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Foodpolis aims to become food industry hub in Northeast Asia
An artist’s rendering of the Korea National Food Cluster, named Foodpolis, which will be constructed in Iksan, North Jeolla Province, by 2016. / Courtesy of Ministry of Agriculture, Food and Rural Affairs
By Lee Hyo-sik
By Lee Hyo-sik
Lee Ju-myeong, director general of food industry policy bureau
Korea is seeking to transform itself into a food industry hub in Northeast Asia, which will serve as a strategic base for multinational food companies looking to enter China, Japan and other Asian countries.
To do so, Asia’s fourth-largest economy has been building an industry cluster in its southwestern region to attract food producers from home and abroad.
When completed by 2016, the Korea National Food Cluster, named Foodpolis, is expected to churn out $14 billion in output annually and generate 22,000 new jobs as over 150 companies and 10 research centers will operate there.
The Ministry of Agriculture, Food and Rural Affairs will invest a total of $500 million to build the food industry complex on a 2.32 million square meter site in Iksan, North Jeolla Province. The cluster is largely designed to draw companies aiming to export a wide range of value-added, processed food products.
Those operating in Foodpolis will receive tax breaks and other administrative benefits. The agriculture ministry has so far signed an agreement with 107 companies and research centers, including 51 from overseas, who are willing to set up a presence in Foodpolis.
“Korea exported both raw and processed food products worth $8.25 billion in 2014,” said Lee Ju-myeong, director general of the ministry’s food industry policy bureau. “This year, we would like to see outbound shipments exceed $10 billion. Our ultimate goal is to enable the country to join the global top 10 food exporters, with its outbound shipments of crops, fisheries and processed food products reaching over $30 billion by 2020.”
To achieve such an ambitious goal, Korea needs to foster globally-competitive food companies, Lee said, stressing that it should learn from countries such as the Netherlands and Denmark, which earn large sums of hard currency by shipping high-value agricultural products.
The Netherlands has a mega food industry hub named Food Valley in which over 70 global food companies and 20 research centers operate, producing an annual output of $64 billion and employing thousands of workers.
“We would like to create one similar to Food Valley to nurture the food industry as our next growth engine. The global food industry is projected to reach $7 trillion won in 2020, with the Asia Pacific region accounting for over 40 percent,” he said. “This presents us with a golden opportunity to jumpstart our economy. If we create Foodpolis successfully, we will become a global food industry powerhouse.”
The ministry also plans to create a “halal food complex” inside Foodpolis, attracting companies looking to export high-quality halal food items to the Middle East and Southeast Asia.
In 2014, Korea exported a wide range of halal-certified food products worth $680 million. The nation seeks to increase the amount to $1.23 billion by 2017 as the global halal food market will expand to $1.6 trillion.
The director said multinational food companies targeting the rapidly growing Chinese consumer market should set up presence in Foodpolis to take advantage of the Korea-China Free Trade Agreement (FTA).
“It has become much easier for companies to ship their food products to the world’s fastest-growing economy thanks to the Korea-China FTA,” Lee said. “Korea is a better place for multinational firms to operate because of its superb infrastructure, streamlined administrative help and an abundant pool of talented manpower. So, they should build a plant in Korea if they want to sell food items in China.”
Made-in Korea food products are also popular among Chinese consumers because they regard Korean products as more sanitary and safer and are willing to pay more than for locally-produced goods. The Korean cultural wave sweeping the globe has also helped increase the demand for Korean food products in the mainland.
Why Foodpolis?
There are many reasons why multinational food firms must establish a foothold in Asia's fourth-largest economy, according to Lee.
“Korea is at the center of Northeast Asia where there is a population of 1.6 billion. It takes less than two hours from Incheon International Airport to reach 60 major cities that have populations of over 1 million,” he said. “It is easy to tap into China, Japan and Southeast Asian nations via sea and air. Foreign food producers can use Foodpolis as their Asian export base.”
Besides its geographical proximity, the director said advanced information technology infrastructure, skilled manpower, attractive business incentives and many other favorable attributes have and will continue to draw global food producers.
The government is offering a wide range of financial and administrative incentives to those investing in Foodpolis.
Companies are exempted from paying corporate income tax for the first three years. They will then receive a 50-percent reduction for the following two years. Investors are also exempt from property holding taxes for 15 years.
In North Jeolla Province, many vocational high schools and universities deal with the areas of agriculture, livestock, fisheries and processed food products, meaning that Foodpolis investors can secure talented workers and researchers from a huge pool of highly-educated students.
Lee said Korea has signed a free trade agreement with dozens of countries, including the United States, China and Europe, adding that they can easily ship products to non-Asian markets thanks to low tariffs and simplified customs procedures.
Foodpolis will also be equipped with the necessary industrial and residential infrastructure.
“We will not only build production and research facilities but also other installations to support business activities, treat wastewater and provide a stable supply of electricity at a low cost,” the director said. “Foodpolis will create a comprehensive research and development (R&D) center where companies can use expensive equipment free of charge.”
A state-of-the-art residential complex will also be constructed. Foodpolis will be equipped with foreign schools, hospitals and other urban facilities, creating an optimal residential environment, Lee said.