Korea downsizes Yellow Sea FEZ

The government on Friday announced a 70 percent cut in the size of the Yellow Sea Free Economic Zone as it unveils measures to rejuvenate the region’s stagnant project to court foreign investment and boost local economy.

Designated in 2008, the Yellow Sea FEZ is one of the country’s six tariff-free industrial areas but has been regarded as the most infeasible. Its five districts cover 55 square kilometers in Gyeonggi Province and South Chungcheong Province.

Under the plan, the government said it has delisted two districts ― Hyangnam and Jigok ― and reduced the size of the other three ― Poseung, Inju and Songak ― by about 71 percent each.

“The adjustment is meant to prevent further economic damage to residents stemming from sagging progress in development and investment plans,” the Ministry of Knowledge Economy said in a statement, adding that it would soon select the developers for the surviving projects in the region.

Last year, the ministry sorted out 35 districts out of 92 in six FEZs for a feasibility study to see if it should deprive the areas of the special status, which ensures a variety of tax, administrative and regulatory incentives for foreign investors.

The Yellow Sea FEZ Authority initially expected that the government and private investors at home and abroad would “chip in 7.45 trillion won ($ 6.4 billion) to establish a global high-tech cluster and an advanced base for exports and imports to China.”

However, skepticism mounted in recent years over the viability of the zones as foreign capital inflows have not lived up to expectations, retarding development there.

By Shin Hyon-hee (heeshin@heraldcorp.com)