Land Ownership Permitted in Free Trade Zones... Pricing Based on State Property Act

First-Ever Procedures Established for Sale of National and Public Land
Enhanced Collateral and New Investment Opportunities Expected

Information Processing and R&D Companies Now Eligible for Entry

Expansion of Customs Benefits to Promote Transition to Advanced Hubs

Gunsan Free Trade Zone.

Ownership of national and public land within Free Trade Zones will now be permitted, and entry barriers for knowledge service companies such as information processing and research and development (R&D) will be significantly lowered.

The Ministry of Trade, Industry and Energy announced on May 20 that a partial amendment to the “Act on the Designation and Operation of Free Trade Zones,” which includes these changes, was approved at a Cabinet meeting.

This amendment aims to improve the aging production facilities and manufacturing-oriented industrial structure of Free Trade Zones and to expand the attraction of digital transformation (DX) and advanced service industries.

First, detailed procedures and conditions for the sale of national and public land and factories within Free Trade Zones have been established. Previously, although there was a legal basis for sales, the lack of detailed procedures meant the zones had only been operated on a leasing basis. As a result, tenant companies had no land ownership, making it difficult to secure collateral and limiting new investments.

The amendment stipulates that, when calculating the sale price of national and public land, the average of the appraised values must be applied according to the "State Property Act." The scope of eligible buyers has also been expanded from current tenant companies to any third party that meets the qualifications for entry.

The government has also introduced post-management measures to prevent speculation. A period restricting the disposal of land has been established, and in cases of failure to sign a tenancy contract or unauthorized disposal, a penalty for non-compliance may be imposed.

Institutional improvements to attract the knowledge service industry are also included. Export companies in knowledge service fields such as information processing and research and development will now be eligible to enter Free Trade Zones, and, considering the characteristics of industries that do not require large-scale factories, an exemption from the standard floor area ratio requirement will be permitted.

The scope of customs benefits will also be expanded. The special provisions of the Customs Act, which previously applied only to customs clearance processes, will now extend to the imposition and reduction or exemption of customs duties. In addition, a new “raw material taxation” method will be introduced, whereby tariff rates and prices are determined based on the state of raw materials used in product manufacturing.

The Ministry of Trade, Industry and Energy plans to implement the revised law from May 2027 after revising the enforcement decree and subordinate regulations. A ministry official stated, “We will continue to support Free Trade Zones so that they can evolve beyond traditional manufacturing and logistics hubs into advanced strategic bases where digital and service industries converge.”

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