Korea is setting up free economic zones to spur foreign direct investment, local industries, and the overall economy. South Chungcheong Province, often referred to as Chungnam, was given the go-ahead for its bid to set up the Yellow Sea FEZ on Dec. 21, 2007. In light of the province`s biggest achievement last year, The Korea Herald interviewed Governor Lee Wan-koo recently to gather insight into his leadership plans and the province`s promising investment prospects. - Ed.


KH: It has been a year and a half since you were elected as the fourth governor of Chungnam Province, and already you have become highly renowned for your leadership and output. Among the many goals you are aiming to achieve, helping the economy is what you have focused on most, and where you have gained the best results. What is your blueprint for improving Chungnam`s economy?
Govenor Lee: I began my public service as an official in the Economic Planning Board. After being elected as a congressman, I worked in various committees related to the regional economy, such as the Agriculture, Forestry, Maritime Affairs and Fisheries Committee, as well as the Finance and Economy Committee. Through these experiences, I was able to come to the conclusion that enhanced economic conditions for the people is the No. 1 prerequisite for a better quality of life.
Moreover, I was able to meet a lot of citizens in person during my election campaign, and what most of them pleaded with me to do was to revitalize the regional economy. That is how I realized that putting Chungnam at the center of the Korean economy should be my foremost duty.
For this reason, I have set five specific goals to achieve during my governance. First, raise per capita income to $30,000. Second, create 30,000 new jobs. Third, bring output in trade and commerce to $100 billion. Fourth, increase foreign direct investment to $6 billion, and fifth, attract new investment from 2,000 companies.
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Also, we will continue to work on our strategic industries, which are flat panel displays, automobiles, petrochemicals and fine chemicals, semiconductors and materials. We are planning to develop industrial clusters for each of these industries and especially focus on developing Chungnam as the Mecca of flat panel displays in Korea.
Furthermore, we will strive to develop our regional industries and regionally specialized industrial complexes. And through cooperation with other districts such as North Chungcheong Province, Honam district and Gyeonggi Province, we will be closer to achieving our goal of balanced regional development on the peninsula.
Chungnam is a descendant of the Baekjae Dynasty (B.C. 16 to A.D. 660), which thrived as the center of Northeast Asia through its dominance of overseas trade. In order to restore that reputation, we will develop our three major ports - Dangjin, Daesan and Boryung New Port - and secure our advantage in overseas trade and commerce with China.
KH: Chungnam has ranked first place in attracting foreign direct investment in "Green Field" (outdoor leisure) industries for two consecutive years, attracting $1.37 billion in 2006 and $1.24 billion in 2007. Is there a secret to such excellent results?
Lee: First, we strive to attract new investments through strategic promotion and marketing of investment. We do targeted customized promotion of our province in a number of industries, including our four major strategic industries, which are flat panel displays, petrochemicals, automobiles and steel manufacturing. We are also aiming to diversify our sources of investment by targeting Green Field industries such as tourism and leisure. We expect this to provide stable employment for our province in high value-added sectors.
Second, we aim to make our province an attractive investing environment. We can reach all parts of the country within two to three hours through our well-established transport infrastructure, and because we are the closest point in the country to continental China, we are the best candidate for overseas trade with China.
We have vast areas of land that are available at a low price and are just waiting for development. Boyrung Dam, the Geum River and Lake Sapgyeo will be able to provide good quality industrial water to investors. Above all, many leading global companies are located in the Cheonan, Asan and Dangjin belt, and together with their supporting companies, this area is becoming a new industrial zone in our province. We are also famous for having the most stable labor-management relations in the country.
KH: I understand that because of such efforts, many companies have chosen to settle down in Chungnam rather than other locations in the country. Can you tell us about the actual results of your investment promotion and what kind of incentives you offer to companies?
Lee: During the past year and a half of my tenure, I have succeeded in attracting 1,315 companies to invest in our province, which makes up 65 percent of my goal to reach out to 2,000 companies.
We have incentive policies that offer tax exemptions and various subsidies including cash grants to foreign companies who decide to invest, and the specifics are as shown. (Refer to table)
KH: Chungnam province ranked first place for export growth rate and third place for total exports in 2006, so it would be safe to say that Chungnam is playing a key role in supporting Korean exports. Can you tell us about your export results and main export items of 2007, as well as your outlook for the coming year?
