Government Expands Local Government Authority to Modify Free Economic Zone Development Plans

In the future, local governments will be able to independently modify development plans for free economic zones without submitting agenda items for approval to the Free Economic Zone Committee.

The Ministry of Trade, Industry and Energy announced on May 19 that it will promulgate a revised enforcement decree of the "Special Act on the Designation and Operation of Free Economic Zones" on May 20, which includes these changes.

This revision is a follow-up measure to the "Expansion of Decentralization of Central Authority" policy in the "3rd Basic Plan for Free Economic Zones." The amendment was prepared through expert consultations, collection of local government opinions, and review procedures by the Free Economic Zone Committee. The revised decree will take effect immediately upon promulgation.

The main changes include allowing local governments to modify project costs without limitation, expanding the scope from the previous cap of 10%. The period for which local governments can independently change project timelines is also extended from the previous one year to two years. In addition, for unit districts within free economic zones that are wholly or partially designated as tourism complexes, the allowable range for local governments to independently alter the area is increased from 10% to 30%.

The regulations on changing permitted business types have also been significantly relaxed. Core strategic industries designated for free economic zones can now be independently added by local governments, in addition to the previously allowed business types within each unit district. Reflecting the regulatory innovation measures for industrial complexes announced by the Ministry in August 2023 as part of the "Abolition of Killer Regulations in Industrial Complexes," the list of permitted business types will now be reviewed every five years. Furthermore, a special business type district system will be introduced, and a new review system will be established for business types in emerging industries not included in the existing standard industrial classification table.

Lee Hyeonjo, Director of the Free Economic Zone Planning Division at the Ministry of Trade, Industry and Energy, stated, "With this revision of the enforcement decree, rapid development led by local governments has become possible. We expect that fostering high-tech industries, including core strategic industries within free economic zones, will become much easier and contribute to revitalizing these zones."