[Series] Jeonnam and Gwangju to Merge into One... Massive Shift of High-Tech Industries Backed by 5 Trillion Won a Year

Accelerating fiscal incentives and second-phase relocation of public institutions
Full-fledged drive to build a three-axis semiconductor cluster
Granting Seoul-level status and a comprehensive tax relief package
Seen as a test bed for a leap forward as a hub of new industries

A view of the Yeosu National Industrial Complex, considered one of Jeonnam's key industrial development areas. Provided by Jeonnam Province.

With the special bill to establish the Integrated Special City of Jeonnam and Gwangju entering the final stage of the legislative process in the National Assembly, the launch of the integrated special city is now coming into view. This administrative integration, which will merge Jeollanam-do and Gwangju Metropolitan City into a single entity, is being evaluated not merely as a redrawing of boundaries but as a national balanced growth project that will reshape the industrial landscape.

From its early days, the Lee Jaemyung administration has presented the "5 Poles and 3 Special Zones" national balanced growth strategy and a "grand shift toward region-led growth" as core state agendas.

The main incentives for administrative integration include: fiscal support of up to 5 trillion won per year (up to 20 trillion won over four years); granting a status comparable to that of Seoul; priority relocation of public institutions; and an industrial activation package including subsidies and tax cuts.

This is analyzed as a measure that will rapidly elevate the fiscal and institutional foundations of the integrated local government.

The administrative integration of Jeonnam and Gwangju started later than those of Daejeon and South Chungcheong, and Daegu and North Gyeongsang, but is now the most advanced in terms of progress toward actual integration. On December 28 last year, Governor Kim Young-rok declared administrative integration through his 2026 New Year’s address, and over roughly 50 days the province carried out all integration procedures without omission, including preparing the special bill, hearing the views of the provincial council, and collecting opinions from residents of the city and province.

There have been more than 50 rounds of formal opinion-gathering, including public hearings and meetings. Despite the short timeframe, it is said that the process was made possible by strong support from the central government and overwhelming backing from local residents.

Jeonnam Province plans to use this not just as a simple merger of the Jeonnam and Gwangju administrative districts, but as an opportunity to leap forward as the hub of advanced industries in the Republic of Korea.

Exterior view of Jeonnam Provincial Office

◆"Not just administration, but industrial restructuring"... Semiconductor three-axis is the key

The centerpiece of the future blueprint for the integrated special city is "industrial restructuring."

In particular, the creation of a three-axis semiconductor cluster is cited as the key card. The plan is to foster the Gwangju area as a talent and R&D hub with a technology ecosystem that covers everything from design to back-end processes; to develop the western area as an advanced production base supported by abundant power and water; and to nurture the eastern area as the center of a physical AI ecosystem and semiconductor fabs.

Jeonnam Province has set a target of attracting 150 trillion won of the 300 trillion won in major corporations’ regional investments, along with an additional 300 trillion won in new industries such as semiconductors, secondary batteries, robotics, and hydrogen.

The policy is to accelerate an "industrial grand transformation" by reallocating strategic industries by zone, including cultural industries, advanced mobility such as autonomous vehicles, renewable energy, the transition of shipbuilding to smart factories, aerospace, and higher value-added petrochemicals and steel.

◆Relocation of public institutions and youth jobs... Aiming for a demographic turnaround

The second-phase priority relocation of public institutions promised by the government is another factor that could amplify the impact of the integrated special city. Expectations are rising that, if this leads to an expansion of youth-preferred jobs and improvements in living conditions, it could become a turning point for population inflows.

There are also discussions underway on expanding existing welfare, education, culture, and youth support programs of the two jurisdictions to cover all residents of the integrated city and province after unification.

In addition, the plan is to design a structure in which all 27 cities, counties, and districts grow together, by creating a balanced development fund and providing separate fiscal incentives to support relatively underdeveloped areas. The guiding principle for policy design is "integration in which no region loses out."

Governor Kim Young-rok stated, "Through administrative integration, we will redirect the flow of Korea’s advanced industries toward Jeonnam and Gwangju, and create a land of opportunity where young people can pursue their dreams in their hometown," adding, "We will open a new era of great prosperity for the 4 million residents of the Jeonnam-Gwangju Integrated Special City."

If the special law passes the National Assembly within this month, it is highly likely that an integrated mayor will be elected in the June local elections and that the integrated special city will be officially launched on July 1. Should integration become a reality, projections suggest that Jeonnam and Gwangju will face a major turning point in which the entire framework of their industrial, fiscal, and demographic structures is fundamentally reshaped.

This content was produced with the assistance of AI translation services.