This article was originally published in the Korean language for the June issue of Leader’s Money Today, a legislative affairs magazine. It has been translated and edited.
“We will raise $600 million in FDI through new business models such as AI,” Dr. Wonsok Yun
On August 11, 2003, the government initiated an ambitious plan to attract foreign investment. Songdo, Cheongna, and Yeongjong in Incheon were designated as South Korea’s first Free Economic Zone (FEZ). A free economic zone is an area designed to attract foreign investment, capital, and technology by offering incentives such as tax reductions and deregulation.
The goal was to establish a prominent business hub city in Northeast Asia, similar to Shanghai, Hong Kong, and Singapore. In the same year, the ‘Act on Designation and Operation of Free Economic Zones’ was established. Nine FEZs were soon operated nationwide, starting with Incheon, Busan, Jinhae, and the Gwangyang Bay Area.
Much of IFEZ was constructed on the former West Sea mud flats and has developed into a bustling international city with modern high-rise buildings.
The growth of IFEZ can be observed through its indicators. From 2003 to July of last year, the total foreign direct investment (FDI) reached $14.756 billion. This figure represents approximately 70% of the $20.8 billion reported by the country’s nine FEZs.
When IFEZ was opened, the number of businesses in the Incheon Free Economic Zone was only 673, but the number has now increased to 3,400. Initially, there were only 3 foreign-invested businesses, but there are currently 206 businesses.
Dr. Wonsok Yun, the current 8th Commissioner of the Incheon Free Economic Zone Authority, took office last February 2024. In this interview with Money Today, he emphasized that the area’s growth resulted from the ‘linked development’ strategy.
Linked development is a business model that connects profit-making sectors with public use. The development profits generated when private businesses build and sell apartments are used to underwrite parks and social infrastructure (SOC) that are essential to the city.
Commissioner Yun said, “So far, IFEZ has chosen the ‘linked development’ method of building profitable residential facilities and public facilities together,” and added, “The model has funded the construction of infrastructure such as smart city and international city amenities. It has made considerable progress.”
However, the Commissioner said that the interconnected development method that has been in place for 20 years cannot lead to the future and sustained growth of IFEZ.
He said, “In the case of interconnected development, the proportion of housing is high, so there is a lack in terms of business revitalization and job creation by attracting domestic and foreign companies.” “We need to discover new businesses such as AI and build innovative business models so that we can move forward as a city,”.
IFEZ has set this year’s target for attracting foreign investment at $600 million (approximately KRW 802.5 billion).
This is an increase of approximately $200 million (KRW 267.5 billion) from last year’s target of $400 million (approximately KRW 535 billion). Commissioner Yun announced that he will achieve this goal this year by attracting high-tech international companies, expanding global investment IR, and the ‘Destination Incheon’ strategy.
Commissioner Yun said, “Foreign direct investment (FDI) was less than expected last year with the war between Russia and Ukraine stalling domestic and foreign investment.” “Nevertheless, IFEZ achieved $432 million, a 10.7% increase compared to 2022.”
He continued, “This year, we will pursue new business opportunities, strengthen our appeal to global companies, and spearhead the development of the city center to reach our target revenue.”
IFEZ Expansion
Of the three IFEZ districts, Songdo International City is responsible for international business, IT (information technology), BT (biotechnology), The Incheon Global Campus (education), and startup research and development. Yeongjong, home to the Incheon International Airport, is focused on logistics and tourism, and Cheongna looks to build on finance and leisure.
In addition, IFEZ plans to attract the lucrative biopharma high-tech industry hub development, in the first half of this year and turn parts of Songdo into a ‘bio-specialized hub complex.’
Commissioner Yun explained, “Songdo has regional geographical competitiveness due to its proximity to the airport and port, and also has the advantage of already having several leading biopharmaceutical companies.”
Currently, IFEZ’s development rate exceeds 90%. There is, however, a lack of space to attract new high-tech industries. It was announced that the southern end of Ganghwa and Incheon Inner Port should be designated as a new FEZ to expand the space.
Commissioner Yun said, “As the IFEZ enters its maturity, investment demand is increasing, but available land is lacking.” Adding, “designation and expansion of new FEZs in the southern part of Ganghwa and Incheon Inner Port are badly needed. “I will do my best to marshal all my capabilities and ensure that they are designated within my term.”
K-POP Culture City/Casino business runs aground… “We will develop alternative projects”
Last year, IFEZ planned to create a ‘K-Pop Content City’ within Songdo’s R2, B1, and B2 blocks (a total of 210,000 m2) but the plan was scrapped under land use issues.
In addition, the Ministry of Culture, Sports and Tourism canceled the long-delayed project to build a foreigner-only casino at the Golden Terra City (formerly Midan City) in Yeongjong Island, near the airport.
Commissioner Yun plans to develop alternative projects and explore other more viable plans.
For example, in Songdo R2 Block where the construction of ‘K-Pop Content City’ was canceled, Commissioner Yun said, “This is a site owned by Incheon Urban Development Corporation,” and “We plan to form a task force (TF) with their team to discuss how to develop the land.”
He added, “The former Golden Terra City will also form a ‘Midan City Revitalization TF’ with Incheon City and the Incheon Urban Development Corporation to target another integrated resort.”
“We will strengthen internal organizational competitiveness by establishing IFEZ Vision and Strategy 2040”
Commissioner Yun’s background is well-suited for the 20240 vision and goals.
As an academic, Dr. Yun graduated from Sungkyunkwan University’s Department of English, obtained a master’s degree in business administration from Seoul National University Graduate School, and earned then a doctorate in business administration from Sungkyunkwan University Graduate School.
His career included joining the Korea Trade-Investment Promotion Agency (KOTRA) in 1986 and serving as the head of the Vancouver Trade Center, the Busan Trade Center, and the KBC Center in Los Angeles, as well as the Planning and Coordination and Economic and Trade Cooperation offices at the KOTRA headquarters.
After decades of service, he has served as a special professor at Sookmyung Women’s University and in the private sector as CEO of the international business division of a Hangeul and Computer Group.
Commissioner Yun, who took office last February, will serve a three-year term. His goal is to develop Incheon into a global city, including the “IFEZ Vision/Strategy 2040 Project.”
The project will take a deep dive into the internal and external environment, develop practical measures, and create a vision and strategy aimed at positioning the city as a top-tier destination by 2040, thus achieving sustainable growth.
Finally, Commissioner Yun highlighted his commitment to retaining IFEZ public officials by addressing organizational culture and a correlation between performance and compensation.
“We will build a system that links performance and rewards where you can collaborate in a free atmosphere and be treated well if you work hard. We will strengthen the competitiveness of our organization by establishing a system that fosters creative talent while generating results.”
This article was originally published in the Korean language in the June issue of Leader’s Money Today, a legislative affairs magazine. Sang-gu Yoon, head of Incheon headquarters, Reporter Se-mi Hong.
The article has been translated and edited by Don Southerton. Dsoutherton@bridgingculture.com