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Incheon Free Economic Zone: Is It Really Sustainable?

Hyun Ji (Michelle) Do CRP 3840: Green Cities

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Introduction: As the world is shrinking due to the rapid globalization, it has become inevitable for a country to engage actively in international affairs to develop economically, politically, socially, and culturally. While the Republic of Korea (ROK), the South Korea, has shown its influential role in the international economy during the 1960s through labor intensive manufactured exports, the trend has changed today where an advanced information and communication technologies have become the main factors of competitive advantage. Thus, to meet such global demand, the ROK government has determined to build free economic zone in the city of Incheon, located on the northwest coast of the ROK peninsula (Figure 1).

Figure 1 Source: “Case Study: Songdo International Business District.” Web. 20 Nov. 2009. < http://galekr.mydelphic.com/Uploads/FileManager/Gale/Press%20Kit/Songdo%20IBD%20Case%20study%20225-09.pdf>

Although Northeast Asia contains three of the largest economies in the world-Japan, China, and ROK- international businesses were mainly transacted through Southern Asia near

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Hong Kong and Singapore for a long time. As ROK is located in the midway between Japan and China, it can function as the most efficient economic hub for the three countries as well as other Asian countries. Moreover, among other ROK cities, Incheon is the best location for the free economic zone for several reasons: Other than the fact that Incheon is only 40 miles away from the capital city, Seoul, ROK’s biggest and the busiest airport, the Incheon International Airport, is located there. The airport has a population flow of 100 thousand/day and has convenient nonstop flights all the way to Europe and North America. Also, 20% of the world’s total population, 2 billion, lives within 3hrs/30min flight from Incheon (“The New”). While there are many topics to discuss regarding IFEZ, this paper will be the case study of evaluating rather IFEZ is truly sustainable or not. Most of the research was done through Korean news papers, scholarly journals, and thesis reports on the web; I was unable to conduct interviews with IFEZ development stakeholders as they did not respond to my e-mails nor pick up their phones. Incheon Free Economic Zone (IFEZ): the New Songdo City: The construction of IFEZ is receiving a great amount of attention from all over world not simply because it is the first designated Free Economic Zone in the Northeast Asia but also it is the first sustainable city in the world designed to be an international business district. The total area of IFEZ is approximately 51,644 acres, 1/3 of the area of Seoul or Singapore, and it is divided into three different zones with distinct functions- the New Songdo City, Youngjong Aeropolis, and Cheongna Leisure City (Figure 2). The construction of IFEZ began in 2003 and it is expected to be completed in 2020 (“Overview”). Among the three designated zones, the New Songdo city or Songdo International Business District (SIBD) is the main focus of the development as it is the global business center

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of the IFEZ where majority of the foreign investments will be taking place. SIBD is a US $25 billion master-planned development, designed by Kohn Pedersen Fox, on 1,500 acres of reclaimed land along Incheon’s waterfront (Whitman et al. 3). Its development is invested by both Gale International and Korea’s POSCO E&C. While the site has opened partially for businesses in august 2009, it is expected to be completed in the year 2014; when finished, the city will accommodate 65,000 residents. Recently, by the opening of 6 mile Incheon Grand Bridge, it now only takes 10 minute drive to the Incheon International Airport, located in Yeongjong Aeropolis, from SIBD (“Why Songdo”). When fully developed, including multiple skyscraper office buildings, SIBD will have various infrastructures, such as fine hotels, international schools, hospitals, museums, cultural center, Northeast Asian Trade Tower (NEATT), Central Park, a luxury retail mall, Jack Nicklaus Golf Club Korea, and so on, to attract multinational and domestic corporations (Whitman et al. 3).

Figure 2 Source: “Overview.” IFEZ. Incheon Free Economic Zone Authority, 2008. Web. 13 Nov. 2009.

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Furthermore, SIBD will be a sustainable city by addressing the following three criteria in its design: 1) Extensive amount of green spaces: SIBD will have 515 acres of landscaping and open spaces, equal to 34% of the total land area of the development (Whitman et al. 5). The Central Park in SIBD which was completed in 2005 meets the highest expectations for a global city park as it includes many eco-friendly features. The seawater canal in the Central Park, unlike typical canals, utilizes seawater to minimize the damage to the ecosystem by storing water from the West Sea during high tide, using tidal energy. Also, the water is purified through a double filter without use of chemicals. Moreover, there is a rain-saving facility in the park to reduce water consumption and the parking lots are located underground to minimize carbon emissions (H. Kim). 2) Pedestrian friendly: SIBD is designed to promote local residents and visitors to move around car-free. Several alternative public transportations will be available including a subway, which will connect all the way to Seoul, water taxis, and buses. Also, the Central Park will have nature trails to promote walking and bicycling. Overall, the entire SIBD will be built under the concept of “successful commercial neighborhoods organically grow in areas with a relatively small scale and which are located in proximity to dense residential districts” which is expected to discourage car uses (Whitman et al. 5). 3) Sustainable building design: the main goal of SIBD construction is to have all the buildings in SIBD, 350 of them, certified by the Korean Green Building Rating System and the LEED. Moreover, the SIBD development team has participated in the U.S. Green Building Council’s (USGB) LEED for Neighborhood Development (ND) pilot program “to ensure that, from a macro level, there is appropriate integration between project site, infrastructure development, and actual building construction” (Whitman et al. 7). Regarding the three criteria, in order to quantify and benchmark the level of sustainability within the city during the construction, the development team is constantly

