[Abandoned Industrial Complex] ① Four-lane Road 'Empty'... Land 5.5 Times Yeouido Has No Owner

No Owner for 24.99 Million㎡ of Industrial Complexes
97 Empty Complexes... Not a Single Land Sale

New Construction Race Leaves Existing Complexes Neglected
37% of Complexes Are 'Old Complexes' Over 20 Years Old

Editor's NoteThere is abandoned land in Korea. Its area alone is 24.49 million square meters, which is 5.44 times the size of Yeouido. Nothing is done on this land. It is simply left unattended. This is the story of 'industrial complexes.' Industrial complexes have been the main drivers of Korea's rapid economic growth since the development of the Ulsan Industrial Complex in the 1960s. However, due to their haphazard establishment, they are now suffering from chronic unsold lots. While focusing solely on building new industrial complexes, existing ones are facing serious aging problems. Asia Economy explores the current status of domestic industrial complexes and seeks directions for the development of Korean industrial complexes through overseas cases in the 'Abandoned Industrial Complexes' series.

On the afternoon of the 31st of last month, I visited Ungcheon General Industrial Complex in Boryeong, Chungnam. Only wild shrubs are growing thickly on the site where no tenant companies have been found. Photo by Joo Sang-don don@asiae.co.kr

On the 31st of last month, I exited the Muchangpo tollgate in Boryeong, Chungnam, and arrived at the Ungcheon General Industrial Complex in about one minute by car. There was only a large sign indicating it was an industrial complex, but the sidewalks and the four-lane road leading in and out were completely empty. The yellow, old container that was used as the sales office for the industrial complex was also closed without any staff inside.

The situation inside the industrial complex was similar. The sidewalks were overgrown with weeds between the paving blocks due to lack of foot traffic, and all the signboards indicating the locations of tenant companies were left blank. The roads in the industrial complex were empty, and there was more abandoned vacant land than factories. On the lots where tenant companies could not be found, only weeds and shrubs taller than a person were growing.

Mr. Jang (75), a private taxi driver met near the industrial complex, said, "I often pass by the industrial complex while farming nearby as a pastime, and it is always quiet except for a few cars during commuting hours on weekdays and holidays. It has been like this for years, and now it seems only a few factories have moved in. I don't know if this can really be called an industrial complex."

Although 600 employees were expected, only 92 are employed... More than half of the lots remain unsold

Ungcheon Industrial Complex is an industrial complex with an area of 685,400 square meters, developed with a project cost of 65 billion KRW from 2015 to the end of 2019. The project was implemented by Boryeong City and Chungnam Development Corporation. At the time, Boryeong City stated, "It will serve as a catalyst for job creation and regional economic revitalization in the southwestern region," expecting an employment inducement effect of about 600 people, a production inducement effect of 90.9 billion KRW, and a value-added inducement effect close to 28.5 billion KRW once the complex was established.

Although it was completed in April 2021, initial sales performance was poor. Only 87,679 square meters, or 17.5% of the 499,649 square meters available for sale, were sold. By the end of the second quarter of this year, only 207,000 square meters, or 43% of the sales area, had been sold. Among the 16 companies that signed sales contracts, only six are operating. The number of employees is 92, which is only 15% of Boryeong City's original estimate.

A Boryeong City official said, "Since COVID-19, interest rates have risen sharply, and the prices of construction materials needed to build factories have increased, causing companies to hesitate to invest. We expect the sales situation to improve once interest rates stabilize."

A tenant company in Ungcheon Industrial Complex said that Boryeong City's changing promises also affected the poor sales. Jang Kyung-seok, CEO of Paranhae, a dried seafood company, said, "Initially, it was said that small and medium enterprises relocating from the metropolitan area to Ungcheon Industrial Complex would receive 30% support for land purchase costs and 14% for facility investment costs, but later the terms were changed." He claimed, "Rumors spread that Boryeong City arbitrarily changed the support conditions, causing companies that intended to move in to withdraw."