Lee: Chungnam province is the hub of the hi-tech industry. The cutting-edge products manufactured in Chungnam contribute hugely to Korea`s exports. Semiconductors, flat panel displays, computers, petrochemicals, and automobiles are the industries strategically fostered in Chungnam, and semiconductors lead among export items.
Due to the surge in oil prices and depreciation of the exchange rate, the province`s export outlook for next year does not seem rosy. However, Chungnam`s export growth in strategic products such as semiconductors, display panels, computers and auto parts continues to be strong. The export market for Chungnam will continue to grow along with the province`s diversification as a base for the country`s exports.
KH: It is obvious that since you took the helm of the province in 2007, there have been many achievements both big and small. But one of the most outstanding achievements seems to be Chungnam`s designation as an FEZ. Would you please share the background on how Chungnam was selected and the details on how your province and Gyeonggi Province promoted the FEZ together.
Lee: Since our province was designated to have an FEZ, the government will provide exemptions and reductions on income and corporate taxes for investors so they can better conduct their businesses. We will also support development of infrastructure, such as road developments and water facilities.
Unlike other regions of the country, we will build good quality schools and hospitals for foreigners, provide foreign-language services, and thereby create a zone that is a desirable place to invest.
On Jan. 27, 2005, the Chungnam and Gyeonggi provinces signed the Mututal Development Cooperation Agreement. The two provinces have much potential to grow economically for many reasons, including their convenient location to do business with China.
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There is a well-established infrastructure for transportation, logistics and industry in both Chungnam and Gyeonggi Province, with the Dangjin and Pyongtaek ports located in each province, it makes the area the most desirable place for a free economic zone.
KH: In the new FEZ, there are five regions in the vicinity of Dangjin port in Chungnam and Pyeongtaek port in Gyeonggi Province, which totals 68.14 square kilometers. In this zone, many investment activities will take place without restrictions. Could you please share the details of the upcoming businesses in the zone?
Lee: The basic concept of the Yellow Sea Free Economic Zone is that the area will be the international base for hi-tech industries in the Yellow Sea area, reflecting the Yellow sea region`s character as the hub of advanced industries with its advantageous location close to China.
This FEZ will be the location of a cluster of internationally cutting-edge industries and will be strategically developed as the base for trade with China.
The size of the new FEZ and the businesses by districts are as follows. The total area is 68.14 square kilometers, comprising five districts. The Songak and Seokmun district in Chungnam province will be developed as a commerce and international business city that is marine-friendly. The Inju district will be a self-sufficient tourist city that has leisure and recreation facilities. The Jigok district will be transformed into an industrial city for hi-tech automotive products. The Poseung area in Gyeonggi Province will be fostered as a base for hi-tech industry, a city of residential complexes and international logistics. The Hyangnam district will be developed into a global Mecca for bio-industry.
KH: There is a grand plan to develop the Yellow Sea FEZ into a Mecca for globally advanced industries. Could you please describe some of the attractive features of the zone and the investment environment?
Lee: The Yellow Sea FEZ is located at the very center of Korea`s West coast, and it has good potential to be the hub of Northeast Asia with China as one of the partners. The new FEZ can be the driving force of economic growth for the region. Within a 100-kilometer radius, major cities such as Seoul, Incheon and Daejeon are located around the zone, which are only an hour or less away. With the expansion of highways and railways, the zone can be reached in less than three hours from anywhere in the country. The area is a strategic place to export manufactured items from Korea to China and to other Northeast Asian countries, at low cost.
There is integration of hi-tech industries such as automobiles, displays, steel, petrochemicals, information-technology and biotechnology within the zone`s vicinity, making it possible for information exchange to take place between these hi-tech industries, which will be strategically developed in the Yellow Sea FEZ. Due to the well-established industrial infrastructure, foreign companies can actively interact with domestic companies.
In particular, Dangjin and Pyongtaek ports will be expanded by 2011, transforming them to function as ports for transshipment, and as a better departure point for exports to China.
KH: Will you please give a brief guideline to the investors at home and abroad, to those who are interested in investing in the Yellow Sea FEZ, and briefly explain about the main roadmap of the zone?
Lee: Chungnam province, where the zone is located, has attracted $1.3 billion of foreign direct investment in 2006 and $1.2 billion in 2007. The investment currently on stand-by amounts to $1.3 billion. Over 1,000 companies invested in Chungnam just last year, which is evidence that the zone provides the best investment conditions.
Companies can freely conduct their business with generous tax benefits. Investors can also enjoy a safe residential life.

By Yoo Soh-jung