The government on Thursday drastically eased regulations on building and expanding factories in the Seoul metropolitan area and announced that land outside existing industrial zones would be opened up for such use. Also, the space available for factories not subject to caps will be expanded from at least 200 sq. m to at least 500 sq. m, and large buildings like superstores will be allowed to be constructed in green belts as long as they do not violate pollution regulations.

The Lee Myung-bak administration has pursued a policy of nurturing city-focused industrial zones by supporting regional government first, followed by measures to ease regulation in the Seoul area. But to stimulate corporate investments amid the global economic slowdown, the administration decided that the only option was deregulation. The Federation of Korean Industries said more than W22 trillion (US$1=W1,251) in corporate investment would be made if construction regulations are eased in the metropolitan area.

In times when it has become easy to open factories overseas, there is no guarantee that businesses that have lost factory space in the Seoul area will move to other regions in the country. From 2003 to 2007, a total of 16,738 companies moved factories to another country, while only 141 companies moved them to other parts of the country. In the case of the LG Philips LCD plant, Korea could have seen that factory relocate to Taiwan if the government had not revised regulations and allowed it to settle in Paju.

Provincial governments are saying they will hold protests, saying they have lost their chances of luring businesses to their areas. They say eased factory construction regulations in the Seoul area will make their own economies, already set to drop due to the government’s drastic decrease in the comprehensive real estate tax, lose more. The conflict between Seoul and provincial governments is undesirable from the perspective of national unity. The government needs to distribute a significant portion of the profits from factory development in the Seoul area to the provinces.

Shipbuilding, steel and other industries that need vast areas of land cannot move to the Seoul area even if regulations are eased. To achieve happy coexistence, high-tech factories that do not need large spaces should be built in the Seoul area, while provincial governments should attract industries that fit their regional characteristics.

Some 49 percent of Korea’s population is concentrated on the capital area, which accounts for only 11.8 percent of the country’s total land. Traffic jams and pollution cost taxpayers more than W15 trillion. Comfortable living conditions will also boost the competitiveness of Korea. So while corporate investment in the capital area should be reinvigorated, we must prevent a radical increase in the population of the area.