'Change Industry Every 5 Years and Expand Cultural Facilities'... Killer Regulations Removed from Aging Industrial Complexes

Joint Public-Private Regulatory Innovation Strategy Meeting
Lowering Industry Restrictions and Investment Barriers
Easing Negative Zone Application Requirements
Allowing Re-leasing After Non-Capital Region Sales
Expanding Cafes, Gyms, and Cultural Facilities

President Yoon Suk-yeol is speaking at the Killer Regulation Reform Regulatory Innovation Strategy Meeting held at the G-Valley Industry Museum in the Guro Digital Industrial Complex, Seoul, on the 24th. August 24, 2023. Photo by Presidential Office Press Photographers Group. [Image source=Yonhap News]

The regional industrial complexes, which have been producing the same products unchanged for decades, are undergoing a complete transformation. The main tenant industries will be allowed to change every five years, and regulations will be significantly relaxed to permit cultural and sports facilities. The goal is to attract advanced industries and improve living conditions to transform these complexes into places where young people want to come.

On the 24th, the Ministry of Trade, Industry and Energy and the Ministry of Land, Infrastructure and Transport announced the "Industrial Complex Location Killer Regulation Reform Plan" at the 4th Public-Private Joint Regulatory Innovation Strategy Meeting chaired by President Yoon Suk-yeol.

The government will first remove rigid restrictions on tenant industries and lower investment barriers for companies. The tenant industries designated during the establishment of industrial complexes will be reviewed every five years to allow advanced and new industries to enter. For new industries not yet classified under the Korean Standard Industrial Classification, an industry review committee involving experts will be established to promptly decide on tenancy. The application requirements for the "Industry Special Zone (Negative Zone)," which allows companies to enter except for prohibited industries, will also be relaxed.

To promote new investments in industrial complexes, the government will ease the current system that restricts sales and leases for five years. Sale and leaseback will be permitted for non-capital region industrial complexes. Through this, companies in industrial complexes can sell their factories and land to financial or real estate investment companies to liquidate assets. Safety measures such as guaranteed lease periods and preemptive purchase rights will be provided during asset securitization.

The government will allow companies to lease adjacent land when expanding factories and permit advanced and green companies to enter industrial complexes developed and established by individual companies for actual demand. A government official explained, "In the case of POSCO, although they intended to expand investments in new growth industries such as secondary batteries and hydrogen production, the current system restricts leasing of actual demand industrial complexes to cooperative companies for public production and joint R&D, causing difficulties in expanding investments in new industries beyond the steel sector."

The government will also relax land regulations to expand cultural and leisure facilities in industrial complexes. To this end, the upper limit of the area that can be changed to support land within industrial complexes without a development plan change procedure will be raised from the current 30,000㎡ to 100,000㎡. A special regulation has been prepared to simplify the establishment of multi-purpose land (complex land) where industrial facilities and convenience facilities can be installed together.

The government plans to expand the budget for the Industrial Complex Environment Improvement Fund to activate private investment in newly secured convenience facilities such as parking lots, sports, and cultural facilities. It will also promote the expansion of area for structural upgrading projects and improve the method of development profit settlement when changing land use. A government official explained, "We have prepared improvement measures to modernize old industrial complexes focused on manufacturing facilities and expand cafes, gyms, and living convenience facilities to attract young and youth populations." According to the 2020 data on workers by age in national industrial complexes, 70.9% are aged 35 or older, while youth workers (aged 19-34) account for only 29.0%.

The government will strengthen the role of local governments to reflect regional characteristics and realities in industrial complexes. The authority to change development and implementation plans of national industrial complexes, previously held by the central government, will be expanded to provincial governors so that local governments can establish "Industrial and Spatial Innovation Master Plans." These master plans will include strategic industry restructuring within complexes and transportation and spatial innovation measures. Additionally, "Brand Industrial Complexes" will be created so that local governments and the private sector can jointly establish themed spaces that attract local residents and youth.

Meanwhile, the Korea Institute for Industrial Economics and Trade estimates that this location killer regulation reform will induce investments exceeding 24.4 trillion won, increase production by more than 8.7 trillion won, and create over 12,600 jobs over the next 10 years until 2033.

This content was produced with the assistance of AI translation services.