Special zones that exceptionally grant authority and benefits to specific regions for economic development are overflowing. There are about 2,500 designated special zones nationwide, and there are many similar and overlapping special zones, such as those in Busan, which cover 2.4 times the city's area. Concerns have been raised that excessive designation of special zones by the government is diminishing the effects of budget and tax support, and also increasing the number of inactive special zones. The government has decided to reform the special zone system.
On the 24th, during a ministerial meeting on national issues along with an economic relations ministerial meeting, relevant ministries released the 'current status and evaluation of regional special zones and industrial clusters.' According to this, a total of 87 special zones and industrial clusters are currently operated by 11 government ministries, and there are 2,437 regions designated as special zones. By city and province, Gyeonggi Province has the highest number with 316, followed by Gyeongnam with 285, Gyeongbuk with 263, and Chungnam with 262, while Seoul has 49 designated special zones.
According to a survey conducted by the Ministry of Strategy and Finance last year, the rapid increase of similar special zones has occurred since various special zones were established after 1970. For example, the Ministry of Trade, Industry and Energy has designated ▲ Free Economic Zones ▲ Free Trade Areas ▲ Foreign Investment Zones, all of which aim to attract 'foreign investment,' and they have similar support targets (foreign investment and returning companies) and content (tax deductions). The research and development zones of the Ministry of Science and ICT and the International Science Business Belt, as well as the advanced science and technology complexes from the Ministry of Land, Infrastructure and Transport and the advanced investment districts from the Ministry of Trade, Industry and Energy, also share similar support objectives. The similarity in support purposes and content among special zones makes it difficult to achieve the intended effect of 'selection and concentration' as stated in the system.
Among the 87 special zones, more than half (50) have designated 1 to 20 regions; however, there are cases where there is no policy demand at all or insufficient incentives where there have been no designations for a long time. Fourteen special zones, such as marina industrial complexes, software promotion complexes, and printing culture industrial complexes, have no designations at all and are virtually outdated.
On the other hand, there have been cases where inefficiency has increased due to unclear principles in designating special zones. The area of general industrial complexes designated by the Ministry of Land, Infrastructure and Transport amounts to 783, and the agricultural industrial complexes total 482. The regional specialized development zones of the Ministry of SMEs and Startups and the ecological industrial complexes of the Ministry of Trade, Industry and Energy total 175 and 108, respectively.
Because of this, experts have pointed out that the policy effectiveness of the special zone system is not high. According to a survey conducted by the Korea Chamber of Commerce and Industry in 2023, the most common response was that it is 'not well managed' at 42%.
The National Assembly Budget Office pointed out that 'without an overall governance structure, there are limits in coordinating roles between special zones, and performance management by special zones is insufficient,' and noted that 'the operation of special zones is primarily handled by various ministries, making it difficult to establish a comprehensive roadmap for identifying special zone operations and promoting a virtuous cycle among them.' It also analyzed that 'the performance evaluation and feedback system is inadequate, resulting in formal operations.'
The government will work to ensure the efficiency of the special zone system based on research and recommendations from the National Assembly Budget Office. First, performance evaluations for the special zones under each ministry will be conducted, and similar special zones will undergo in-depth evaluations to promote system reform and interconnections between special zones. A government official said, 'We will prepare measures for cross-ministerial linkage and rationalization of special zones and industrial clusters through consultations with relevant ministries.'