The IK Wave

About FIZs, FTZs and FEZs

By SunTae Kim

Ever heard of FIZs, FTZs and FEZs? They’re short for various zones in Korea designed to provide foreign investors with a better business environment.

FIZ means Foreign Investment Zone.

FTZ means Free Trade Zone.

FEZ means Free Economic Zone.

As for how they’re different – well, it’s complicated. But I’m here to spell it out for you.

1. Foreign Investment Zones (FIZ)

A foreign investment zone is an area designated by a mayor or governor as a zone where foreign investors can do business, receive incentives including tax exemptions or reductions and benefit from mitigated regulations. The goal of an FIZ is to attract large-scale foreign investment that can help advance Korea’s industries, create technology transfers, generate jobs and more.

There are two main types: complex-type and individual-type. A complex-type FIZ is a section of an industrial complex that has been designated for lease or sale to foreign-invested companies. An individual-type FIZ is an area designated for an individual location for a foreign-invested company.  

 

2. Free Trade Zones (FTZ)

Free trade zones are industrial complexes, airports, seaports, distribution complexes, freight terminals and more designed to create synergy effects by clustering companies in manufacturing and logistics business. They include those in Donghae, Masan, Kimje and Gunsan. Incheon International Airport and five ports in Korea are also FTZs.

This means companies in an FTZ related to manufacturing and logistics can receive tax exemptions and export products without complicated procedures. Also, customs duty deferment and tax exemptions are applied to both foreign goods and certain domestic goods imported into the zone. So if you’re a manufacturing or logistics company, an FTZ is where you want to be.

FTZs in Korea

 3. Free Economic Zones (FEZ)

Free economic zones are areas that encourage foreign investment through providing an ideal living and business environment. They are equipped with infrastructure including high-tech industrial complexes as well as urban centers, schools, hospitals and more. Korea has eight FEZs: Incheon, Busan-Jinhae, the Gwangyang Bay area, Daegu-Gyeongbuk, Saemanguem-Gunsan, the Yellow Sea area and two recently designated zones.

Each FEZ specializes in certain industries and works to increase and enhance the business activities of foreign-invested companies through deregulations and the provision of incentives. The greatest difference between an FTZ and FEZ is that an FEZ is a more active system that fosters a suitable living environment for companies.

FEZs in Korea

 In short, FIZs, FTZs and FEZs are all measures by the Korean government to create a better business environment for foreign companies. I hope the differences and information detailed above will help you invest and find business success in Korea!

 

Suntae Kim is an intern on Invest Korea’s Investment Public Relations Team, at KOTRA. He helps manage the company’s social media communications and assists with the Friends of Invest KOREA program. He is a media major at SungKyunKwan University.
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