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Seoul, the capital of the Republic of Korea, was administratively separated from Kyonggi in 1946, so that the province now surrounds the city. The 514-kilometer Han River, on which Seoul is built, runs through Kyonggi. To the north of the river are mountains and to the south are flatlands where both farms and cities thrive. Kyonggi is 10,184 square kilometers in area, or 10.2 percent of the country. As of the end of 1998, Kyonggi had over 8.7 million residents and the population has been growing steadily by 40,000 to 50,000 persons annually. The Province's Industrial and Foreign Investment Environment Centrally located between Japan, China and Russia, Kyonggi is at the center of Northeast Asia both industrially and geographically. It has a consumer market of over 22 million people, well-developed communications, information, transportation and distribution networks; and, with over 18 percent of the country's technical training centers, 856 industry-affiliated research centers, and 124 colleges and universities, its workforce has no shortage of skilled personnel. There are over four million economically active people in Kyonggi Province, or some 20 percent of the nation's workforce. Its Gross Regional Domestic Product (GRDP) is $50 billion, 17 percent of Korea's Gross National Product. Over 20,000 small-, medium- and large-sized businesses are located in Kyonggi Province, 26 percent of the Korean total. The manufacturing, assembly, automotive, electrical and electronic industries among them operate at advanced-nation levels which is why 67 percent of foreign investors prefer the Kyonggi-Seoul metropolitan area as their investment destination. Kyonggi has set as its goal to become the hub of world trade in East Asia. There are over 9,000 acres of active industrial parks in the province and over 7,400 acres of new industrial parks in the works. Construction on large infrastructure projects including highways, rail lines, harbors, airport facilities are under way to keep up with its rapidly expanding industrial base. Creating an ideal environment for foreign investment was the major goal of Chang-yuel Lim, governor of Kyonggi Province, on assuming office. "Upon my inauguration as governor, I made the revival of the local economy my number one priority and promised that I would bring $30 billion of foreign investment into the province," he said. "To achieve this target I am ready to offer foreign investors a one-stop, personally tailored service and have personally assumed the role of the province's Chief Investment Officer. In this capacity, I will personally supervise foreign investment in the province and create the best location for foreign investment in the world." For a limited period, Governor Lim said the province will offer prime industrial land to foreign investors at bargain prices. Using autonomous powers vested by the Foreign Investment Promotion Act, passed Nov. 17th, 1998, the province will lease out public land to foreign investors for periods of up to 100 years. Large-scale investors and investors in the high-tech industry will be given land for factory use free of charge, and local taxes such as acquisition tax, registration tax, property tax, and aggregate land tax will be reduced or exempted for up to 15 years. In addition to cheap industrial land and the implementation of a tax reduction/exemption system, on Sept. 1st 1998, the province established the Kyonggi Provincial Investment Center in Seoul to provide a full administrative service to foreign investors throughout the investment process. To provide exclusive service to foreign investors, the Foreign Investment Promotion Division has been newly-established in the provincial government offices despite a program to downsize the administration by 12.4 percent.
The Drive to Attract Foreign Investment to Kyonggi Kyonggi Province has enormous potential and an endless array of possibilities. However, the province has been hampered by laws such as the Seoul Metropolitan Redistribution Planning Act, originally made to prevent an over-concentration of population in the capital area and ensure balanced development of the region. These regulations have been a stumbling block to attracting foreign investment and have stalled Kyonggi's competitiveness. With the passage of the Foreign Investment Promotion Act, many of the province's demands were finally realized. These include the expansion of the terms of leasing public land, further tax incentives at the local level, the construction of industrial parks for the exclusive use of foreigners in which land may be sold or rented, and provision of foundation facility support for foreign investors. The Seoul Metropolitan Redistri-bution Planning Act will also be revised. In the past, investors wanting to invest in areas where legislation existed to guard against over-population had to pay a local tax five times the basic rate. That requirement has been reduced to three times the basic rate while foreign investors will only pay the basic tax. Previously there were restrictions on building tourism complexes larger than 14.4 acres in nature conservation zones. In the future, however, for a temporary three-year period, investors in an enterprise with a foreign equity component of at least 51 percent will face no such restrictions. In addition, the number of high-tech plants, such as computer manufacturing, wireless communications, and broadcasting equipment facilities authorized to be built in such reserves by Dec. 31st, 2001 has been temporarily expanded from seven to 20. Provincial planners anticipate when these revisions are implemented, the quality of Kyonggi's investment environment will be among the best in the world. Furthermore, in order to stimulate foreign investment in SOC projects, the provincial government has completely upgraded the present system to meet international standards. In the past, the only avenue open to participation by investors was the BTO (Build, Transfer, Operate) system. Investors will now be able to opt for the BOT (Build, Own, Transfer) system if they so choose. To enable investors to bolster their financial underpinnings in SOC projects, domestic and foreign financial institutions will be able to establish SOC-related investment and finance companies. Kyonggi is now creating opportunities for private-sector involvement in SOC projects such as roadways, railways, seaports, and convention centers to ensure foreign investors' profitability, stability, convertibility and long-term operating