Incheon FEZ becomes global business hub

A panoramic view of Songdo International City in Incheon / Courtesy of Incheon Free Economic Zone Authority

By Baek Byung-yeul

The Incheon Free Economic Zone (IFEZ) has been acclaimed for making something out of nothing as the IFEZ Authority, which supervises the development of the zone, has transformed what was once just a mudflat into Korea’s largest free economic zone.

With Korea in a nutcracker between economic heavyweights China and Japan, the IFEZ was opened in 2003 to strengthen the country’s economic competency by transforming three districts of Incheon, west of Seoul — Songdo, Cheongna and Yeongjong — into hubs for logistics, international business, leisure and tourism.

Industry officials said the achievements the IFEZ has made over the past 15 years are unprecedented on the global stage, as the zone has attracted $11.83 billion of foreign direct investment (FDI). The amount accounts 67 percent of the total FDI that the country’s eight other free economic zones have attracted so far.

Marking the 15th anniversary, the IFEZ Authority Commissioner Kim Jin-yong spoke of his future vision for IFEZ,saying the organization will actively react in the face of today’s technological changes driven by the Fourth Industrial Revolution.

“To make the IFEZ a global city, we will actively react to the changes generated by the Fourth Industrial Revolution,” Kim said.

Kim also gave credit to IFEZ employees and Incheon citizens for making the free economic zone what it is today.

“The achievements the IFEZ has made were possible, thanks to the passion and efforts of the IFEZ Authority’s employees, support from Incheon citizens and knowledge and participation of related experts,” Kim said.

Incheon Free Economic Zone Authority Commissioner Kim Jin-yong speaks during an opening ceremony for the local office of Japanese machine tool builder Okuma in Songdo International City, Incheon, Aug. 30. / Courtesy of Incheon Free Economic Zone Authority

The zone is now in the third phase of its development plan. Though the plan is scheduled to be completed by 2022, the IFEZ Authority said it plans to extend it beyond the target date. In the first phase, the IFEZ Authority laid the groundwork to make the zone a global city from 2003 to 2009, while focusing on attracting FDI from 2010 to 2014.

Songdo International City, which is designed to focus on international business, IT, biotechnology, education and R&D sectors, has a population of over 130,000 as of September 2018. The IFEZ Authority said the district has reached a development rate of 84.7 percent and it plans to have a population of 265,000.

Yeongjong International City, which has focused on aviation logistics, tourism and leisure, has reached a development rate of 89.2 percent while the development plan for Cheongna International City, which aims to nurture international finance, R&D, medical, logistics and high-tech industries has been completed.

Kim said the IFEZ has potential to grow as one of the world’s best global cities in the near future.

“We will do our utmost to make the IFEZ an economic growth engine for Korea,” Kim said. “If we are to adequately prepare ourselves for the future, I believe the IFEZ can become one of the world’s best global cities that can compete with Shanghai, Hong Kong, Singapore and Dubai in the near future.”

Songdo leaping into global bio hub

The IFEZ Authority said one of the most remarkable achievements the zone has made is transforming Songdo into a global hub for the biopharmaceutical industry.

The district has the world’s largest total biopharmaceutical production capacity at 560,000 liters.

To make the district the world’s best global bio hub, surpassing the current biopharmaceutical powerhouses including San Francisco, Singapore and Ireland, Kim announced an expansion plan in April to develop an additional 990,000 square meters of land. There, the IFEZ Authority plans to build bio infrastructure facilities for R&D and service centers for global medical healthcare.

The IFEZ Authority is also trying to offer smart city services to its residents. The smart city system refers to an efficient and eco-friendly city equipped with security systems based on information and communication technology and automation. In June, 2018, the IFEZ Authority hosted a New Cities Summit to showcase its smart city technologies.

The IFEZ is aiming to make the zone a global education hub as well. Starting with the State University of New York Korea, five schools have set up branches at the Incheon Global Campus. The campus will soon add more branches such as the Smart City Research Center from Stanford University.

In March 2018, the IFEZ Authority also signed an agreement with Yonsei University to establish a second international campus, a Severance Hospital facility and Yonsei Science Park in Songdo.

“The second international campus of Yonsei University is expected to bring 5,000 additional students including graduates and foreign students to the city,” an official from the IFEZ Authority said.

The official added the zone has attracted a series of investments to make it a future city to lead the Fourth Industrial Revolution. For instance, Okuma, a leading Japanese firm in machine tools, opened a training center in the zone in August 2018. Miele, a German home appliance firm which has the largest market share in Europe, has been constructing robot manufacturing and research facilities in cooperation with local robotics firm Yujin Robot.

Yeongjong aims to be resort hub

Yeongjong will become the hub for the country’s resort industry. The district already has Paradise City, the first integrated resort in Northeast Asia. With a 1.3 trillion won ($1.1 billion) investment, the construction of the hotel, casino and convention hall was completed on 330,000 square meters of land in April 2017. The resort added a shopping plaza, spa and performance hall by September 2018.

Caesars Korea, developed by the U.S.-based casino group Caesars Entertainment, will be completed by 2021 and Inspire Integrated Resort will be done by 2023.

Cheongna as financial hub

Cheongna is also attracting investors. On the western side of the district, Shinsegae Complex Shopping Mall will be constructed on 165,000 square meters of land. The complex developed by retail giant Shinsegae Group will have not only a shopping plaza but also leisure and entertainment facilities such as a theme park and a hotel.

The construction of Shinsegae Complex Shopping Mall is expected to start in the first half of 2019 and will be finished by the latter half of 2021. The IFEZ Authority presumes the complex will help the local economy by creating 4,000 jobs.

Hana Financial Group is also working on developing the Hana Financial Town project on 247,749 square meters of land in the district. The project is to integrate the finance-related functions of the financial group. It opened its integrated data center in 2017 and its Hana Global Talent Development Center will be completed in the near future.

To promote balanced development of the free economic zone, the IFEZ Authority said it will begin construction of the 3rd Yeollyuk Bridge that connects Yeongjong with Cheongna in 2020. The bridge, which will be completed by 2025, is expected to invigorate the development of the Yeongjong district.

According to data from the Korean Society of Transportation, the 3rd Yeollyuk Bridge will have a production inducement effect of 1.2 trillion won, a 400 billion won effect on the inducement of added value and create 4,000 jobs.