[Territorial Policy in Korea (1)] A new direction in Korea`s territorial policy National territory means an area where a nation`s

sovereignty reaches, its people live and its citizens, government and businesses carry out diverse activities. We have a responsibility to effectively use and develop our territory, enhance its competitiveness and hand well-preserved land to our descendants. For this small and densely populated nation to compete with larger countries, an effective and systematic development of its territory is imperative. During the past half century, territorial policies have made a great contribution to the nation`s development and modernization. Modern infrastructure created through territorial development, such as industrial complexes, expressways, high-speed trains and information networks, has led its economic growth. New residential towns and clean water have boosted the citizens` quality of life. In the 21st century, global competition is ever intensifying and territorial policies will play a bigger role. Nations are striving to nurture green growth engines, such as eco-friendly industries and renewable energies. Territorial policies should build a spatial foundation for each region to attract and develop new industries while ensuring effectiveness and competitiveness. The nation also should explore strategies to maximize the geographic strength of the Korean Peninsula, located in a pivotal area that connects Eurasia and the Pacific. Legal framework of territorial policies Korea`s territorial policy is based on the Framework Act on National Territory. It stipulates basic guidelines on the planning, making and implementing of territorial policies, including the Comprehensive Development Plan series. Article 2 of the act says, "The state may impose, as prescribed by law, restrictions or obligations necessary for the efficient and balanced utilization, development, and preservation of the land of the nation that is the basis for the productive activities and daily lives of all citizens." The act also specifies three fundamental principles of territorial management: the balanced development of national territory (Article 3), the creation of conditions for competitive national territory (Article 4), and eco-friendly territorial management (Article 5). Implementation of territorial policies Territorial policies are implemented on three major levels. First, they are established and executed on a pan-governmental level. Territorial policies involve a wide variety of projects such as regional and urban development, industrial sites, transportation infrastructure, information networks, housing welfare and land management, sustainable development, inter-Korean exchanges and Northeast Asian cooperation. Therefore, it is better to execute the policies on a pan-governmental level involving all related ministries, rather than leaving them to a certain single ministry. Second, the role of local governments is becoming increasingly important. In the past, the authoritarian central government pushed plans in a one-sided, top-down manner. The opinions of the local governments were not reflected properly. With the nation democratized and decentralized, the central and local governments undertake equal roles and responsibilities in establishing and executing policies. In the future, territorial polices will be further decentralized, involving greater participation from citizens. Third, territorial plans are determined and executed through approval by the supreme decision-maker: the president. All previous presidents actively pushed territorial planning. From the 1960s, comprehensive territorial and economic development plans had been implemented under the powerful initiatives of the national leaders. History of the national policies 1) Early industrialization When Korea began to industrialize in the early 1960s, the territorial policy focused on economic growth and regional development. Investment was concentrated on water resources for farming infrastructure and social overhead capital for industries -- including industrial complexes, expressways, multipurpose dams, harbors, ports, land reclamation and water sources for industries and daily life. The capital zone and southeastern coastal cities with strong growth potentials were the focus of development. 2) Mature industrialization As industrialization accelerated in the 1970s, the first comprehensive national territorial plan (1972-1981) focused on developing a heavy chemical industrial base and consolidating infrastructure for water and energy supplies. The second comprehensive plan (1982-1991) emphasized the development of multiple core regions, i.e., small- and middle-scale industrial complexes in major provincial cities with strong growth potential. As the economy further progressed and matured in the 1990s, policies shifted to high-tech, knowledgebased industries. The third comprehensive plan (1992-2001) aimed at creating new industrial regions and forging high-tech industrial structures. The fourth plan (2000-2020) including a revised plan pushed for the nurturing of industrial capitals, special-purposed cities and innovative clusters. <**3> 3) Localization Major territorial policy goals in the 1980s were to address widening gaps among regions and population concentration in the capital. The government also tried to reduce land restrictions by introducing the concept of land as public property and develop the western coastal region as part of its North Korea policy. The second comprehensive national territorial plan had four objectives: inducing the population to provincial areas, searching out development potential nationwide, upgrading citizens` welfare standards and preserving the natural environment across the nation. In particular, various measures including the Capital Region Readjustment Planning Act were implemented to lessen the concentration of population and industry. Balanced territorial development was pushed most strongly by the Participatory Government (2003-2008). It tried to empower the

