Free Trade Zones
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Free trade zones are locations designated to attract manufacturing and logistics companies in industrial complexes, airports, ports, distribution complexes, and cargo terminals and create synergic effects by connecting businesses. National and local tax reductions or exemptions are granted depending on the types and sizes of businesses. Tariffs on foreign goods and certain domestic goods imported into the free trade zones are reserved, and a zero-tax rate of value-added tax is applied.
Consequently, companies that intend to export products made with imported foreign raw materials do not have go through complicated refund processes. Long-term leases of land or buildings are available at affordable prices, offering favorable locations to foreign-invested companies that are engaged in manufacturing for the purposes of export, logistics including warehouses, distribution, cargo handling, and packaging, and wholesale for the purpose of export and import transactions. Free trade zones have been established in optimal locations, especially for large-scale foreign-invested companies that concurrently operate manufacturing and logistics businesses.
※ Free trade zones are planned to be integrated into free economic zones in accordance with the revision of the investment attraction support system (July 2018).
Requirements for Occupancy
- Manufacturing companies whose primary purpose is exporting (including Korean offshore companies in repatriation)
- Wholesale companies whose primary purposes are export and import transactions
- Knowledge-based service companies
- Foreign-invested companies engaged in manufacturing and knowledge-based services
- Logistics companies dealing in cargo handling, transport, storage, and exhibition
- Companies assisting occupying companies in finance, customs, and data processing, etc.
Incentives
Category | Eligible Business | Incentives |
---|---|---|
Tax Reductions or Exemptions |
|
100% of local taxes (acquisition tax, registration tax) for up to 15 years |
Tariff Benefits |
|
|
Zero-Tax Rate of Value-Added Tax |
|
|
Rental Fee Reductions or Exemptions |
|
※ Source : Korean Free Economic Zones Homepage (www.fez.go.kr)
Designation of Free Trade Zones
Free trade zones are classified into industrial complex-type, airport-type, and seaport-type zones. There are seven industrial complex-type zones located in Masan, Iksan, Gunsan, Daebul, and other areas, and six airport-type and seaport-type zones including those located in Incheon International Airport, the Port of Pohang, the Port of Pyeongtaek-Dangjin, and the Port of Gwangyang. Logistics complexes and cargo terminals are also eligible for designation.
Industrial Complex-Type Free Trade Zones (As of March 31, 2018)
Category | Masan | Gunsan | Daebul | East Coast | Yulchon | Ulsan | Gimje |
---|---|---|---|---|---|---|---|
Date of Designation | ’07.1.1. | ’00.10.6. | ’02.11.21. | ’05.12.12. | ’02.12.12. | ’08.12.8. | ’09.1.6. |
Area (1,000㎡) |
957 | 1,256 | 1,157 | 248 | 344 | 819 | 991 |
Number of Companies | 113 | 28 | 34 | 17 | 14 | 35 | 25 |
Occupancy Rate (%) | 98.1 | 89.9 | 96.5 | 58.7 | 62.7 | 96.2 | 46.3 |
Airport-TypeㆍSeaport-Type Free Trade Zones (As of March 31, 2018)
Category | Seaport-Type | Airport-Type | ||||
---|---|---|---|---|---|---|
Port of Busan | Port of Pohang | Port of Pyeongtaek-Dangjin | Port of Gwangyang | Port of Incheon | Incheon International Airport | |
Date of Designation | ‘02.1.1. | ’08.12.8. | ’09.3.30. | ‘02.1.1. | ‘03.1.1. |
‘05.4.6.(1stage) ‘07.12.31.(2stage) |
Area (1,000 m2) |
9,364 | 840 | 1,429 | 8,880 | 1,837 | 3,050 |
Number of Companies | 67 | 3 | 15 | 47 | 1 | 664 |
※ Source : Ministry of Trade, Industry, and Energy website
Free trade zones are special zones that guarantee more freedom in manufacturing, logistics, distribution, and trade. Foreign investors receive various benefits, such as tax exemptions, rental fee reductions, and supportive facilities, in accordance with related laws. Free trade zones act as tariff reserve areas, which means companies will find more advantages for import and export activities in these zones than in any other region.
Overview of Free Trade Zones
※ Source: Study on the Reinforcement of Special Economic Zones for Attracting Foreign Direct Investment, Korea Institute for Industrial Economics and Trade, 2013
Free Trade Zones in Korea


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Airport type
- Incheon International Airport(3,050)
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Port type
- Incheon Port (1,964)
- Pyeongtaek-Dangjin Port(1,429)
- Pohang Port (840)
- Busan Port (9,364)
- Gwangyang Port (8,880)
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Industrial complex type
- Gunsan (1,256)
- Gimje (991)
- Daebul (1,157)
- Yulchon (344)
- Donghae (248)
- Ulsan (819)
- Masan (957)

※ Source: Study on the Reinforcement of Special Economic Zones for Attracting Foreign Direct Investment, Korea Institute for Industrial Economics and Trade, 2013