Reprioritize FEZ districtsThe Ministry of Knowledge Economy is reportedly considering abolishing some of the specially created districts in the nation’s six free economic zones (FEZs).
The ministry allegedly regards the districts as unfeasible and inefficient, saying they have failed to help attract foreign investment and businesses to the economic zones.
In response to the reports, residents of the districts and local governments that have jurisdiction over the areas strongly protested the possible moves, as one would expect.
The government designated free economic zones in Incheon, Busan and Gwangyang in 2003. It then added three more in the Yellow Sea, Daegu and Saemangeum in 2008.
All of these areas, however, are struggling, and they have not lived up to the lofty expectations the government set.
This is not a surprise, though, because the government simply spread out the zones evenly across the country without fully debating where to create them.
Through the first half of this year, just $2.7 billion in foreign investments had been made in the nation’s six FEZs, accounting for 3.7 percent of all foreign investment in Korea.
The zones aren’t even differentiated by region anymore, and land prices in the areas have soared even in the absence of foreign companies moving in.
Few, if any, companies will be willing to pay these exorbitant prices. At the moment, most free economic zones are focused on luring new apartment complex developments and have literally given up efforts to attract foreign investments.
If the economic zones cannot function properly, it is best for the government to abolish them as soon as possible.
Of course, bailing out on the zones now could lower the public’s confidence in the government’s policy decisions. It also could lower Korea’s sovereign credit rating.
The problem, however, will only get worse if we leave everything as is.
Shortly after the government announced its plans to possibly abolish the districts in the zones, resistance came from several directions. The government then quickly back-pedaled, saying it will not force any of the areas to close unless it has agreements with their respective local governments.
But it is irresponsible for the government to sit idly by.
It should reprioritize the districts and make decisions about their fates based on their respective financial conditions. Resolute, proper restructuring is the right way to fix these faulty policies and truly work for residents.