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conducting a carbon footprint and greenhouse gas reduction analysis to understand the real climate impacts and mitigation opportunities to pursue options with the greatest quantifiable benefits (Whitman et al. 6). As a note, Youngjong Aeropolis and Cheongna Leisure City will be developed in a similar way as SIBD. Problems Caused by the IFEZ Construction: Despite IFEZ’s innovative sustainable development plan that is being recognized worldwide, its indiscreet focus on the construction of artificial eco-friendly infrastructures has resulted in tremendous environmental, social, economical, and cultural problems in the city of Incheon, threatening the eco-system and the lives of numerous pre-existing residents, especially those who are living near the Incheon bay area. Current Problem: Destruction of the Tidal-flats: The construction of IFEZ is the major cause of the rapid disappearance of Incheon’s preexisting natural environments, particularly, the tidal-flats. While, Incheon use to have 4 different tidal-flats-Ganghwa-do, Gimpo, Namdong, and Songdo-, as urbanization took place starting from the 1980s, except for a portion of the Songdo tidal-flats, all of them have been and are being reclaimed today (Y. Kim, “The Remaining”). As for the Songdo tidal-flats, approximately 4400 acres of it were reclaimed in 1994 to extend Songdo as the new ocean city. However, when Songdo was chosen to be part of IFEZ in 2002, the planned reclamation increased to 13,000 acres. This, in present, leaves only 2500 acres of tidal-flats, which is called Songdo Development District 11 (SDD11), along the bay of Incheon (Pertusa). The reclamation process of the Incheon tidal-flats for the construction of IFEZ is damaging Incheon’s land and ocean environments significantly as the entire region gradually loses its natural purification system. When the ocean currents get blocked and oceanic life cycle

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changes due to the continuous reclamation, various organic matters and toxic wastes from the nearby land cannot decompose by the microorganisms in the ocean and thus rot and accumulate resulting in severe ocean contamination at the Incheon sea port (“Songdo Development”). Moreover, the most important issue that is caused by the reclamation of the tidal-flats is the significant decline in internationally engendered shore and water birds. Since 2000, according to Ramar, 13 species of water birds are internationally concentrated in Songdo, and 1% or more of each population of these 10 species are concentrated in SDD11 since 2006 (“Large Scale”). For example, the Relict Gull, a globally vulnerable species, are already almost lost to the Incheon reclamation activities- while 143 of them were counted at the peak in February 2001, only 1 was counted at the peak in January 2009 (Cockburn). However, the reclamation process is not only harming the ocean eco-system. Most of the rock materials that are used for reclaiming tidal-flats are drawn from Mun Hak Mountain which is one of the few remaining natural green lands in Incheon; an imprudent extraction of such rock materials will eventually destroy the entire ecosystem of the mountain (“Songdo Development”). Furthermore, the reclamation of the tidal-flats is taking the means of living away from the residents, who are mostly fishermen, of the Incheon sea port vicinities. Thus, all the traditional fishing villages are disappearing. A vast portion of the SIBD today used to be a thriving fishing village as the national government promoted fish farming in the late 1950s. Due to its extensive scale and abundant salt and nutrition from the inflow of various rivers, Songdo tidal-flats were the ideal location for fish farming investments. During this time, the tidal flats were filled with seashells and in the peak period of the fish farming in the late 1970s, the total amount of production, including clams and oysters, was 7000 tons. However, as the reclamation process began in the 1980s, the Ministry of Land, Transport and Maritime Affairs (MLTM)

