Rep. Land & Factory Sale
- SEOUL, South Korea (April 30, 2025) — A proposed amendment to South Korea's Act on the Designation and Operation of Free Trade Areas could considerably alter how these...
- Since their inception in 1970, South Korean free trade areas have operated under a lease-only model.
- The Masan Free Trade Zone, redesignated as a national industrial complex last year following legislative efforts, illustrates the challenges.
South Korea Considers Land Sales in Free Trade Zones too Boost investment
SEOUL, South Korea (April 30, 2025) — A proposed amendment to South Korea’s Act on the Designation and Operation of Free Trade Areas could considerably alter how these zones operate, potentially stimulating investment and economic growth. The amendment, introduced by national Assembly member Yoon Han-hong, would allow for the sale of land and factories within free trade areas, a departure from the current lease-only system.
Lease-Only System Faces Scrutiny
Since their inception in 1970, South Korean free trade areas have operated under a lease-only model. While this provides tenants with long-term land access at low rents, it has also created obstacles to investment, especially concerning plant expansion. the absence of land ownership makes securing financing and making long-term strategic decisions more difficult for businesses.
Masan Zone as a Case Study
The Masan Free Trade Zone, redesignated as a national industrial complex last year following legislative efforts, illustrates the challenges. Despite expectations that an increased construction rate (from 70% to 80%) would spur additional investment, progress has been slow.
Amendment Aims to Revitalize Zones
Proponents of the amendment argue that allowing land sales would address limitations of the lease-only system, such as aging facilities and difficulties in obtaining mortgages. They believe this change would revitalize free trade areas and enhance company vitality.
The amendment, drafted in consultation with ministries including the Ministry of Trade, Industry and Energy, seeks to improve the overall free trade area system. The goal is to promote autonomous investment by companies and attract high value-added industries.
Key Changes Proposed
the most significant proposed change is the allowance for the sale of land and factories. Currently, the lease-only system limits long-term facility development and collateral options. Allowing sales is expected to improve investment stability and asset utilization for companies.
To mitigate speculation, the amendment includes provisions for tenure requirements and disposal restrictions, ensuring supply meets actual demand. It also aims to support digital conversion and high value-added activities for tenants.
Legislator’s Perspective
This amendment focused on creating jobs, enhancing local economic vitality, and converting free trade areas to high-tech industrial bases.
Yoon Han-hong, National Assembly Member
South Korea’s Free Trade Zones: Land Sales Amendment to Boost Investment – Your Questions Answered
Are you interested in investing in South Korea, or curious about how the country attracts foreign businesses? This article dives into a proposed amendment to South Korea’s free trade zone regulations that could considerably impact investment.
What’s the big news regarding South Korea’s Free Trade Zones?
SEOUL,South Korea is considering a significant change. An amendment to the Act on the Designation and Operation of Free Trade Areas is being proposed. This amendment, introduced by National Assembly member Yoon Han-hong, would allow for the sale of land and factories within these zones.
How do South Korean Free Trade Zones currently operate?
currently, these zones operate under a lease-only system. This means businesses lease land and facilities instead of owning them outright. This system has been in place since 1970.
Why is the lease-only system being re-evaluated?
The lease-only model, while offering long-term land access at low rents, has faced scrutiny. It presents several challenges that may hinder investment:
Limited Financing Options: The lack of land ownership makes it harder for businesses to secure financing, especially for large-scale projects.
Difficulties with Plant Expansion: The lease-only structure can complicate plant expansion plans.
* Challenges with long-term strategic decisions: It can negatively affect a company’s ability to make long-term plans.
what specific problems have emerged?
The Masan Free trade Zone provides a clear