rights. The province is also constructing the Oyon-Hansan Industrial Park, a 65-acre site for rent exclusively to foreign businesses that began accepting reservations for space in January of this year. Businesses that invest in this area will be offered a 50 to 100 percent reduction or exemption in corporation tax and income tax for 10 years, and the same incentives regarding local tax for 15 years. The government will subsidize land-purchase prices, plus any necessary trunk road construction, landscaping, and water supply facilities, by 50 percent. It will also provide foundation facilities such as a harbors, roadways, rail lines, sewage systems and support toward medical and educational facilities. The province endeavors to solve any difficulties foreign investors might encounter in the investment process. For example, the German scaffolding and formwork company PERI Gmbh experienced difficulties during the process of making its US$40-million investment in Kyonggi. The company bought land to build a factory, but experienced problems because the entrance road to the site was too narrow and it was not connected to the main local road. Upon being made aware of this, the province immediately took measures to have the road widened and connected to the main local road. Ashland Chemical of Columbus, Ohio, planned to build a US$30-million factory in Kyonggi. The province found a site that was ideal for Ashland and provided one-stop service for all of their administrative needs in setting up the factory which began operations in May last year. What Kyonggi is Targeting A glance at Kyonggi's industrial structure will reveal it has a typical mixture of small-, medium- and large-sized businesses, but it is also a province with many golf courses, ski resorts, leisure parks, museums and heritage sites, and is a popular tourism and culture center. Although the local economy has shrunk since the financial crisis and the country entered the IMF restructuring program, Kyonggi boasted an annual average growth rate of 12 percent over the last 30 years when the national economy grew at an average of about six percent. In many ways, Kyonggi Province has been the driving force behind the phenomenal growth of the Korean economy. Kyonggi has over 670 successful foreign businesses operating within its boundaries, including Motorola. It also has a well-developed automotive industry, represented by Kia Motors which has been newly-taken over by Hyundai, and by Ssangyong Motors, which has been taken over by Daewoo, as well as many auto parts manufacturers including the Daewoo automobile plant in the metropolitan area. In addition, with 37 percent of Korea's high-tech businesses including international semiconductor and electronics companies such as Samsung, Hyundai, LG, and Daewoo, plus small- and medium-sized businesses specializing in heavy equipment, parts, and biotechnology products, Kyonggi Province is the ideal location for investing in high-tech and technology-intensive industries. Given Kyonggi's vibrant technology-based industrial structure, the province is actively looking for merger and acquisition partners for many promising local small- and medium-sized businesses and equity participants in large, employment-generating joint ventures. The province also hopes to attract foreign investment in tourism and leisure facilities that are both profitable and will serve to improve the standard of living of Kyonggi residents. Kyonggi offers foreign investors a well-preserved natural environment, a superior workforce, and excellent infrastructure. By taking advantage of the opportunity to invest in the province's high-tech and technical intensive industries or the leisure and tourism industries, they will quickly realize why Kyonggi is known as the "Land of Promise." Prospects for the Future Total foreign investment in Kyonggi by the end of 1998 amounted to US$ 1.56 billion. According to the statistics on foreign investment by autonomous regions, Kyonggi Province is second only to Seoul in this respect. However, taking into account portfolio investments that are not direct forms of investment and the many businesses headquartered in Seoul with actual business sites or production facilities in Kyonggi, the province has brought in more actual direct foreign invest than any area in the country. Such statistics also demonstrate the attraction of Kyonggi Province for the foreign investment community. The province has taken concrete measure to actively promote foreign investment such as its holding of the recent International Investment Fair for potential foreign investors visiting the province, selecting target businesses that are right for the local investment environment, providing match-making services with local companies, and providing one-on-one consultations for foreign investors with experts in various fields who can advise them on their investment. Kyonggi's Foreign Investment Consultation Team and Foreign Investment Promotion Council quickly and efficiently deal with any and all problems that foreign investors encounter and give full administrative support to insure that the investment process proceeds smoothly. Cultural & Tourism Resource Potential The cultural and tourism sectors in Kyonggi Province have the potential to be as profitable as its high-tech industry. The west coast of Kyonggi Province, some 413 kilometers long, has been an important point for sea trade with China since the first century and the center of Korea's world-renowned ceramics culture. Kyonggi is home to Hwa Castle, which has been designated a World Cultural Heritage Site by UNESCO, as well as being home to 287 and 626 historical relics and sites designated as provincial and national treasures, respectively. Kyonggi's beautiful natural surroundings have made it the center of the country's sports and leisure industry with over 100 golf country clubs (52 percent of the national total) plus numerous ski resorts. Just a step away from the cities are beautiful mountains, valleys, and islands perfect for tourist and leisure facilities of all kinds. In preparation for the World Ceramics Expo in 2001 and the 2002 World Cup, Kyonggi is developing large-scale tourism projects such as the Kwangju-Ichon-Yoju Ceramics Complex, Mt. Chookryung Resort, Daeboo and Imhae Marine Tourism Complexes, the Ocean Science Center, and the Natural History Museum. These facilities will offer a variety of leisure recreational activities and be developed in accordance with a thematic tourism marketing strategy aimed at attracting foreign investment.