local government by relocating state administration and public organizations from the capital to the provinces and attracting businesses to the provinces. To this end, the government energetically constructed innovative and business-friendly cities. 4) Globalization In the 1990s, awareness grew that in order to join the ranks of advanced nations Korea had to respond eagerly to the global trend. In this period open-door policies were accelerated worldwide with the conclusion of the Uruguay Round and the collapse of socialist systems. Korea increased exchanges with formerly hostile nations such as Russia, China and Eastern European countries. However, it was not until the Asian financial crisis in the late 1990s that globalization began to affect territorial policies in earnest. Reflecting the challenges of worldwide economic liberalization and the importance of fast-growing Northeast Asia, the fourth comprehensive national territorial plan (2000-2020) aimed at establishing an open territory and set up an action plan to make the nation a hub of Northeast Asia. Lee Myung-bak administration`s territorial policy: mega economic zone and global territorial strategies 1) Mega- and supra-regional economic zones The current administration is pushing a three-dimensional development strategy -- basic residential zones, megaregional economic zones, and supra-regional economic zones. Mega- and supra-regional economic zones stretch beyond the boundaries of administrative districts and aim at improving national competitiveness to meet the challenges of globalization. Economies of scale in industries, R&D and infrastructures will upgrade regions` growth potential. Under the initiatives, 16 cities will be reorganized into 5+2 mega-regional economic zones. Eastern, western and southern coastal areas and the inter-Korean border area will be developed into supraregional economic zones. Leading industries and manpower will be nurtured. Infrastructural networks will connect mega- and supra-regional economic zones. Regional and trans-boundary cooperation will be reinforced and regional resources will be jointly developed. This strategy is intended to upgrade territorial competitiveness required in the era of free trade agreements. 2) Creation of a green territory Green growth is a new paradigm in the territorial policy. The strategy is to tackle global warming, the energy crisis and the economic crisis. By proactively nurturing environmentally-friendly industries and a green territory, Korea seeks to create a positive cycle between preservation and development of the environment. Green territory policies include recycling resources, developing eco-friendly buildings, residencies, cities and traffic and logistics networks, restoring four major rivers, preserving forests and promoting eco-tourism. In addition, by engaging actively in global discussions on climate and exhibiting leadership based on its experiences with green territorial policies, Korea will be able to join the ranks of advanced green nations. 3) Housing and deregulation of land management The basic direction of housing welfare policy can be summarized as a supply-based housing market system, housing standard improvement and the establishment of a housing safety net. Supply-based housing refers to the provision of various types of houses that cater to the needs of changing trend such as a one-person household or a household of the elderly. Housing standard improvement refers to addressing quantity issues such as increasing the amount of housing and the size of the residential space, etc., and such quality issues as providing new housing and refurbishing old housing. The safety net refers to providing cheap houses and financial support to low-income citizens. The new paradigm in the territorial policy seeks to reform land regulations that hinder national competitiveness. Areas are realigned to strike a balance between development and preservation, and regions are integrated or split depending on their utility. Policies on land use are becoming more flexible to accommodate green growth. 4) Construction of hi-tech transportation networks A low-carbon, energy-saving green transportation network is emerging as the new infrastructure policy in the era of a green economy. This includes more procurement of new modes of low-carbon transportation, construction of smart roads by incorporating information technology, and more use of trains and bicycles. In addition, the government tries to build a cheap and highly efficient transport system by adopting intermodalism, which means the integration of land, sea and air transportation means operated separately in the past. Also, to sustain economic growth and increase accessibility to the national territory, more traditional transport infrastructure should be built. In line with the mega-regional territorial development, new types of highways and railroads are under consideration. The government plans to construct a new Korea Train Express (KTX) line from Seoul to Mokpo on the southwestern tip of the nation. At the same time, it plans to build a new futuristic city in Saemangeum, a vast stretch of reclaimed land on the southwestern coast. The hinterlands of Busan and Gwangyang are being developed as hub pots that will generate high values, while more regional ports are being established as part of mega territorial developments. 5) Ubiquitous territorial information system Until now, the central government has spearheaded the drive to build infrastructure such as a high-speed information network and various accumulated spatial information. However, hereafter, the focus will be on building user-centered (local government, citizens, corporations) information networks based on territorial information compiled for years. The government will continue to upgrade ubiquitous territorial information to ensure more scientific establishment, execution, and monitoring of policies on urban and regional development, traffic, disaster and real estate. 6) Global territorial strategies of the Korean Peninsula The primary goal of the territorial policy for the peninsula is to establish a foundation for the peaceful reunification of

