A proposal was made to differentiate the overcrowding control zone regulations, which are applied uniformly across Seoul, by local and industry characteristics. Seoul's population and manufacturing base have shrunk considerably and the growth axis of population and industry in the greater Seoul area has shifted to southern Gyeonggi, but the entire city has faced the same regulations for about 30 years. The Seoul Institute proposed reducing overcrowding charges for hubs in artificial intelligence (AI), international business, and research and development (R&D), and speeding up reviews for large-scale development projects.
According to the Seoul Institute's report "Improvement plan for the capital region maintenance zones for managing Seoul's urban growth" on the 13th, Seoul's population, which had grown to 10.61 million in 1990, fell to 9.34 million in 2024. By contrast, Gyeonggi Province's population increased from 3.07 million in 1975 to 14.01 million in 2024. The Seoul Institute analyzed that the population and industry growth hub of the capital region moved from Seoul to southern Gyeonggi.
The manufacturing base has also contracted sharply. Workers in manufacturing in Seoul accounted for 1.13 million, or 29% of the national total, in 1993, but fell to around 240,000 in 2023. During the same period, manufacturing workers in Gyeonggi Province increased 1.7 times from 780,000 to 1.36 million.
However, the regulatory framework that designates all of Seoul as an overcrowding control zone has remained in place for about 30 years. The Capital Region Readjustment Planning Act was enacted in 1982, and in 1994 the current system was established, dividing the capital region into three zones: overcrowding control, growth management, and nature conservation. All areas of Seoul are designated as an overcrowding control zone.
In overcrowding control zones, the construction or expansion of population-concentrating facilities such as factories, schools, and public offices is restricted. In Seoul, building new or expanding office or retail buildings above a certain size also incurs overcrowding charges. Development projects above a certain size must undergo review by the Capital Region Readjustment Committee.
There are also tax burdens. When acquiring real estate to newly build or expand a corporation's headquarters or main office building, or to newly build or expand a factory in an overcrowding control zone, the acquisition tax is levied at a heavier rate. For registrations related to corporate establishment and branch openings, the registration license tax is also levied at a heavier rate under certain conditions.
The Seoul Institute analyzed that these regulations act as constraints on corporations' location and investment decisions. It noted that conflicts are also emerging with policies pursued by the Seoul city government, such as industrial restructuring, attracting strategic industries, and mixed-use redevelopment in the urban core.
It also cited the Yongsan International Business District as a case. The Seoul Institute assessed that tax and location regulations stemming from the overcrowding control zone could burden land supply for the Yongsan International Business District and the attraction of domestic and foreign corporations.
As solutions, the Seoul Institute proposed: ▲ differentiated management by subarea within Seoul ▲ reducing overcrowding charges for AI, international business, R&D, and startup clusters ▲ introducing expedited reviews by the Capital Region Readjustment Committee. Rather than lifting the overcrowding control designation for all of Seoul at once, it suggested varying the regulatory intensity according to strategic projects and local conditions.
Han Ji-hye, a research fellow at the Future Space Research Division of the Seoul Institute, said, "By pursuing measures such as exempting overcrowding charges to spur mixed residential-office development in station areas, the urban core, and former sites, the capital region maintenance zone system should be enabled to function as a tool for managing urban growth."
☞ Capital Region Readjustment Planning Act
Enacted to disperse the population in overcrowded zones, the law divides the capital region into three zones—"overcrowding control, growth management, and nature conservation"—and applies differentiated regulations. In overcrowding control zones, corporate establishment and real estate acquisition tax and registration license tax are levied at heavier rates, and the construction or expansion of population-inducing facilities such as factories and universities is restricted.