"Rental Subsidies Needed to Attract Global Companies to Yongsan"

Active Utilization of the 'Foreign Investment Zone as a Service' System
Policies Needed to Strengthen International Hub Capabilities Including Special Zone Designation
Discovery and Development of Yongsan's Unique Foreign Investment Attraction Strategic Industries

It has been pointed out that incentives such as rent subsidies should be provided to attract regional headquarters of global companies to the Yongsan International Business District, aiming to transform it into a business hub in the Asia-Pacific region like Singapore and Hong Kong.

Service-Type Foreign Investment Zone System (Source: Excerpt from presentation materials by Han Ji-hye, Research Fellow at Seoul Institute)

On the 30th, the Seoul Metropolitan Government held a forum titled "Yongsan Embracing the World: An International Business City Where Citizens and Nature Coexist" at the Yongsan War Memorial. Han Ji-hye, a research fellow at the Seoul Institute, who presented on the topic of "Global Headquarters Attraction Strategy," explained, "Seoul is currently unable to provide aggressive incentives comparable to competing cities due to attraction policies limited to cash support and service-type foreign investment zones." She added, "While cash support and tax benefits can be provided to new growth engine industries, the actual support rate is low because there are few foreign-invested companies that meet the support requirements." Currently, the service-type foreign investment zones designated in Seoul include △Intuitive Surgical Korea △A-Biotech △Boeing Korea Technology Research Center.

Han said, "Although global companies' interest in Seoul is increasing due to international tax regulations and geopolitical changes around China, cost-related competitiveness factors such as tax burdens, institutional uncertainties, and rigid labor environments remain unfavorable." She noted, "Even companies that evaluate Seoul positively compared to the past mention these as issues to be resolved." Asian competing cities such as Singapore, Hong Kong, and Tokyo provide direct incentives like tax reductions and exemptions to attract finance and advanced industries. Additionally, they offer tax benefits and subsidies for establishing and operating regional headquarters and international activities. To create a foreigner-friendly living environment, they also issue employment visas with relaxed requirements for highly skilled foreign personnel.

Han proposed the active utilization of the "service-type foreign investment zone," which is suitable for Seoul's service-oriented industrial structure and can be used in the short term. The service-type foreign investment zone system supports foreign-invested companies in high value-added service sectors such as research and development by providing regional and building occupancy support. Companies with a foreign investment share of 30% or more can move in, and subsidies amounting to 75% of the standard rent are provided. Eligible industries include research and development, finance and insurance, and knowledge service industries. At the end of last year, related regulations were revised to allow regional headquarters to move in as well.

Han explained, "In the short term, we need to explore ways to actively utilize the service-type foreign investment zone system. Although there are few designated cases, it has elements that fit Seoul's conditions and is relatively effective." She added, "Seoul should take the lead in revitalizing the service-type foreign investment zone system and urge improvements to the system, such as expanding local tax reduction benefits."

Yongsan International Hub Capacity Enhancement Policy (Source: Excerpt from presentation materials by Han Ji-hye, Research Fellow at Seoul Institute)

As a mid- to long-term solution, she suggested legal and institutional improvements to establish a specialized attraction strategy for the international business district. This would allow for exceptional incentives limited to Yongsan, similar to Tokyo's Asia Headquarters Special Zone (AHQ) and National Strategic Special Zone (NSSZ). The Asia Headquarters Special Zone system provides benefits such as investment tax credits, special depreciation, and exemptions from real estate acquisition tax (buildings) and property tax for projects contributing to economic revitalization and strengthening national industrial competitiveness. The National Strategic Special Zone offers benefits such as simplified immigration document submission, legal and financial consultation desks for foreigners, low-interest loans, and rent discounts (10% for one year).

Han emphasized, "Seoul needs to promote policies to strengthen its international hub capabilities to the level of competing cities, which it has relatively neglected so far." She added, "We should also explore bold preferential support measures that go beyond the service-type foreign investment zones, such as special zone designations like those in Asian competing cities. It is necessary to propose improvements to investment attraction-related laws that do not fit Seoul's conditions."

She continued, "In the mid- to long-term, we must consider Yongsan's unique strengths that can offer differentiated experiences and opportunities from other Asian cities." She added, "To highlight Yongsan International Business District as a foreign investment hub over other business centers in Seoul in the future, we need to contemplate Yongsan's distinctive characteristics and concretize its role and function within Seoul's industrial economy and spatial structure."

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