Paranhae, which was located at the Garak-dong Export Center in Seoul, learned about Ungcheon Industrial Complex while considering factory relocation for business expansion, and a Boryeong City employee personally visited their office to explain the relocation benefits. CEO Jang said, "At the time, I asked to have the support conditions specified in the contract, but they refused, so I relied on several verbal promises, which turned out to be a mistake." He explained, "After building more than 70% of the factory, they changed the support conditions from the total area to the building coverage ratio, i.e., based on the building area." Because of this, Paranhae received subsidies based on the 4,600 square meters of the factory building, not the entire 9,000 square meter site. CEO Jang said, "I expected to receive 1.78 billion KRW in subsidies at the time of contract, but it was actually reduced to about 800 million KRW," and added, "We are currently suing the city."

Regarding this, Boryeong City declined to comment, stating, "Since the lawsuit is ongoing, it is inappropriate to comment on this matter."

97 industrial complexes have zero sales performance, yet construction continues despite unsold lots

The situation at the Jukbyeon Marine Bio Industrial Complex in Uljin, Gyeongbuk, is even more severe. Uljin County started developing the industrial complex in the early 2000s to build marine bioindustry infrastructure. Although local councils expressed concerns such as "there are no successful cases" and "there is no business plan," the industrial complex covering 83,000 square meters was launched in August 2016. What are the results now? As of the second quarter of this year, the unsold rate of the industrial complex is 70%. There are only six tenant companies, and only five are actually operating. The number of workers is 40, so the employment creation effect is minimal. Despite offering various tax reduction benefits and allowing industries unrelated to marine bio to move in, the unsold lot problem remains unresolved.

According to the Korea Industrial Complex Corporation on the 11th, as of the second quarter of this year, there are 1,315 industrial complexes nationwide, with a designated area of 1.45482 billion square meters. Of the 619.22 million square meters available for sale, about 24.49 million square meters, or approximately 4%, remain unsold. This means industrial complexes equivalent to 5.44 times the size of Yeouido (4.5 million square meters) are being left unattended. The area of unsold industrial complexes, which hit a record low of 20.82 million square meters in the third quarter of last year, increased by 3.67 million square meters to 24.99 million square meters in the second quarter of this year, just nine months later. During the same period, 26 new industrial complexes were developed. This means new industrial complexes were continuously built while leaving unsold lots as they were. Nationwide, 97 industrial complexes under development or completed have not sold a single plot of land.

On the 31st of last month, Daejeon Industrial Complex. The entire complex is dark due to the absence of streetlights. Photo by Joo Sang-don don@asiae.co.kr

While focusing only on building new industrial complexes, existing ones are aging. As of June this year, there are 487 aged industrial complexes nationwide that have passed 20 years since their groundbreaking. These account for 37% of all 1,315 industrial complexes. At the end of last month, I visited the representative aged industrial complex, Daejeon Industrial Complex. Around 6 p.m., the evening rush hour, Daejeon Industrial Complex was almost completely dark due to the lack of streetlights. The roads were occupied by parked trucks and passenger cars. A few people were precariously passing between the trucks blocking the already dark road. Mr. Kim (68), who works as a truck driver in the industrial complex, said, "Until dawn, trucks occupy the roads, then passenger cars of employees who have come to work take over, and abandoned trucks of closed companies are left scattered around. I have worked here for 33 years, and this situation is the same as in the past."

The issues of unsold lots and aging in industrial complexes are not new. A report titled 'Status and Policy Tasks of Industrial Complexes' published by the Korea Industrial Complex Corporation 19 years ago in 2005 pointed out, "Many problems have occurred due to regional supply-demand imbalances, aging infrastructure, and environmental deterioration caused by indiscriminate development, failing to adequately respond to changes in the domestic and international industrial environment." However, these problems are still recurring as of 2024.

This series was supported by the Press Promotion Fund, funded by government advertising fees.