Investment promotion zones offer businesses huge tax incentives, but those firms are supposed to offer the island something in return, namely jobs and a boost to the economy. Critics say the businesses are not living up to their end of the bargain. Lee Hee-jung reports.
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Iho-dong, Jeju City

Iho-dong was designated as an investment promotion zone in 2009, with plans to develop 270,000 square meters of land with investments worth 420 billion won. Hotels and theatres were slated for construction as part of a resort complex. However, not a single brick has been laid yet.


According to a survey undertaken by the provincial office in April and May, less than half of the 49 investment zones have actually had businesses set up within them. Five business have cancelled construction, and 3 have not even begun.


Investment and employment figures have not met expectations.


Out of the 49 investment zones, investment currently stands at 4.5 trillion won, which is a mere 40% of the original 11.5 trillion won planned. Only 2,600 jobs have been created, which is 14.7% of the initial plan to hire 18,000 employees.

The total amount of tax breaks given within the investment zones comes to 110 billion won.

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‘Firms benefits, but local economy doesn’t’

Critics are now complaining that hardly any economic benefit has been generated by these huge tax reductions. The government has issued demands to five of the local businesses, saying that construction must be resumed within six months.

In addition, a special request to drop the investment zone status afforded to three particular firms has been put forward, in light of the complete lack of any progress.

[INTERVIEW]
Yang Gi-chul / Director, Provincial international trade dept.
Every project is subject to comprehensive assessments before we decide on revoking status. These administrative measures will serve as a threat to businesses incapable of carrying out such long-term investments.
<인터뷰:양기철/제주특별자치도 국제통상국장>
"종합계획 심의를 거쳐 지정해제 절차를 밟게됩니다.
장기투자가 미진한 사업장은 이번 행정조치가 상당한 자극이 될 것으로 생각합니다."

[reporter]
Lee Hee-jung

As a follow up measure, the tax collection period will be extended from 3 to 5 years on areas released from surveillance.

Lee Hee-jung KCTV