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Gyeonggi stakes a 2 trillion won Paju plan on one of about four Peace Economic Zone slots
Gyeonggi Province has asked Seoul to designate 6.9 square kilometers of Paju a Peace Economic Zone under a 2 trillion won plan. Paju is one of several sites the province is preparing for a program meant to produce only about four zones nationwide.
The Investor · Invest desk
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What happened
- Gyeonggi filed the plan with the Unification Ministry and the Land Ministry on Sept. 30, covering parts of Paju-eup, Munsan-eup and Wollong-myeon.
- So far 210 companies have expressed interest in moving into the zone, a figure the province cites as evidence that the project is viable.
- Designated zones get tax and levy reductions, special treatment in permits and approvals, and priority support for infrastructure.
- About 1.4 square kilometers, a fifth of the site, would be held as a separate peace site to maximize links if inter-Korean economic cooperation resumes.
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Why it matters
- constraint Gyeonggi will field four candidates for roughly four national places, so a pilot win for Paju may leave less room for Yeoncheon, Pocheon and the October pick.
- cost Each square kilometer outside the peace site carries about 364 billion won of the plan's cost, a bill that public budgets or incoming companies must cover before 210 expressions of interest become investment.
- exposure A fifth of the zone is held for a revival of inter-Korean economic cooperation, an outcome neither the province nor the companies it is courting can bring about.
By the end of the year Gyeonggi expects to hold four candidate sites [1]: Paju in the first round [1], Yeoncheon County and Pocheon in the second [10], and one more chosen through an October call for proposals [11]. Seoul Economic Daily, which reported the filing, expects competition among local governments for the pilot designations to intensify [12]. The Unification Ministry plans about four zones nationwide [5], so some of that competition is between Gyeonggi's own sites.
The 2 trillion won estimate [3] spread over about 6.9 square kilometers [2] comes to roughly 290 billion won per square kilometer [2]. Take out the 1.4 square kilometer peace site [7] and 5.5 square kilometers remain [3], each carrying about 364 billion won of the cost [4]. The province says the 210 companies interested in moving in show the project is viable [4]. It did not say how the 2 trillion won divides between public money and the companies themselves, or how many of the 210 have gone past a statement of interest [3].
For a tenant, designation is worth whatever the tax, levy and permit concessions [6] save it compared with an undesignated plot nearby. Gyeonggi's argument for Paju is that it is the best location in the western inland region, given its existing advanced industrial base, its proximity to the Kaesong Industrial Complex and its wide-area transport networks [9]. Governor Choo Mi-ae said, "Based on Paju's location and industrial competitiveness, we will do everything possible to win a first-round pilot designation and make northeastern Gyeonggi the hub of South Korea's peace economy." [13]
Two pieces of the plan assume ties with North Korea. One of the five planned districts is for inter-Korean logistics [8], and the peace site, a fifth of the area, is reserved for the case where inter-Korean economic cooperation resumes [7].
Three outcomes look plausible. Paju wins a pilot designation and the concessions start turning interest into tenancy. The ministry spreads its zones across regions and Gyeonggi's later candidates find the places filled. Or Paju is designated and the tax breaks prove too small to fill 5.5 square kilometers [3]. I'd put the first ahead of the others for Paju. Yeoncheon and Pocheon are still drawing up development plans [10], so the province is putting its one finished plan into the round with the earliest designations. The counter-thesis is in the ministry's own figure: about four zones [5] is approximate, a fifth is not ruled out, and in that case Gyeonggi's sequencing costs it little. The view is wrong if the ministry passes over Paju in the first round, or if Yeoncheon or Pocheon join Paju with a designation next year. A second Gyeonggi zone would show the ministry is not rationing places by province.
What to watch
- Whether the Unification Ministry names Paju among the first-round pilot designations, and which other local governments it picks alongside.
- How many of the 210 interested companies sign land or tenancy agreements once the tax and permit terms are fixed.
- Which site Gyeonggi selects from its October call, and whether it joins Yeoncheon and Pocheon before the Aug. 31 second-round deadline.