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The plan was approved by 21 related ministries during a meeting of economic ministers on July 24, the Ministry of Finance and Economy said.
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Yeongjong Island will be developed as an air logistics center for Northeast Asia, Songdo New Town as an information technology and high-tech center, the Gimpo reclaimed land site as a regional financial hub, and Busan and Gwangyang ports as mega hub ports.
To create a favorable business environment within the SEZs, the government will offer various tax incentives, one-stop administrative services, and improved housing, education and medical services to foreign investors.
Notably, foreign manufacturing companies investing $50 million or more to set up an operation in the envisioned special economic zones will pay no corporate or income taxes for seven years and receive a 50 percent reduction on these taxes for another three years.
The government will also raise the ceiling for tax exemption on company allowances provided to foreign officials assigned here to 40 percent of their fixed monthly salaries from the current 20 percent.
In each of the SEZs, the government will set up an ombudsman office to assist foreign companies and open a branch office under the Korean Commercial Arbitration Board to help settle business disputes between Koreans and foreigners.
To make living in the SEZs more comfortable for foreigners, the government will allow foreign hospitals and pharmacies to set up operations dedicated solely to foreigners. Foreign medical institutions will also be able to set up hospitals and pharmacies in a joint venture with Korean investors.
In addition, new telephone hotlines will be provided to address foreigners' questions and concerns.
In the SEZs, foreigners will be able to use English for all administrative paperwork and get help from interpreters and translators at government agencies.
They will also be able to use major international currencies such as U.S. dollars, Japanese yen and EU euros along with Korean won when paying for goods and services.
The government plans to revise laws to allow free, unlimited use of foreign currency in the special zones. Current regulations put a limit on the use of foreign currency in the country at $1,000 per transaction.
In addition, the government will build international high schools and encourage foreign graduate schools to open branches in the SEZs. It will also ease regulations on the establishment and management of foreign schools across the country.
Moreover, the government will improve its system of fingerprinting foreigners residing in Korea and encourage more English-language television and radio broadcasts.
To govern the envisioned SEZs, the government will set up a special administrative unit, chaired by the minister of finance and economy and a task force under the finance ministry.
Critics, however, say that the government needs a stronger agency under the direct control of the President to develop the SEZs as planned.
Former Prime Minister Nam Duck-woo says that it will not be easy to set up all the legal foundations required to implement the hub project.
"It is also necessary to establish a strong government agency because inter-ministerial coordination is important for smooth implementation."
"To solve such a problem, the political parties should launch a special parliamentary panel empowered to deal with the legal affairs related to the hub project," Nam said.
The government will finalize the action plan by the end of the year after putting it to a public debate, the finance ministry said.
"The finalized plan will come out by the end of this year, but its implementation is likely be handed over to the next administration," said Jeung Eun-bo, director of the policy coordination division at the finance ministry.