[Abandoned Industrial Complex]②Regulations Lifted, Boom in Developments... Ultimately Unsold Units and Aging Facilities

Government Eases Industrial Complex Regulations from 2008
Built 2.24 Times More Than National Demand
Local Industrial Complex Unsold Units Up 268% in 7 Years

Currently 24.49 Million㎡ Unsold Industrial Complex Area
Government Plans to Build Another 40.76 Million㎡ Industrial Complex

The fundamental cause of millions of square meters of land designated as domestic industrial complexes being left idle can be found in oversupply. Industrial complexes have been supplied for decades far beyond the level nationally required. Once regulations on industrial complexes were lifted, local government heads rushed to develop industrial complexes, claiming they would revive the local economy. The complacent belief that simply creating industrial complexes would attract companies and spur economic growth, combined with shortsighted policies focused only on removing visible regulations without long-term policy planning, is pointed out as the reason behind the current problems of unsold lots and aging facilities.

The construction of the SK Ulsan CLX factory is underway at the Ulsan Industrial Center (currently Mipo National Industrial Complex) in 1963. Photo by Yonhap News

According to the government on the 11th, industrial complexes have driven the Korean economy since the groundbreaking of the Ulsan Industrial Center (now Mipo National Industrial Complex) in 1962. They received full support from the Park Chung-hee administration, which aimed to transform Korea’s economic structure from agriculture to industry. The enactment of the "Export Industrial Complex Development Act" in 1964 gave momentum to industrial complex policies. Industrial complexes were established nationwide, starting with the Guro Industrial Complex. From the 1970s, the private sector also began developing industrial complexes. One example is the Yeongdeungpo Machinery Industrial Complex (now Seoul Onsu Industrial Complex), led by the Yeongdeungpo Industrialists Association in 1970. Subsequently, industrial complexes were built in rural and fishing villages for balanced national development, and in the 2000s, the creation of high-tech industrial complexes was also actively pursued.

With deregulation beginning in 2008, the number of industrial complexes started to explode. That year, then-President Lee Myung-bak declared a major deregulation of industrial complexes upon taking office. In January of the same year, while still president-elect, he said, “It took several months to move a utility pole at the Yeongam Daebul Industrial Complex,” implying that although the pole was unnecessary, regulations made its removal difficult. The transition committee also announced it would immediately pursue tasks to reform industrial complex regulations. On March 13 of the same year, he personally chaired the first meeting of the National Competitiveness Enhancement Committee and ordered the deregulation of industrial complexes.

In line with this, Yoon Doo-hwan, a member of the Grand National Party, proposed the "Special Act on Simplification of Industrial Complex Permits and Approvals (Industrial Complex Simplification Act)" to supply land necessary for corporate production activities in a timely manner. After the bill passed the National Assembly, the procedures for permits, development plan approvals, and environmental impact assessments required for industrial complexes were drastically reduced. The approval period for industrial complex plans, which used to take 2 to 4 years, was mandated to be decided within six months. The authority to designate local industrial complexes under 300,000㎡, previously held by metropolitan government heads, was transferred to local government heads.

As regulations were lifted, industrial complexes rapidly increased. According to the Korea Industrial Complex Corporation, from 2002, when statistics began, to 2008, when the Industrial Complex Simplification Act was passed, the number of industrial complexes increased from 492 to 688, an increase of 196 (39.84%). However, in the seven years following the act, the number of industrial complexes increased by 359 (72.97%), nearly doubling. In particular, general industrial complexes, which local government heads could designate freely, surged. From 2008 to 2014, national industrial complexes increased by 6 (18.18%) from 35 to 41, while general industrial complexes increased by 261 (166.24%) from 277 to 538.

Deregulation Causes Unsold Local Industrial Complex Lots to Surge 268%

As the number of industrial complexes increased, companies were expected to move in accordingly, but in reality, unsold lots surged. In 2008, the unsold industrial complex land was 12,322,000㎡. Compared to 2002, when it was 17,365,000㎡, this was a 29.04% decrease. Both national industrial complexes (-42.24%) and general industrial complexes (-10.54%) decreased. However, seven years after the Industrial Complex Simplification Act, unsold land increased by 86.3% to 27,324,000㎡. The increase was led by general industrial complexes. Unsold lots in national industrial complexes increased by about 32.3%, while those in general industrial complexes rose by 268.48%.

Empty signboard for tenant companies. The signboard indicating the location of companies within the Ungcheon Industrial Complex contains no information. Currently, 57% of the land in the Ungcheon Industrial Complex is unsold. Photo by Joo Sangdon don@asiae.co.kr

The Boryeong Ungcheon Industrial Complex, launched in 2022, is a representative example. Boryeong City began developing the 680,000㎡ Ungcheon Industrial Complex in 2010, despite the entire 1,210,000㎡ Yeongbo Industrial Complex in the area remaining unsold. Concerns were raised in the city council as well. In 2009, Boryeong City Council member Kim Jong-hak criticized, “They are painting rosy pictures by planning a second agricultural industrial complex, a clean agricultural industrial complex, and even a southern industrial complex,” and questioned, “Is it okay to just keep expanding like this?” Ungcheon Industrial Complex still has 57% of its lots unsold.

Uljin County faced similar problems. In 2008, Uljin County began developing the Pyeonghae Agricultural Industrial Complex. In that year’s major county administration report, criticisms poured in such as, “Are you thinking this through?” “Why build a project in Pyeonghae when projects don’t do well even in Uljin?” and “There are hardly any successful cases, so if you want to build a complex there, you need a plan to attract companies.” Nevertheless, Uljin County pushed ahead with the development citing accessibility. Although sales began in 2012, 34% of the lots remain unsold even after 12 years. Later, the Jukbyeon Marine Bio Agricultural Industrial Complex was also built, but 83% of its 149,000㎡ remains unsold and abandoned.

Warnings about such oversupply were voiced even at the time. According to analysis data obtained by Asia Economy from the National Assembly Budget Office 14 years ago, the government predicted that about 120㎢ of industrial complex land would be needed from 2010 to 2012. However, the actual supply was 268.8㎢. This means that 2.24 times more industrial complexes were developed than the government required. This was due to local governments competing to build industrial complexes. Researchers pointed out that since oversupply was a concern, “measures to prevent (indiscriminate industrial complex development) are necessary.”

The government still maintains a stance of “building more industrial complexes.” In March last year, President Yoon Suk-yeol held an emergency economic and livelihood meeting and announced 15 national high-tech industrial complex candidate sites nationwide, totaling 40.76 million㎡. This is the largest scale among industrial complexes designated by previous administrations and far exceeds the current unsold industrial complex land of 24.49 million㎡. There are concerns that the creation of large-scale, high-tech industrial complexes will worsen the unsold lot problem in local industrial complexes. Jang Eun-gyo, a research fellow at the Korea Research Institute for Human Settlements, said, “Although systems for supply-demand management have been established since the oversupply in the 2000s, there are still differences by city and province,” and added, “Continuous monitoring is necessary.”

Editor's NoteThere is abandoned land in Korea. It covers 24.49 million㎡, which is 5.44 times the size of Yeouido. Nothing is done on this land. It is simply left idle. This is the story of 'industrial complexes.' Industrial complexes have been the driving force behind Korea’s rapid economic growth since the development of the Ulsan Industrial Complex in the 1960s. However, due to their haphazard proliferation, they now suffer from chronic unsold lots. While focusing only on building new industrial complexes, existing ones face serious aging problems. Asia Economy examines the current status of domestic industrial complexes and explores directions for their development through overseas cases in the 'Abandoned Land, Industrial Complex' series.

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