Provincial designation of an Investment Promotion Zone comes with massive tax breaks because the province expects the zone to boost local economy. Critics, however, say that policy has had a negative effect on the economy. In order to improve the situation, the government has tightened designation standards. Mike Laidman reports.

[slug] \15.5b project designated Investment Promotion Zone in 2013

This hotel in Jeju City cost about 15.5 billion won to build.

The hotel was designated as an Investment Promotion Zone in 2013 according to the then current legislation of the Jeju Special Law. At that time, 5 million US dollars, or 5.5 billion Korean won, was required for designation.

[camera] Moon Ho-seong

Now, the province has toughened up its standards; instead of only 5 million US dollars, tourism businesses will now need 20 million in investments.


These tourism business can be in one one of ten categories, including tourist hotels, leisure complexes, and international convention facilities.

The province expects the higher standard to better manage the Investment Promotion Zones.


Of the 48 zones scattered across the island, 41, or 85 percent, are focused on tourism businesses. The island also expects the change to help normalise this zone imbalance.


The island is bringing in management rights for the Investment Promotion Zones from the Jeju Free International City Development Center to strictly monitor them after their designation.

INTERVIEW
Yang Gi-cheol / Provincial dept. of international trade
The JDC doesn’t have the authority to cancel zone designations. The 5th revision to the Jeju Special Law transfers the management rights of the zones from the center to the province. We expect the change to create more jobs and boost the local economy.
<인터뷰: 양기철/ 道 국제통상국장>
"JDC가 지정해제 권한이 없는 상태에서 관리권을 운영한다는 것 자체가 어려움이 있어서 이번 5단계 제도개선을 통해서 이것을
*수퍼체인지*
일원화시킴으로써 실질적으로 투자진흥지구지정에 따른 각종 일자리 창출이라든지 관련된 이행조건 부분이 충분히 충족될수 있도록..."

Up until now, the designation of these Investment Promotion Zones has been accused of having a detrimental effect on the economy.

[reporter]
Mike Laidman

Islanders are now waiting too see if the new, tightened standards will have the positive effects the government originally intended.

Mike Laidman, KCTV