In order to foster cutting-edge industries and secure jobs, Goyang Special City is promoting the designation of a free economic zone as a key project. In addition to foreign investment demand, securing settlement requirements such as foreign schools is expected to be important factors in determining success or failure.
The Ministry of Trade, Industry and Energy revised the evaluation criteria for each evaluation item, such as the designation of free economic zones, in April and increased the weight of the evaluation on foreign investment, corporate attraction, and residential environment. In 2022, the designation of free economic zones was changed to a ‘continuous designation’ method and investment demand was emphasized as an important factor.
The city announced that since 2022, when it began promoting the designation of a free economic zone, it has signed a total of 138 business agreements and letters of intent to invest in the creation of a high-tech industrial complex in the free economic zone, establishment of foreign educational institutions, and investment in Ilsan Techno Valley, and that the total amount of investment intent amounts to 6.5 trillion won.
The Gyeonggi Free Economic Zone Authority is promoting a 17.66㎢ free economic zone in the Goyang JDS district, and Gyeonggi Province plans to apply for additional designation to the Ministry of Trade, Industry and Energy in the second half of this year. Ilsan Techno Valley will be developed on a scale of approximately 871,761㎡ and plans to supply and sell land by the end of this year.
A Goyang City official explained, “The business agreements (MOUs) and letters of intent (LOIs) signed with domestic and foreign companies, schools, and organizations are important basic data for assessing investment demand in the free economic zone, and we believe that, along with attracting foreign schools to create an environment for foreigners to settle, they will serve as key factors in determining whether or not to designate the free economic zone.” He added, “We are making every effort to meet with as many domestic and foreign companies, schools, research institutes, and organizations as possible to introduce the Goyang Free Economic Zone and form cooperative relationships for investment. We are striving to form continuous exchanges and relationships of trust and to seek cooperative measures to ultimately lead to investment results.”
Change to ‘regular designation’ method for free economic zones… Increase in importance of private and foreign investment demand
The Ministry of Trade, Industry and Energy changed the designation of free economic zones to a rolling designation method in July 2022. Previously, economic zones were designated through a city/province general public offering every 5-6 years, but now it has been converted to a ‘rolling application and designation’ system. Detailed procedures have also been improved to shorten the period from application to designation from more than a year to less than 6 months.
The Ministry of Trade, Industry and Energy said that it has improved the designation method to a rolling designation method in order to speed up regional development and domestic and foreign corporate investment in line with the rapidly changing domestic and international environment. It also said that the designation of a free economic zone will be reviewed by comprehensively evaluating the region’s innovation ecosystem creation plan, private investment demand, and foreign investment attraction strategy.
Currently, nine free economic zones are operating nationwide, but activation by region shows a large difference. According to 2022 statistics, the total number of companies in free economic zones is 7,644, and among them, four places, Incheon (3,821), Busan-Jinhae (1,954), Gwangyang Bay Area (712), and Daegu-Gyeongbuk (917), account for more than 90% of the total, showing a large difference in activation by region. The Ministry of Trade, Industry and Energy’s plan to operate in a ‘demand-later designation’ manner is also interpreted to mean that it will examine whether the designation effect of free economic zones can be clearly achieved based on investment demand.
Changes in the evaluation criteria for designating economic zones… Emphasizes foreign investment, corporate attraction, and foreigner settlement conditions
In April of this year, the Ministry of Trade, Industry and Energy revised the evaluation criteria for each evaluation item, including the designation of free economic zones, and strengthened the requirements for attracting foreign investment and companies and securing a living environment for foreigners.
Previously, the basic plan for the free economic zone (25 points) and demand for corporate entry (25 points) were combined to give a total of 50 points, but the revised criteria award a total of 60 points for the basic plan for the free economic zone (20 points), foreign investment and corporate attraction (30 points), and securing a foreign settlement environment (10 points). The revised criteria emphasize more specifically the creation of a foreign investment and foreign settlement environment.
Looking at the details of foreign investment and corporate attraction (30 points), the foreign investment attraction (10 points) item mainly evaluates foreign investment preferences, investment performance, investment intention (including attracting international organizations), and appropriateness of investment attraction strategies and goals. The advanced core strategic industry attraction (10 points) item evaluates the advanced core strategic industry attraction performance, selection appropriateness, and investment intention, and the investment conditions (10 points) item examines related service industries such as logistics/distribution, worker settlement conditions such as education, commerce, and cultural facilities, professional manpower production, and research capabilities.
In the newly established Foreign Settlement Environment Securing (10 points) item, investment intentions in foreign settlement support facilities, foreign schools, research institutes, etc., and network support measures between foreign and domestic companies were selected as key evaluation factors.
Goyang City, focusing its capabilities on securing investment demand… MOU and investment intent are investment demand assessment materials
Goyang Special City is focusing its capabilities on securing investment demand for the designation of a free economic zone and the development of Ilsan Techno Valley.
City officials explained, “The evaluation for designating a free economic zone recognizes the performance of signing a memorandum of understanding (MOU) and a letter of intent (LOI) as investment demand, and they play an important part in the evaluation.” Some argue that MOUs and LOIs have no legal effect and are meaningless, but the explanation is that simply confirming the intent to invest satisfies the requirements for designating a free economic zone, and it is unreasonable to request a legally binding document from the other party when the free economic zone has not yet been designated.
The city said that once the designation of the free economic zone is confirmed in the future, it will be possible to have more specific and in-depth discussions about investment plans with companies and institutions that have expressed interest in investing, and it is expected that new investment discussions will also increase significantly.
In addition, attracting foreign schools is considered an essential facility for overseas professionals to reside for a long period of time, and is emerging as one of the key factors that determine the success or failure of designating a free economic zone.
Goyang City has reflected this by signing agreements and letters of intent for investment with a number of overseas schools, including the University of Birmingham, King’s College School, Christ’s College Brecon International School in the UK, Drexel University School of Medicine in Philadelphia, USA, Clean Lutheran High School in California, and Singapore Global School Foundation. Discussions on establishing schools are also expected to proceed more specifically and quickly once the designation of the free economic zone is confirmed.
Economy Queen Reporter Hongmi Kim / Photo Goyang Special City
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2024-09-05 07:26:36