The government has apparently concluded that the Free Economic Zone project has failed and is reconsidering the whole project. The government designated six areas for redevelopment to attract foreigners and foreign investment, but it concluded that the project has been distorted into a new city development project and has been ineffective in attracting foreign investment.

There have been several attempts to make the project work, including controversial measures such as allowing foreigners or local private educational bodies to establish international schools there where Korean nationals can make up 30 percent of the student body. It also would have permitted foreign profit-making hospitals under a presidential decree. These plans were attacked by both political parties and civic groups.

The government formed a taskforce of officials from relevant ministries in June to evaluate the project. Their report, seen by the Chosun Ilbo on Thursday, states, "While a total amount of W65.93 trillion (US$1=W1,181), including government funds of W8.3 trillion, has been invested in the FEZ project, the six FEZs have only managed to attract US$8.5 billion of foreign investment, of which just US$1.89 billion is foreign direct investment. That is just 2.5 percent of the total FDI Korea attracts."

One of the main reasons it cites is red tape in establishing facilities like schools and hospitals. "Although the FEZs were planned as a test-bed for deregulation for foreigners, a considerable portion of land designated as industrial zones is being developed as high-rise residential or commercial buildings, serving as a means of profit-making for Koreans or local development."

To make the environment more attractive for foreigners, the government plans to relax current rules. It wants to make Incheon an international city specializing in logistics and distribution; Busan and Jinhae for port and logistics and distribution; Gwangyang for petrochemicals and steel; Hwanghae for advanced technology; Saemangeum and Gunsan for tourism and eco-friendly industries; and Daegu and North Gyeongsang Province for medical facilities.