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banned the constructions of new fish farming facilities and denied the extensions of the existing farms’ fishery rights, thus resulting in the suspension of fishery businesses in the Songdo tidalflats (Pertusa). Today, as of 2004, the construction process of IFEZ has produced 1264 jobless people in the fishery industries in the Incheon bay areas. To soothe the situation, the Incheon Free Economic Zone Authority (IFEZA) decided to give priority to these unemployed people in the purchase of the portion of Songdo’s reclaimed land as an economic relief. However, such policy has produced even greater problems. First, most of the unemployed residents are old people, age range from 60 to 70, who do not have the purchasing ability. Even those who do have the economic resources, are not in the need of or interested in buying lands, they simply want to live in their old homes and continue fishing in the tidal-flats: there are many cases where the fisherman buys the land and dies after few years of purchasing it without having had any chance to use or make profit from the land. Secondly, there are increasing conflicts within the unemployed people’s families regarding the purchased land inheritance rights. Thirdly, as majority of the unemployed residents, about 80% of them, give up their priority purchasing rights to private investors, there are growing problems of speculative investment in real estate. Thus, the policy that was made to help the poor has become an advantage to the wealthy (“The New”). Despite the various problems caused by the reclamation of the tidal-flats, in July 2008, the IFEZA announced their plan to reclaim the rest of Songdo tidal-flats, the SDD11 (Figure 3). Although the Advanced Environmental Examination Council proposed to the IFEZA based on the General Environmental Policy to further review the decision, the IFEZA completely ignored the proposal and decided to reclaim SDD11 by simply stating, ‘because IFEZ needs more land to

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build facilities that can accommodate the increasing number of foreign investors, reclamation of SDD11 is necessary” (“The Last”).

Figure 3 Source: “The Controversy of an Additional Reclamation of Songdo Development District 11.” dongA.com, 25 Nov. 2008. Web. 20 Nov. 2009.

Opposing the Reclamation of SDD11: As many lives, majority of the Songdo bay area residents and the remaining eco-system, are dependent on SDD11, various environmental and non-profit organizations (NGO) have been putting pressure on IFEZA and the Incheon city government to decline the reclamation decision. Moreover, what enrage the protesters even more are the national government’s paradoxical actions: while it has approved the reclamation proposal of SDD11 in July 2008, it also made agreements with several international organizations to preserve the Songdo tidal-flats. For example, the national government’s statement that no more large-scale reclamation projects would be permitted within the Republic of Korea (ROK) was submitted to the Ramsar Convention Secretariat and to the Tenth Ramsar Conference in October 2008 (“Large Scale”). In

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addition to such international proposal, domestically, MLTM has developed the National Wetlands Management Plan in 2007 which includes the goal of preventing national net loss of wetlands in ROK. However, paradoxically, MLTM was the leading decision maker in the reclamation proposal of SDD11 in 2008 (“Large Scale”). Due to such unreliable actions of the national government, various environmental groups and NGOs worldwide started to criticize, through the mass media and internet, the ineffectiveness of the ROK government’s environmental policies. Also quite a number of environmental groups conducted SDD11 reclamation protest march along the Incheon bay area. As the national government felt the increasing pressure from the public media, the MLTM proposed, in March 2009, that while 1770 acres of SDD11 will be reclaimed starting in June 2010, 740 acres of it will be preserved as a habitat for shore and water birds (“Large Scale”). Current Opposition Movements and the Next Step: Although the national government announced the preservation of the portion of SDD11, majority of the Songdo bay area residents and the environmentalists worldwide want the entire SDD11 to be preserved. Thus, instead of protesting in small groups, various organizations with similar interests are coming together as a big group to impose even more pressure on the national government to cancel the reclamation of SDD11. For example, as the Incheon city government, again paradoxically, opened International Symposium on Migratory Birds (ISMB), in September 2009, to make a memorandum of understanding to become a permanent member of the Partnership for the East Asian Australasian Flyway (EAAF) (“Home of”), 7 different environmental groups got together and protested in front of the building where the symposium was taking place (Kee). As for the residents who are economically dependent on SDD11, collaborating with the

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environmental groups, they are also protesting against the reclamation by opening press conferences. Most of the members are fishermen of Oedo and Soraepogu which are districts adjacent to SDD11. The general arguments of these fishermen are, 1) If SDD11 is reclaimed, the sea route that leads into Soraepogu will become too narrow for even small fishing boats to go through. If that happens, Sorepogu, which is one of the well known Incheon fishing villages, might disappear along with its long history. 2) Including many bare hand fishermen in Oedo and those in its vicinities will lose their jobs as SDD11 is their only economic resource (“Leave the”). Despite such efforts, current anti SDD11 reclamation protests and proposals barely get recognized by the government. This is because many of the protesters are designated minorities with no economic or political power. In order to make the anti-reclamation movement effective, the environmental and the bay area resident groups need to collaborate even more. Also, to bring in people of different ages from various parts of the country to support the campaign, the protesting groups should provide educational programs to spread the awareness of the importance of preserving the tidal-flats. Other Prospective Problems Caused by the Construction of IFEZ: Many other problems arise from the construction of IFEZ as the entire zone is developed towards the favor of the wealthy and the foreign investors. According to Korea IT Times, in 2005, Hwan Kyun Lee, who is the CEO of IFEZA, criticized the ROK’s administrative inconveniences for the inducement of foreign investors. He emphasized the necessity of loosening the complicated administration regulations and the imperfection of the one stop service system (“Incheon Free”). As the IFEZ development stakeholders’ main concern became the inducement of foreign investments, the entire IFEZ operation and construction plans were designed to provide the ideal setting for the foreign companies. With such development approach, when

