Saemangeum aims to be global hub

A land development plan of Saemangeum / Courtesy of KASDI

Free trade pacts with diverse economies to draw investors

By Yoon Ja-young

Lee Byoung-gook, administrator of the Korea Agency for Saemangeum Development and Investment (KASDI).

As you drive along the west coast of the Korean Peninsula, you will encounter a sea dike that is listed in the Guinness Book of Records as the longest seawall in the world. This is the beginning of the Saemangeum Project, which is regarded as the biggest civil engineering project in Korea's history.

After the construction of the 33.9 kilometer sea dike connecting Gunsan and Buan on the west coast in 2010 April, 291 square kilometers of new land is being reclaimed along with 118 square kilometers of newly created lakes in the still ongoing project. The vast area will be developed into a hub of global free trade and economic cooperation.

The gigantic project was previously handled by diverse ministries, but the government established the Korea Agency for Saemangeum Development and Investment (KASDI) in September 2013 for more effective and comprehensive management.

KASDI Administrator Lee Byoung-gook said Saemangeum will make full use of Korea's strength as a country that has signed numerous free trade agreements (FTAs).

"Korea is the only country that signed FTAs with major economies including the United States, China, the EU and ASEAN. Saemangeum will be an attractive option for global business seeking to make use of the FTAs with the ‘Made in Korea' label."

He also points out Saemangeum's geographical strength.

"As it is located at the center of Northeast Asia, in proximity to rapidly expanding Chinese mega cities, Saemangeum is in better condition to develop itself into a global economic hub," he said.

It's the opportunity to build a brand new city entirely from scratch, and Saemangeum is seeing new vast land being created literally from scratch. This is a big advantage for Saemangeum ― as a new state-owned land, there will be little conflict of interest compared to the existing lands with multiple interests intertwined. Saemangeum offers plots that businesses can freely use in diverse forms.

The administrator also stressed that businesses advancing into Saemangeum will be given tax incentives as good as free economic zones. National taxes will be exempt for three years, and provincial taxes, 15 years. Companies will also be given customs tax breaks for five years.

Momentum from China

The Saemangeum Project got special momentum after the summit between President Park Geun-hye and Chinese President Xi Jinping last July. The two countries agreed to build an economic cooperation complex in Saemangeum, incorporating this in a national agenda.

The complex will be an open special economic zone, jointly developed and established by Korea and China. The zone will be a win-win for both countries, making use of the best capital, technology and trade conditions of each country.

"The zone will be the test-bed of the Korea-China FTA, a core of economic cooperation between the two countries," Lee said.

For local companies, Saemangeum will make the best outpost to advance into China ― they can enjoy minimized transaction costs thanks to simplified customs and quarantine procedures as well as other administrative support.

At the finance ministers' meeting early this year, Korea and China also agreed to start joint research on Saemangeum Economic Cooperation Complex to execute the agreements reached at the summit.

"Based on joint research, we will focus on making more specific plans for economic cooperation with China."

Lee added that if the joint project with China succeeds, Saemangeum will expand economic cooperation to other major economies such as the United States, Japan and the EU.

Development plans

Saemangeum will be developed into three main areas.

The first is for industrial and science research. To make full use of Korea's competitive edge as a country with multiple FTAs, it will focus on attracting export-oriented processing firms as well as energy, logistics, components and materials and chemical companies. Research and development centers related to these will also be set up, making Saemangeum a core global industrial belt.

The international cooperation area, meanwhile, will include special economic cooperation zones based on joint projects with other countries. The area will attract headquarters of global businesses, cutting-edge industries in IT, harbor and logistics industries and urban tourism. It will also include an upscale residential area to attract foreigners.

Lastly, Saemangeum also aims to be a tourism and leisure hub. The area south of the sea dike will be developed into a comprehensive tourism hub equipped with accommodation, leisure, commercial and shopping facilities. There will also be ocean-themed water parks and camping sites.

"The Gogunsan Archipelago near Saemangeum will also be developed into a comprehensive resort area preserving the wonderful pristine nature of the small islands, jointly with foreign investors. I hope many tourists will enjoy the beauty of Korea's famous western coast," the administrator said.

Saemangeum attracting investors

Saemangeum has attracted 13 trillion won ($11.5 billion) in investment by 81 businesses so far. Among them are OCISE and Toray, which built the first facilities in the industrial complex. Solvay, a Belgium-based chemical company leading the world's silica market, is also set to start building a facility at Saemangeum this April.

Lee said the agency is focusing on facilitating corporate investment. It also adopted tax cuts and support programs for businesses, enabling a long-term lease of the land to lessen their burden.

Construction of infrastructure, including highways and ports, is also being accelerated.

Construction on a road penetrating Saemangeum from east to west will start in May, to be completed in 2017. The agency expects that the road will greatly improve accessibility within Saemangeum, cutting development costs and improving conditions for corporate investment.

The agency is also planning to start construction on another road to run from south to north of Saemangeum as soon as possible after completing the administrative process for it this year.

Facilities tailored for foreign investors and their families, such as schools and hospitals, will be another competitive edge for the region.

Lee said Saemangeum has special meaning for him. He headed the Saemangeum Project team for three years from March 2009 and became the first administrator when the agency was set up in 2013.

"I feel huge responsibility as the first administrator at this critical moment when Saemangeum has the momentum to make a quantum leap forward and become the most successful story in the country's development history."

To create a brand new city where before there was only water will, without doubt, take astonishing vision and commitment. Thus, Korea has paid great attention to find the best way to build a city most suitable for our 21st century lives.

Lee said he believes the comprehensively developed area will make an optimal ecosystem for the creative economy, where the strengths of each industry mingle to create a totally new business.

"Every member of KASDI is doing our best to allow Saemangeum to fulfill its role, as a valuable asset for the development of Korea's economy. Saemangeum is an area with so much potential that in 20 years, many believe it could be a prototype for cities of the future," he said.