With a diverse portfolio of international organizations, Songdo is seeking to become a leading business, tourism and logistics destination in Northeast Asia.

Long known for its seaside amusement park, the reclaimed island is the linchpin of the Incheon Free Economic Zone, which, since its 2003 inception, has been grappling with budget woes, flagging foreign investment and a moribund property market.

The launch of U.N. offices and other multinational bodies in recent years was deemed a much-needed catalyst for the initiative.

The city is now home to eight U.N.-related offices: the U.N. Economic and Social Commission for Asia and Pacific subregional office for East and Northeast Asia; the U.N. Asian and Pacific Training Center for Information and Communication Technology for Development; the U.N. Commission on International Trade Law’s regional center for Asia and the Pacific; the U.N. International Strategy for Disaster Reduction’s Northeast Asia office; the U.N. Office for Sustainable Development; the U.N. Depository Library; the Northeast Asian Subregional Program for Environmental Cooperation; and the secretariat of the Green Climate Fund. It also houses the World Bank Group, the Asian Federation of Biotechnology, the Association of World Election Bodies and the secretariat of the East Asian-Australasian Flyway Partnership. 

After winning the bid to house the secretariat of the GCF in October 2012, Songdo set out to transform itself into a global symbol of environmental conservation, shaking off its financial woes and its reputation as a ghost town.

The institution plans to draw about $100 billion a year by 2020 to help developing countries adapt to climate change and curb greenhouse gas emissions. The state-run Korea Development Institute projected the annual economic impact would reach 380 billion won ($367 million) after the agency grows to have a workforce of 500.

Realtors were elated by the success of the bid, as swaths of long-unsold apartments and commercial buildings sold quickly, prompting some analysts to declare that hosting the GCF will spark a full-fledged upturn for the area’s real estate market.

“Having the international agencies, especially the GCF, has helped us make Songdo known around and outside the country and created direct and indirect economic effects,” said an official at the Incheon city government’s international cooperation bureau, asking to remain anonymous due to office policy.

But the ambition has also set off skepticism that all the incentives the multinational entities are enjoying will only aggravate the city’s financial straits, securing few benefits.

A slew of other organizations are speculated to be considering settling down in the business district including the Global Green Growth Institute, the U.N. Information Center’s envisioned Korea office, and a field structure to be set up by the Office of the High Commissioner for Human Rights to probe North Korea’s violations of human rights.

The municipality usually offers conditions including a 10-year free lease of office space and operating cost subsidies, sources say.

Incheon has promised the GCF to gradually provide 15 floors of office space in the 33-story G-Tower by 2020 and the right to use the Songdo Conventia conference center for 20 days a year, all free of charge for 10 years. It will also shoulder part of the fund’s operating expenses along with the Finance Ministry.

“As we’re grappling with budget constraints, we’re no longer aggressively seeking to invite international organizations,” the city official noted.

In the aftermath of the 2008-09 global financial meltdown, foreign investment dried up, development projects stalled and the city government’s debt snowballed. Doubts linger over financial, real estate and labor deregulations there, and over the city’s advantages against bigger rivals like Shanghai and Hong Kong.

Yet with the existing organizations, multinational corporations and prestigious schools, Songdo hopes to build its clout as a global business district over the long term.

In July, the city government launched a consultative body with eight international entities, the IFEZ authorities and other related institutions to foster joint projects and improve coordination. They plan to hold a forum in October to discuss ways for international organizations to contribute to community development.

“So far we have not had a multilateral communication channel between all the stakeholders so the consultation will help improve interaction and policy coordination and (help us) devise joint programs,” the city official told The Korea Herald.

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