[EDITORIALS]How to help ailing free zones

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[EDITORIALS]How to help ailing free zones

The International Business Center Forum, a gathering of the the nation’s elder economic policy makers, recommended that the current free economic zone system be reformed. The group of former finance ministers, which includes Kim Mahn-je, Lee Seung-yun and Jin Nyum, proposed that the administration of the free economic zones in Incheon, Busan, Jinhae and Gwangyang be made independent of those local governments and report directly to the central government. They also recommended that the zones should be visa- and tariff-free and that strikes and other labor actions should not be allowed there.
Those recommendations deserve attention. The free economic zones have not functioned well, although the Pudong New Area and Suzhou Industrial Park, developed by the Chinese government and modeled after Korea’s free economic zones, are successful as bases of economic development. Korea should not only regard the Chinese free-economy zones as strong rivals but also should use the Chinese zones as a model.
The administration needs to re-establish the concept of free economic zones. They should be strategic points with a good business environment. In order to entice foreign investors, such zones must have favorable conditions, so disparities between rules inside the zones and outside them are inevitable. If the administration makes policy for the zones based on a sense of equality with other industrial areas or in line with its goal of balanced development around the nation, the zones will not be a success. What foreign investors will come to the zones where too many regulations exist? Even though the zones were established two years ago, they have not been successful.
The administration once declared that it would develop the nation into a hub of Northeast Asia, but is saying nothing about that recently. The nation cannot become a Northeast Asian hub if even the free economic zones are not functioning. It is not easy to make such zones successful even if one applies good free-market principles. But the administration is also introducing political considerations like equality and balanced development when administering the zones. That is why the projects have not been a success. The government should be open-minded enough to accept recommendations from the elder economic experts. Free economic zones are needed for the domestic economy’s future.
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