IFEZ hit by plunging foreign investment
Overseas investment drops by 80% in Incheon free trade hub
The Incheon Free Economic Zone (IFEZ) is in a dilemma over a sharp decline in this year’s foreign investment, losing its luster as the nation’s first and biggest free trade hub.
The IFEZ, designated as Korea’s first free economic cluster in 2003, served as a frontrunner to drive the government’s free trade movement under which the western port city was expected to transform itself into a hotbed focusing on state-of-the-art IT and bio businesses.
The plan went smoothly for about a decade after its designation, attracting such emerging and top-tier bio players as Samsung BioLogics and Celltrion.
It growth was also attributable to government-led financial support and expectations for the emerging industries.
However, its growth in terms of foreign investment has been showing signs of a rapid decline in recent years.
One noteworthy figure is the steep downfall in IFEZ’s foreign capital attraction during the first half of the year when the organization attract- ed only $52.7 million, down more than 80 percent from $324.6 million a year earlier.
“When investing here, foreign investors have to report detailed plans to local banks, during which process the arrival of invested capital can be delayed,” an IFEZ official said.
The remark comes at a time when the IFEZ is facing a growing setback over continuous reports it has failed to draw foreign capital due to the absence of a specific long-term vision and a weak growth outlook.
The IFEZ authority, however, attributed the FDI drop to “unpredictable investment nature.”
“It is too early to judge our achievement by citing data of the past year or two,” the official said.
As IFEZ is a state-run body, however, critics have blamed the organization for failing to win foreign capital mega contracts in recent years.
The latest in a series of failures came this March when Indonesian conglomerate Lippo Group and U.S. casino operator Caesars Entertainment withdrew their plan to build a casino complex worth 2.3 trillion won on Yeongjong Island. The IFEZ covers three regions in Incheon — Songdo, Yeongjong Island and Cheongna.
The initial investment plan made headlines here in 2014, as this was the first time foreign capital won a license to establish a casino complex in Korea.
The IFEZ has since failed to win notable investments, facing growing criticisms that it is wasting the national budget without a specific roadmap for long-term growth. The government plans to invest more than 13 trillion won on running IFEZ until 2020.
The official declined to comment over whether it is in talks with foreign investors over winning big deals that can dispel lingering concerns surrounding its shadowy outlook.
“We cannot make public the details over the ongoing capital attraction plans,” the IFEZ official said.
The government designated the IFEZ as the first of eight free economic hubs here, in a move to take advantage of the city’s geographical merits as Korea’s major air and sea transportation hub.