should strategically target machinery industries in order to capitalize on the rapidly increasing industrial development throughout Asian countries.

Thirdly, adding to the successful completion of the ``Land of New Opportunities,'' Cholla-pukto is known for its harmonious labor-management culture, in sharp contrast to the rest of Korea. Thus, the province is committed to maintaining this distinction.

As some of the readers may know, Governor Yoo Jong-keun has been recognized as an outspoken advocate of free market principles and a forerunner of the country's efforts to induce foreign investment. The province is becoming a new``model'' for an investor-friendly business environment. The local government and community have always stressed the need for personal attention and care with regard to investment in our province.

The administrative process for foreign investment in Korea can become an unwanted hardship. Therefore, the Cholla-pukto Investment Support Team has been established to provide both domestic and foreign investors with comprehensive assistance with regard to all administrative matters. For example, when Hyundai Motor Corporation wanted to build its Chonju plant years ago, Cholla-pukto exerted every effort to meet Hyundai's demands, including an aggressive campaig calling on the central government to alter its land use plan for an industrial complex.

Furthermore, the local government has also been eager to listen to foreign investors and solve their problems. The provincial governor proposes an ``after-sales-service,'' which is considered to be one of the most important elements needed to attract foreign investment.

For these reasons, it is no surprise that Cholla-pukto ranked number one amongst regions and the improvement of their business environment in a nationwide survey conducted by the Federation of Korean Industries in 1997.

In addition, the province also operates the Administrative Real Estate Agency (AREA) within the Foreign Investment Information Center (FIIC) in Seoul. AREA provides one-stop service for real estate matters, ranging from the locating of plant sites to the establishment of factories. Meanwhile, the FIIC offers one-stop investment consulting and assistance for foreign investors located in Seoul.

The EU companies such as Pan Asia Paper, BASF, Hankuk Vetrotex, Novartis Agro Korea are successfully operating their business in the province. In 1998, Cholla-pukto ranked first in terms of inducement of foreign direct investment among all Korean provinces.

Above all, Kunsan Free Trade Zone is the most attractive public sector project that offers some of the most profitable investing environments in Korea, promising a trade hub for the Asia-Pacific region in the 21st Century.

The government officially designated a part of the Kunsan National Industrial Zone as a new multi-functional Free Trade Zone (FTZ). Located on the west coast of Cholla-pukto and surrounded by its four major industrial zones, the Kunsan Free Trade Zone will serve as an area for a wide range of industries from manufacturing to distribution and international trade.

The Kunsan FTZ is currently under construction, and businesses are expected to begin operations from June 2002. However, due to its following advantages and, thereby, the anticipated high demand for land, we are recommending that investors secure plant sites well in advance of the completion date. But then again the question rises, why the Kunsan Free Trade Zone stands out of many others?

Firstly, the government plans to purchase the land from the developer, KoLand, and then provide foreign investors with ``rent-free lease'' for their businesses. Due to the attractiveness of rent-free lease, the government expects a strong demand for land, and thus has already been ready by law for the expansion of Kunsan FTZ into the remaining 416 hectares of Kun-Jang National Industrial Zone if land demand exceeds the planned 129 hectares.

Secondly, the Kunsan FTZ plans to develop part of its land as an integrated industrial zone for the machinery business, which expects that integrated machinery businesses will enjoy a beneficial ``agglomeration'' effect among machinery businesses within the FTZ, as well as with related businesses operating in industrial zones, adjacent to the Kunsan FTZ.

Thirdly, the Kunsan FTZ will provide the shortest and most direct shipping route from South Korea to China, 580 kilometers from Qingtao. And it will be an ideal candidate for the Asian headquarters of multi-national companies aiming to crack the world's largest and fastest growing market.

Fourthly, due to the diverse benefits of an FTZ such as its tariff-free status and special treatment in existing laws, the Kunsan FTZ is a perfect place for international trade, transit trade and other trade-related businesses.

Fifthly, businesses in the FTZ will be exempt from corporate and income taxes for the time periods as indicated on the screen. Local taxes on acquisition, property, aggregate land and registration will also be exempt for 15 years.

And finally, last year, Cholla-pukto enacted the Enterprise and Investment Promotion Act, which can provide subsidies to foreign investors for employment, job training, equipment and facility investment subject to some conditions.