Make hub dream a realityDreams of becoming a Northeast Asian hub are getting farther and farther from Korea. According to the Korea Chamber of Commerce and Industry, the nation’s three free economic zones ― Incheon, Busan and Gwangyang -- obtained only $240 million of foreign investment in total last year, while the Pudong New Area of China attracted $5.6 billion in foreign investment in 2005.
The reason investments in Korea’s free economic zones are sluggish is that they are not attractive. They are burdened with regulations and taxes, while lacking roads, schools and hospitals. For example, it took nine months for one foreign company to get permission to do business because it had to go through a 17-step approval and permission process last year. Even after permission was granted, the company has not yet begun construction due to other regulations. There is no such thing as a “one-stop service” here. Even government officials with authority over one free economic zone gave their zone a score of 52, with 100 being a perfect score, according to the National Assembly Budget Office.
As for Pudong, wages are low and the corporate tax there is only half of what it is in other areas of China. It takes only five days to get permission to establish a new corporation in the area. There are nine schools for foreigners and 16 hospitals.
As for Dubai’s Jabel Ali, there is no tax and there are 79 schools for foreigners.
The administration cannot be unaware of these conditions. But it is making no move to correct them, making it seem as if it has no will to develop free economic zones. Maybe the administration thinks there are more important issues, such as restricting the expansion of plants in the Seoul metropolitan area and constructing “corporate towns” and “innovative towns” in the provinces to balance regional development. The government may think that even if all the foreign investments go to Korea’s rivals, such as China and Singapore, we can still live well as long as there are cities and factories in the provinces.
Northeast Asia is a strategic point of the global economy, where Japan, the world’s second-biggest economy; China, the world’s fourth-biggest economy; and Korea, the world’s 11th-biggest economy, are located. If Korea becomes a logistic or financial hub of the region, we will be able to find new growth engines. The government should provide no-visa, no-tariff, labor struggle-free economic zones to develop the nation into a Northeast Asian hub.