New port opens Korean bid as regional hub

20 January 2006

The Korea Herald

By Yoo Soh-jung



Busan New Port, symbolizing the country's vision to become a logistics and financial hub, opened yesterday with a big boost to the start of the new year.



Although only three of the 30 container berths have begun operations, it is about one year ahead of schedule.



The new port, worth 9.2 trillion won, went into development in 1995, with completion targeted for 2011. By this time the country's largest port will triple its handling capacity to 15 million TEUs (each TEU equals a 20-foot equivalent unit container). It currently accommodates vessels of up to 8,500 TEUs.



The three new berths, worth $7.6 billion, will have a 1.2-kilometer shoreline with an average depth of 16 meters. They will be able to accommodate three 50,000-ton vessels anchored at the same time.



In 2004, Asia housed 13 of the world's 20 busiest container ports, with the top four in Hong Kong, China and Singapore.



While Asian ports have been competing to meet the needs of growing trade with Europe and North America, Korea now hopes the new port will help attract the greatest volume of cargo in the region. It believes its strategic location can help link the Eurasian continent and the economies in the Pacific Rim.



Other plans for serving as the regional hub include creating free economic zones. Plans are underway to provide high-tech manufacturing and research and development facilities. By opening a distribution park, Busan seeks to become a global logistics center linking China, Japan, both Koreas and the Russian Far East.



The global competition for developing FEZs, however, has grown more intense, with Korea pitted against strong competitors like Singapore, Hong Kong and Shanghai.



But the Korean government believes the country has many advantages, including geographical location, a large pool of talented human resources and a strong information-technology infrastructure.



The government last year allocated 1.9 trillion won to support activities of the nation's three FEZs, up 47 percent from last year. Next year, the subsidy will be raised to 2.4 trillion won.



Cho Sung-ik, deputy minister of the Ministry of Finance and Economy's Free Ecomonic Zone planning office, noted that the FEZ authorities are preparing to carry out investor relations activities jointly with the central government and other related organizations.



Other efforts include removing any hurdles to foreign investment, with special emphasis on creating a competitive living environment. This will feature world-class schools and hospitals. The government said in July last year that a consortium of U.S. hospitals, including the Hospital of the University of Philadelphia, plans to establish a foreign-run hospital in Songdo International City in the Incheon Free Economic Zone by 2008.



Under the revised FEZ Law, foreign hospitals will be allowed to treat local patients. The government believes foreign hospitals will push domestic medical service to improve as well as help attract international biotech companies to the country.



The Korean government believes developing FEZs will advance the nation's position as the business and logistics hub of Northeast Asia. The region has a population of 1.5 billion and accounts for nearly 20 percent of global gross domestic production, while emerging as one of three major trade blocks that fuel global economic growth.



Incentives the Korean government are providing includes leases for up to 50 years with annual rates of about 48 cents per square meter to foreign companies and joint ventures with as little as 10 percent foreign investment. This is one-fifteenth the rate for logistics ventures in Shanghai, the Busan Port Authority said.



Busan became a port in 1876. In 2003, it exceeded Shanghai and Shenzhen, the world's third and fourth-busiest port, in size.



Busan also boasts its port as the starting point for the "Iron Silk Road," a land bridge for cargo that could be transported to Europe along the Trans-Siberian Railroad. But it still needs approval by North Korea to build the Trans-Korea Railway.



For Korea, the dream of the Iron Silk Road is that it would serve as a natural link between Busan and the cities in northeast China like Shenyang and Harbin. It would also have links to Mongolia.



As part of the Busan-Jinhae FEZ, experts say the new port now looks forward to helping Korea serve as an economic powerhouse.



"Busan has the potential to become a center for logistics because it's located on a very busy shipping route and is near major markets like China and Japan," said Korea's Minister of Maritime Affairs and Fisheries Oh Keo-don in a speech earlier this year.



"That is why the government has been seeking to expand the port since the mid-1980s."

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