Nearly half of districts in Korea’s FEZs face possible default

October 7, 2013 Leave a comment

Nearly half of districts in FEZs face possible default

2013/10/07 14:27

SEOUL, Oct. 7 (Yonhap) — Nearly half of all individual districts in the country’s eight free economic zones (FEZs) may be undesignated even before they ever take off, partly due to their failure to attract investors, a lawmaker said Monday, citing related data. According to Rep. Oh Young-sik of the main opposition Democratic Party, 46, or 46.9 percent, of 98 districts in eight FEZs still lack any development plan.Only 19 of the total have been fully developed with the remaining 33 still in the development phase, Oh said, citing data from the Ministry of Trade, Industry and Energy.

Under the current law on FEZs, developers of each district must file a request for their respective regional government’s approval of their development plan within three years following the initial designation of the district they wish to develop.

The 46 districts that currently lack any development plan, thus, face a possible cancellation on default, said Oh, who is a member of the parliamentary committee on trade, industry and energy.

Both the ministry and the lawmaker pointed to a prolonged downturn in the real estate market here as a reason for the developers’ failure to attract investors and thus set up a detailed development plan.

Oh also pointed to the concentration of investment in only a small number of the most competitive FEZs as another problem facing free economic districts and their developers in other areas.

According to the data from the trade and industry ministry, out of the total US$7.77 billion invested in the country’s FEZs since 2004, 63.4 percent, or $4.93 billion, went to the most active FEZ in Incheon, just west of Seoul.

Another FEZ near the country’s second-largest city Busan also attracted $1.24 billion, or 15.9 percent of the total, over the period while most other FEZs attracted a little over 1 percent or even less than that of the total.

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