[THE INVESTOR]] South Korea will overhaul the operations of exisiting free economic zones to attract more investors, the Trade Ministry said on Aug.31.

It will also expand incentives and benefits to local companies as well as foreigners in order to reinvigorate the FEZs.

The ministry unveiled a plan to revamp its FEZ policy at a deregulation review meeting chaired by Prime Minister Hwang Kyo-ahn in Incheon, west of Seoul.

The scheme came as the FEZs have failed to woo as many foreign investors as hoped due to weaker-than-expected benefits and a delay in the development of facilities.

The country has designated eight FEZs across the country since 2003, including ones in Incheon and Busan, while a total of 2,189 companies do business there with 96,000 employees as of 2015.

The eight FEZs received US$5.6 billion in foreign direct investment between 2004 and 2015, accounting for a mere 5 percent of the country’s total FDI over the same period.

In particular, the FEZ has been focused on drawing foreign investment, giving more incentives and benefits to overseas companies than to local firms.

The government will prioritize fostering next-generation industries in the FEZs and giving equal benefits to South Korea-based companies who do business in an FEZ.

Sectors of renewable energy, biochemical, futuristic vehicles such as electronic cars and convergence materials will be newly invited to the FEZs, along with the current key industries like steels, shipbuilding and petrochemicals, as part of the government’s long-term plan to bolster such potential industries as a new growth engine.

The plan also involves measures to cut red tape and give more incentives to both foreign and local companies.

(theinvestor@heraldcorp.com)