Designation of Masan Free Trade Zone as National Industrial Complex, Finally a 'Big Step'

Ministry of Economy and Finance Submits Q3 Legal Amendment Bill to National Assembly

The 8th term of Gyeongsangnam-do under civilian leadership has found a breakthrough for designating the Masan Free Trade Zone in Changwon City as a national industrial complex.

According to Gyeongnam Province on the 3rd, since 2018, the province has requested the addition of a supplementary provision to the Act on Industrial Location and Development to recognize the Masan Free Trade Zone as a national industrial complex. However, this request faced opposition from the Ministry of Land, Infrastructure and Transport (MOLIT), which stated that legal amendments were difficult due to the absence of similar cases and a national industrial complex management plan.

During the 8th term, Governor Park Wan-su, Deputy Governor for Economy Kim Byung-gyu, and local lawmakers including Yoon Han-hong continuously persuaded the Ministry of Economy and Finance, MOLIT, and the Ministry of Trade, Industry and Energy, leading to a rapid turnaround this year.

The transition to a national industrial complex was adopted as an agenda item at the Ministry of Economy and Finance’s issue coordination meeting and the Prime Minister’s Office’s regulatory innovation strategy meeting. As a result, an alternative was proposed to create a legal basis under the Ministry of Trade, Industry and Energy’s Free Trade Zone Designation and Operation Act, allowing designation as a national industrial complex through deliberation by the Industrial Location Policy Deliberation Committee.

Furthermore, on the 2nd, the Ministry of Economy and Finance announced, “By the third quarter of this year, we will coordinate with MOLIT and the Ministry of Trade, Industry and Energy to submit a related bill to the National Assembly to establish the legal basis for designating the Masan Free Trade Zone as an industrial complex.” They added, “Through this, we will facilitate corporate investment by easing building coverage ratios and convert the free trade zone, which has existed for over 50 years, into a cutting-edge export industrial base.”

Masan Free Export Zone, Changwon-si, Gyeongnam.
[Photo by Gyeongnam Provincial Government]

The Masan Free Trade Zone, established in January 1970, is recognized as Korea’s first foreigner-only investment district and has played a pivotal role in Korea’s modernization and industrialization.

Currently, 127 companies are operating there, and among the seven industrial complex-type free trade zones nationwide, it achieved the highest export amount of $986 million in 2022.

Designated as a free trade zone in 1970 when the concept of industrial complexes did not yet exist, it was established as an industrial area. Although it has been over 50 years since its creation and its facilities are aging, it has faced setbacks in redevelopment projects because it was not eligible for various government support projects such as the Old Hub Industrial Complex Competitiveness Enhancement Project and the Smart Green Industrial Complex initiative.

While industrial complexes have a building coverage ratio of 80% (the ratio of building area to land area), the Masan Free Trade Zone, classified as a general industrial area, has a coverage ratio of 70%, which has been an obstacle to expanding investment such as facility expansion by resident companies.

Deputy Governor for Economy Kim Byung-gyu said, “We have overcome a major hurdle to designate the Masan Free Trade Zone as a national industrial complex. Although there are still differences of opinion between MOLIT and the Ministry of Trade, Industry and Energy, we will persuade them well to achieve legal amendments within this year and transform the Masan Free Trade Zone into a cutting-edge industrial complex, making it a forward base for exports and the re-advancement of Gyeongsangnam-do.”

This content was produced with the assistance of AI translation services.