A Model for Luring Investment

Since July 2008, when the government officially approved the development of the Yellow Sea Free Economic Zone, four memorandums of understanding (MOUs) and seven letters of intent(LOIs) for foreign investment have been inked. The investment amount through these deals totals as much as $378 million, with interest coming from major advanced industry countries including Taiwan, the United States, China, Japan, Germany and France.

The authority behind the project is focusing on attracting LED, renewable energy, logistics, tourism and leisure, automobile parts, hotel, bioenergy, pharmacy and distribution businesses.

The zone, also called YESFEZ, will feature everything from hotels, homes and retail shops to educational and medical institutes.

The idea is to induce investment from foreign companies by providing a cozy living environment.

In November, 2009, the YESFEZ inked an MOU with California State University, San Bernardino(CSUSB) to set up a campus in the zone. The college was named one of the best universities in the western United States by the Princeton Review and came in 61st among western universities in U.S. News & World Report's annual college rankings in 2007.

The YESFEZ authority plans to receive a detailed blueprint for the construction of the campus as well as an operating plan.

“We hope the CSUSB campus will help bring more foreign companies to the economic zone,” Kim Sung-bae, commissioner of the YESFEZ, commented. “We will continue to work so that the campus can become a reality in the near future.”

The YESFEZ succeeded in signing an MOU worth $20 million with a distribution company in Philadelphia, on Nov. 2009.

And in October, the YESFEZ signed a $30 million MOU with a Germany renewal energy company. The zone's investment attraction organization visited Germany on Oct. 18, 2009 and signed an MOU with F. Company just three days later. F is recognized as a leading firm in the renewable energy industry within Germany.

The company plans to build a biogas plant and an R&D center in the zone by 2014 through a 50-50 joint partnership with a Korean firm aiming to enter the Chinese and Southeast Asian market.

According to an executive of the YESFEZ authority, the investment attraction organization visited five cities in Germany from Oct. 18 to 23, 2009, holding individual meetings with potential investment companies that focus on everything from semiconductors to LEDs.

On Oct. 20, 2009, it engaged in mutual cooperation efforts with one of Germany's most famous environmentally friendly cities, Freiburg. The meeting led to an MOU with the city to work together on green development. The agreement provides the YESFEZ with a chance to benchmark itself against a city that serves as a model when it comes to the use of alternative energy, such as solar, in business and everyday life.

The YESFEZ also signed an investment agreement with the Ambassador Hotel Group. Under the deal, the group will invest $20 million to construct and operate a hotel within the Songak District.

With the addition of a 300-room hotel, the Songak District will be able to provide accommodations and convenience facilities to foreigners. In addition, the hotel will create 14.3 billion won in economic value and bring 150 new jobs to town.

YESFEZ's Wave of the Future

The Yellow Sea Free Economic Zone(YESFEZ) will provide companies with an optimal environment for global business activity.

The YESFEZ focuses on the knowledge and creative industries. It specializes not only in the production of state-of-the-art auto, display, IT, and biotechnology, but also in research and development. All of the ingredients are in place for it to evolve into an economic hub of Northeast Asia and a global center for high-tech industries.

The automobile industry in Korea has grown rapidly, producing 3.8 million completed automobiles a year. The Korean market has good access to China and holds the potential growth of becoming a logistics center production base by pursuing market openings with the Korea-U.S. FTA and Korea-EU FTA. The automobile industry near the YESFEZ consists of companies such as Hyundai, Kia, Ssangyong, Hyundai Mobis and international companies such as Magna, VISTEON and Johnson Controls.

Major electronics companies within the YESFEZ are global players like Samsung Electronics, LG Electronics, Hynix, Alcatel, SONY and Coring Glass. The DRAM and NAND Flash world distribution center of Dongbu Hitek and Amkor are also located in the vicinity of the economic zone. LG Display and AU Optronics, Hoya, Toyotanso, TOPPAN are leading the world display industry.

The YESFEZ also has 127 companies producing construction machinery, molding machinery, shipping, airplane parts and railway parts, forming a machinery cluster, as well as 48 medicine and medical machinery companies.

YESFEZ development overview

Total area 55.05 square kilometers / Projected investment 7.45 trillion won / Construction period 2008~2025