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IFEZ is completed in 2020, it is expected to have various negative impacts on the lives of the Incheon residents by increasing the economic disparity significantly within the city of Incheon. Some of the prospective problems are, Labor: In order to provide flexibility to the companies in IFEZ in controlling their employees, the national government has neglected even the basic labor standards. First of all, along with the complete restriction in labor union formation, a leaves of absence per month, payments for the weekly holiday and menstruation holiday, Enforcement Decree of the Act on Employment Promotion and Vocational Rehabilitation for Disabled Persons, and Aged Employment Promotion Act were all abolished in IFEZ (“The Free”). Moreover, by allowing the expansion of Temporary Employment Act, IFEZ will be filled with low paid temporary laborers from all over the nation as well as the world. Education: Deterioration of public school systems and people’s heavy reliance on private tutoring and academic institutions has been one of the major social problems in ROK for several years. Such condition not only puts financial burden on household expenditures but also results in severe socioeconomic inequality as the wealthy children are more likely to attend prestigious schools (Chung 3). Thus, the construction of international schools in IFEZ will worsen the situation by urging competitions among Koreans to send their kids to these schools. Moreover, as only 30% of the admission quota (out of the total accommodation of 2100 pupils) can be Koreans (Kang), and the tuition being $20,500 per year (Y. Kim, “Songdo International”), highest among the international schools in other Asian countries, it is presumed that only the children of the wealthy can attend the schools in IFEZ. Therefore, the Incheon working class residents are protesting against the opening of these schools due to the fear that the city of Incheon will become the place for only the wealthy which will leave current low income

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residents nowhere to go. Medical Facilities: By allowing foreign private hospitals to operate in IFEZ, the IFEZA claims that the national medical workforce employment will noticeably increase, estimating employment of 16.3 people per $100 million profit gained from the medical industry in IFEZ (“The New”). However, as IFEZ allows the foreign medical facilities to be privately owned, thus allowing foreign remittances, it cannot be guaranteed that these institutions will benefit the ROK economy greatly (“The Problems”). Moreover, by being in the “free economic zone,” as the foreign hospitals can import cheap medical treatment resources from other countries, it will not contribute in increasing the consumption of ROK’s medical resources Also, the possibility of drug trafficking will increase as the medicines that are banned in Korea can be imported by these private institutions (“The New”). Lastly, as the hospitals in IFEZ will not be obligated under the national health insurance system, the employment salary and the cost of medical treatment are privately determined. This will result in the abolition of the Medical Facility Compulsory System and give rise to the private medical insurances; Thus, resulting in medical service inequality within the city of Incheon (“The Problems”). Speculative Investment in Real Estate: As it was briefly mentioned in the explanation about the priority purchasing rights for the unemployed fishermen, the speculative real estate investment is becoming a serious problem in IFEZ as it increases the land price continuously. While such phenomena can improve the living qualities of the Incheon city, it is the main cause of the gradual flight of the pre-existing residents, whom again are mostly low-income class, to the nearby vicinities where the land is cheaper (“Songdo Development”). Conclusion: Despite the obvious problems caused by the construction of IFEZ, the public media

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worldwide has been praising how sustainable and eco-friendly the development of IFEZ is by referring only to the currently built artificial eco-friendly infrastructures. According to the article, “New Songdo City-The Making of a New Green City,” a sustainable city should: Ideally achieve an environmental, social and economic equilibrium. Societal indicators like inclusion (lack of discrimination), cultural amenities, universal access, architectural beauty, user comfort, and health and safety need to be considered along with economic indicators like diverse employment and skills base, and environment indicators like land utilization, air quality and pollution, construction materials, and energy and water usage. (Whitman et al. 2) Applying such definition, IFEZ is nowhere close to being sustainable. To achieve true sustainability, the national government and the IFEZA should retrieve from its current development plan aimed towards only satisfying the wealthy and the foreign investors. Rather, development should continue with a revised plan that has the least negative impact on the lives of the pre-existing residents and the eco-system of Incheon. In order to alter the government decision, the role of the current protestors, mainly consisted of environmentalists and the Incheon bay area residents, is crucial in informing the needs of the plan change throughout the nation. Also, if the national IFEZ protesting group can receive supports from internationally active NGOs, human rights groups, labor union groups, environmental groups, and so on, the ROK government will be more pressured to review the development plan. While the establishment of IFEZ is important for ROK to become an influential member in the global economy, the stakeholders should not sacrifice the eco-system and the social and cultural characteristics of Incheon that our ancestors have preserved for a long time.

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