Open Korea / BJFEZ FDI since 2004 tops $3.8 billion With its two-year anniversary in March 2006 as an impetus, BJFEZ (Busan-Jinhae Free Economic Zone Authority) is devoting the Authority's heart and soul toward the development of the zone and the attraction of additional foreign investments, after reaching $3.8 billion in FDI (foreign direct investment) as of March 2006. Since its establishment in 2004, the Busan-Jinhae Free Economic Zone Authority has attracted a total of US $3.8 billion in investments, including 15 total investment cases, high tech investments totaling US$830 million, tourism investments totaling $200 million, Busan New Port investments totaling to US $2.8 billion, and logistics parks totaling $13 million, according to Commissioner Chang Soo-man, BJFEZ. As Commissioner Chang pointed out in his speech at a recent Busan-Jinhae Free Economic Zone Authority's Press Luncheon with the SFCC (Seoul Foreign Correspondent Club) members, the biggest news among several new developments taken place in the meanwhile was the official opening of the Busan New Port last January. The first three berths are now in full operation and BJFEZ officials expect 900,000 TEUs to be handled this year with traffic increasing to 3 million TEUs in 2008 when a total of 18 berths will be in operation. By 2011, when all 30 berths are finished, Commissioner Chang says, "We project the Busan New Port will be handling more than 10 million TEUs." Currently MSC Line of Switzerland has been visiting the Busan New Port twice a week and the names of two additional lines to be using the new facilities will be announced shortly, Chang explained. As has been announced earlier, Dubai Port World is involved in the management of the New Port's Northern terminal. The Authority continues to market the Busan New Port to major shipping lines in cooperation with the Ministry of Maritime Affairs and Fisheries, Busan Port Authority and Pusan New Port Company. Attracted to the generous financial incentives "In the meantime, bidding for space within the Busan New Port's distribution park is in progress." explains Commissioner Chang further. Last year a Japanese consortium comprised of DAT Japan and Fukuoka Ocean Logistics won the bid for 16 acres of space, according to BJFEZ officials. The distribution park's second phase will be for 105 acres for a supply period of December of this year. Tenant selection is currently in process. Chang proudly pointed to the fact that additional achievements within the Free Economic Zone have been made in regards to the development of the Busan Science & Industrial Park which officially opened last fall. So far nine investment MOUs (memorandums of understanding) have been signed totaling $230 million. All of these companies are attracted not only to the capabilities of the Busan New Port, but also to the generous financial incentives offered such as tax breaks, cheap lease rates for the land and various available subsidies, the Commissioner noted. Chang said: "Those who have been following the development of our zone may already be aware of Renault- Samsung's $600 million investment which is now in progress", adding that they have started plans to build a new engine plant facility within their current site. Still paddy fields & dry fields except for some foreigner investment areas However, despite BJFEZ's rosy blueprint, the corner that BJFEZ has to turn in order to be started along right lines is the heart of mountains rising one above another, experts warn. First off, supply and demand of industry land required is a fiasco then and there, they point out. Experts explain that though BJFEZ officials insist that the Agency has gained tangible FDI performance in the meanwhile, there are not lands to be offered to foreign companies over several years to come. It is said that development plans about 18 areas are under way, but these areas are still paddy fields and dry fields except for some foreigner investment areas. Experts were critical of the current legal system by which one year is required for the environment influence assessment even though associated companies are eager to speed up development. Moreover, to attract foreign hospital and universities which can have synergy effects on the Free Economic Zone is in a fog in BJFEZ, insiders point out. Second, to solve reverse discrimination about domestic companies that invest jointly with foreign companies too is a pending question. In the light of international trend in which most foreign companies decide to invest by constructing a partnership with domestic companies, domestic companies are excluded from the benefits of national taxes reduction & exemption. For instance, in the case of a foreign investment company whose 30% share is owned by a domestic company, only 70% is done in terms of taxes reduction & exemption. Complications between both Gyeongnam and Busan two local autonomous entities also are a stumbling block as evidenced in a tedious struggle regarding the name of the New Port over several years. BJFEZ must lend an ear to insiders' criticisms Another of BJFEZ projects includes the Ungdong tourism and leisure area where the Agency aims to develop golf courses, resorts and sports complexes. "We currently have a $200 million investment in progress from a UK developer, SnowBox, who will construct an indoor ski dome with related facilities. This includes the development of hotels and shopping centers", Commissioner Chang added. Chang went on to say: "We continue to seek developers to participate in the Myeongji New International City project. This area will serve mostly commercial and residential purposes and will have widespread IT infrastructure. We have been in touch with several developers regarding their participation in this project." Last but not least, one of its biggest priorities, is the attraction of an international school and hospital to cater to families of foreign investors living within its zone as well as domestic population. In conjunction with this, the Commissioner concluded his remarks by stressing: "We are engaged in several talks with worldclass hospitals in the United States and Singapore. We also continue to pursue international schools including some prestigious institutions in North America." Nonetheless, BJFEZ officials should listen to insiders' criticisms in a humble way to attract foreign hospital and universities that can help boost the synergy effects of the Free Economic Zone so that BJFEZ may finally take off two years after its establishment.