Pusan and Kwangyang to be designated CFZ next January

Pusan and Kwangyang were finally granted as CFZ (Custom Free Zone) designation December 17 and with things well on-track they could be operating CFZs as of January 1, 2002.

The City of Pusan officially announced the Custom Free Zone (CFZ) as Ministry of Finance and Economy (MOFE) notified on December 17. The Pusan CFZ is expected to greatly contribute to national competitiveness and economic development as it takes Pusan one step closer to being a truly international logistic hub port.

MOFE and the Ministry of Maritime Affairs and Fisheries (MOMAF) declared that the CFZ areas in the Port of Pusan would total 1.27 million square meters of wharves in the Pusan East Container Terminal (PECT) and the Hanjin Terminal wharves in the western Kamcheon terminal, the former Cheil Jedang sites. Along with those two areas, a total of 890 thousand square meters in the Yongdang site, a PECT hinterland area, and the Daesun shipbuilding areas are be scheduled for CFZ designation.

Not being ones to sit on their laurels, the City of Pusan will push for the rest of the port to be designated CFZ in mid 2005 after creating CFZ hinterlands of 270 thousand square meters by 2004 to stand as a firm logistic base in the future. The hinterlands in the Pusan New Port are expected to draw domestic and international total logistic companies (TLCs) to go one step further and gradually develop 930 thousand pyoung (about 3.1 square kilometers) of hinterlands by 2013.

With CFZ designation, the Pusan New Port and hinterlands are predicted to produce as much as an additional 5.5 trillion won and employ 31,000 people.

Companies in CFZ areas could conduct business such as cargo transportation, usage and consumption of foreign products, and repairs relatively freely without having to report to Customs. Custom fees, value added taxes (VAT), and special consumption taxes would not be charged there as the area would be treated as a foreign country.

For new facilities in the CFZ, foreign investment amounts over 30 million dollars would be tax exempt for foreign investment companies for clearing direct taxes and rental fees.

According to the Daewoo Economic Research Institute, the Pusan CFZ is expected to produce 92 billion won thanks to an accelerated LME (London Metal Exchange) warehouse, 21.2 billion won in additional production and 1,669 newly created jobs.

Net transit cargoes are forecast to increase to 63,000 TEU, a growth rate of 10% annually, or around 14 million dollars (16.4 billion won) if the CFZ is settled by 2003.

The CFZ in Pusan will be operated following the current systems until the new system can be completely settled down. The management system would be separated into two sections, with MOMAF handling the container terminal section and the City of Pusan handling LME storage sites.

The City of Pusan will enforce related projects to accelerate CFZ operation by investing around 150 million won during next year and will lobby for a CFZ council composed of the government and public parties together.