Foreign Investors Unclear on Plan
By Jane Han
Staff Reporter
The Lee Myung-bak administration has set aside nearly 2 square kilometers of land for multinational companies and institutions in its revised blueprint for the planned Sejong City, but foreign investors say the city lacks attractiveness due to its remote location and unclear incentives.
"Sejong is in the middle of an isolated location. Who wants to be there?" asked an Australian CEO, who declined to be named in criticizing government policies.
He said all the hoopla surrounding the new science and education center may interest Korean firms, but is not attractive to foreign companies, which would rather stay close to the capital city.
The government announced an edited $14.6 billion blueprint Monday to rebrand the planned city in the South Chungcheong Province, about 150 kilometers from Seoul, scrapping an earlier plan to relocate ministries there.
The revision aims to create an "economic hub" that will attract education and research institutes and companies, including those from overseas, as directed by the business-friendly President Lee.
Lee instructed developers last week to create a foreign investor-only section in the Sejong project and will make sure that both local and multinational firms get treated equally in receiving tax benefits and other incentives.
Monday's announcement delivered Lee's specifications concerning overseas investors, as the plan entails a "global investment complex" spanning 1.9 million square meters, about one fourth the size of Yeouido. But the reaction from the foreign business circle has been lukewarm.
"Seoul is now finally starting to handle housing, schools and banking systems for foreigners - and there are still problems," said one American businessman, who has lived in Korea for more than a decade. "So what can we expect from this unknown city?"
He said that tax incentives can be lucrative, but added that the programs will hurt other government-supported free economic zones (FEZs).
"The Lee administration is shooting itself in the foot. They want to promote investment and get all these FEZs going, but they're undermining their own projects by bringing on new ones," he said, adding that the government's recent flip-flop over the controversial project sends a negative message to investors.
"It makes people nervous that policies can be easily changed from one administration to the next," he said. "What if the opposition takes power next time? The city might get changed again."
The original plan envisaged by the late President Roh Moo-hyun was to send nine ministries and four subsidiary agencies to the provincial city, as part of the liberal government's aim to promote balanced regional development.
But the incumbent conservative administration dropped the blueprint amid strong opposition.
Major local conglomerates, including Samsung, Lotte and Hanwha, have agreed to launch business operations in the new city, Prime Minister Chung Un-chan said Monday.
Austria's SSF is currently the only known foreign company to have invested in Sejong City, but government officials said they will strengthen their efforts to attract overseas firms and institutions.
Meanwhile, the European Union Chamber of Commerce in Korea (EUCCK) said, "None of the foreign investors are fully aware of what additional incentives will be offered from the existing FEZs."