Outlook for Kyonggi in the 21st Century From east to west, Kyonggi Province stands midway between China and Japan; from north to south it lies between Southeast Asia and Russia. Early in the 21st century, Kyonggi Province will offer airport and port facilities meeting international standards, with the completion of the Inchon International Airport and the expanded Inchon City Port. Because Kyonggi has a superior workforce and plenty of industrial land, it is well-positioned to emerge as the industrial base for businesses looking to tap the huge and rapidly-growing consumer markets of China and elsewhere in East Asia. Kyonggi Province continues to grow. The autonomous region will soon have a population of over 10 million and given the fact that 37 percent of the nation's high-tech businesses are located in Kyonggi as well as the huge domestic consumer market of over 22 million people in the Kyonggi-Seoul metropolitan area, it is apparent why Kyonggi Province is becoming the dynamo of the East Asian economy. Kyonggi is also blessed with an abundance of human, historical and cultural resources waiting to be developed. Among them are well-preserved historical treasures left by the earliest inhabitants of the peninsula, beautiful natural surroundings, performance arts such as the Yangju Mask Dance, and many other unique cultural artifacts deserving of a world audience. However, of prime im-portance is the fact that the door is wide open to all who wish to invest in Kyonggi Province. Businesses that invest in Kyonggi Province will benefit directly from the recovery of the Korean economy, now under way, and with trade between North and South Korea increasing, the province will play a pivotal role in inter-Korea trade and an even more important role in an unified Korea. Given its enormous potential, corporations locating in Kyonggi will be at the forefront of the business developments in the 21st century. For more information, please contact: Kyonggi Province Foreign Investment Promotion Div.
Kyonggi Province Investment Center (Seoul Office)
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When the leading Japanese general trading firm, Innotech Corp., decided to set up a high-tech equipment manufacturing operation overseas, it did not look further than its closest neighbor. Inno-Asia Co. manufactures compact-disc (CD), CD-ROM and digital-video-disc (DVD) inspection systems at a plant in Kwangju, Kyonggi Province, south of Seoul. Innotech marked annual sales of 440 billion won and a net profit of 170 billion won during fiscal 1996/97. The company, which employs more than 1,000, ventured into the manufacturing sector by acquiring Admon Science Inc. The investment originated in the Japanese firm's plan to restructure its manufacturing division by setting up operations closer to overseas target markets. The firm decided to begin with Admon's line of inspection systems and considered ways that the operation might be spun-off into a satellite operation outside Japan. After exploring possibilities in other Asian locations such as Malaysia, Innotech choose Korea. Mr. Knight commended the efforts of the Korea Investment Service Center (KISC), operated by the Korea Trade-Investment Promotion Agency (KOTRA). He said that the "one-stop" service center helped the firm locate a suitable site so saving him considerable time and effort. Inno-Asia's plant site in Kwangju was first recommended by KISC. Inno-Asia executives visited the site and immediately recognized its potential _ the site provides easy access to the major Korean electronics companies, Seoul, and the Kimpo International Airport. In addition, the hi-tech nature of Inno-Asia's investment meant it qualified for full tax exemption for seven years and a 50 percent reduction for a further three years. "KISC helped us almost from the starting phase, beginning with our research on possible sites,"said Mr. Knight. "We also received considerable assistance from the regional government of Kyonggi Province. Since then, Innotech has funneled $1 million into its Korean start-up and commenced training technicians who will be responsible for assembling the systems at its plant. For now, Inno-Asia's main client will be Admon Science and Innotech, and some of its manufactured products will be re-exported to Japan. It also plans to venture soon into Southeast Asian markets, and has particular interest in Taiwan and Singapore. Major Korean clients include Saehan Media and the Samsung and LG business groups. Inno-Asia Co., Ltd. eventually expects to expand the firm's manufacturing capacity, broadening the range of products to include flat-panel display inspection systems and Admon's other inspection systems. The firm plans to localize 80 percent of the parts used for the manufacture of the systems. Inno-Asia Co., Ltd
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The center of political, economic, and cultural life of
the Korean people for much of their 5,000 year
history, Kyonggi has long been home to the national
capital. 
