Regulations Cramp Songdo Development
By Jane Han
Staff Reporter
A one-of-a-kind ubiquitous city housing an international school, a hospital with top notch English-speaking medical staff, an American-style mall and a Jack Nicklaus-designed golf course, all built from scratch atop a man-made island. The grandiose blueprint for Songdo New City, as skeptics put it at first, may have been too good to be true.
About five years into the massive undertaking, some of the bilingual city's flagship plans are caught in South Korea's infamous web of regulations, which planners say may ultimately repel foreign investors from what is dubbed the ``new Asian hub.''
One of the first hiccups came early this year, when Songdo's first international school delayed its September 2008 opening for another year, saying there weren't enough foreign nationals in the area to attend the school.
``Regulations limit Korean students' ratio to less than 30 percent of the total, but the current situation makes it impossible to fill the remaining 70 percent with non-Koreans,'' said an official of the Incheon Free Economic Zone Authority (IFEZ), who asked for anonymity. IFEZ is the master planner of the economic zone, which covers three designated districts ― Songdo, Cheongna and Yeongjong.
Among the three, Songdo, situated 35 kilometers southwest of Seoul, has garnered most attention for being ``built from scratch on 1,500-acres of mud.''
The city, which is slated for completion in 2020, currently does not have a significant foreign population. However, the first wave of residents is expected to move in starting 2010.
The official said there were already enough waitlisted Koreans who could fill the 2,100-student capacity campus, but that would turn the institution, which is 80 percent built, into another ``hagwon.''
The school must open by next fall, he said, as local parents have been infuriated with the delay. But he added that ``nothing can be guaranteed at this point due to unexpected variables.''
An official of Gale International, which is co-developing the city's International Business District in a 70:30 joint venture with POSCO E&C, said fallout from this may hamper its investment-attracting efforts in the long run, as proper English education for children is often considered a prerequisite for investors.
Another necessary infrastructure to attract foreign investors is an English-friendly hospital, which Songdo isn't sure of opening anytime soon.
The renowned New York-Presbyterian (NYP) Hospital was scheduled to open a 600-bed facility by the end of this year, but ``insufficient documents'' and regulations that require more than 50 percent funding from foreign capital have supposedly stalled progress.
``The Ministry of Health, Welfare and Family is planning to request the National Assembly to pass a special law that could lower the bar,'' said Lim Kyung-il, who oversees the medical business ventures in the IFEZ.
He said the NYP Hospital is waiting to see regulatory changes made after the special bill is reviewed later this year.
``Their plans may be called off altogether if the two sides don't come to a consensus,'' he said.
Similar situations triggered by complex regulations can also be seen in the U-City's much-touted, but delayed construction of a biotechnology industrial complex.
Two foreign companies showed interest in investment, but a multi-stepped evaluation procedure and clashing rules from different government divisions are hampering further progress.
Even local companies are barred from entering the complex, as a metropolitan planning act prevents domestic corporations, such as LG and Samsung, from having a presence in the FEZ.
Developers say many investors find it odd that major national firms aren't residents of the so-called financial hub.
``Regulations are still a serious problem bogging down Songdo's development,'' said a ranking official of the IFEZ, who asked to be unnamed.
He said organizers expected the Lee Myung-bak administration to significantly ease the tight rules, but obvious changes have not been made yet.
``We'll have to wait to see what the new Assembly will do, but skepticism is rising among us, considering other political situations in the way,'' he said.
However, Gale International, the New York-based developers, says it remains optimistic about the city's potential.
``Regulations, of course, are an obstacle for developers, but we think many of the knots will be worked out in the near future,'' said a Gale executive.
The problems tainting the country's many free economic zones have been pointed out by economic experts numerous times.
David Eldon, the non-executive Chairman of the Dubai International Financial Centre Authority and co-chairman of the Lee administration's committee for national competitiveness, said, ``South Korea must try to open as much as Dubai. It should learn not only the hardware, but the software aspects.''