the two Koreas. The administration of President Lee Myung-bak is pursuing step-by-step cooperation and exchanges based on mutual trust, i.e., a practical collaboration that would mutually benefit both Koreas. Also, the administration is trying to reinforce cooperation in industry, tourism, farming and fisheries, environment and transportation by designating the border region as a peace zone and thereby reduce military tension and transform the border area into one for mutual cooperation and coexistence. The current territorial policy also takes Northeast Asia and the world into account. The policies include building an international traffic network to solidify Korea`s role as a gateway for global traffic and exchanges and strengthening transboundary ties with neighboring countries such as China and Japan in industries, logistics, tourism, environment and etc. Also, Korea seeks to transfer its experience and know-how to developing nations. Aims of this series In this series, The Korea Herald and KHRIS will look into the past, present and future of Korea`s territorial polices. This will introduce readers at home and abroad to Korea`s territorial policies which have been key to its astonishing economic growth. This is also an opportunity to share Korea`s territorial policies with other nations. Foreign policymakers will be able to derive implications from the series that will cover diverse themes related to territorial policies. In addition, feedback and opinions from readers will help upgrade territorial policies of Korea and other nations. [Territorial Policy in Korea (2)] Road to culture-oriented territorial policy In the era of industrialization, urban competitiveness largely depended on economic activities. But in this knowledge-based society, environmental friendliness and historical and cultural characteristics have emerged as the most important factors in determining a city`s competitiveness. Nations around the world are competitively pushing projects to conserve their historical and cultural resources as part of efforts to solidify national identity. Such projects are becoming increasingly important since they proved to both strengthen national pride and boost tourism through the national heritage. Territorial development devoid of cultural focus However, Korea`s regional development plans failed to place sufficient emphasis on historical and cultural resources. Such aspects remained on the sidelines in territorial policies which focused on economic development and industrialization. A rare exception was the Gyeongju Comprehensive Tourism Development Plan which began in 1971 to excavate cultural assets and create the lakeside resort of Bomun in the ancient city in the southeastern part of the nation. All major national development plans - from the Five-Year Economic Development Plan from the 1960s to the 1980s, to the Comprehensive National Territorial Development Plan since the 1970s, and to the Five-Year Economic and Social Development Plan in the 1990s - focused on infrastructure construction for economic growth such as industrial complexes and residential land, multipurpose dams, roads, and highways. This stemmed not only from the priority of economic development but also from a lower public awareness of the significance of cultural heritage. In addition, because the preservation of historical relics is in a separate realm from economic growth, it was not seriously considered in a wider scope of plans for regional development and territorial management. Regional development policies as cultural tourism industry A remarkable change came in the 1990s as economic prosperity increasingly heightened public awareness of culture and the environment. The nation began to reflect seriously on the damage the reckless development drives wreaked on the nature and cultural assets for the past 30 years. A raft of major legislation to protect the environment and eco-system was established. Culture became key themes in the discourse on regional development. Culture encompasses a variety of sectors such as movies, plays, pop music, festivals, games, lifestyles, and historical and cultural heritage. Regional development plans utilizing culture have flourished since the mid-1990s. However, they mostly focused on culture as an industry such as movies, tourist attractions, regional festivities and international culture and arts events. Conspicuous undertakings were the Gwangju Biennale (beginning in 1995), Pusan International Film Festival (1996), and Puchon International Fantastic Film Festival (1997). The trend was intensified in the 2000s as income growth and the five-day workweek system augmented the public`s desire and need to enjoy culture in everyday life. Reflecting this trend, the revised 4th Comprehensive National Territorial Plan (2006-20) included development of cultural and tourist spots in each region as a major task. As part of such efforts, refurbishment of cultural relics and development of tourism and leisure facilities

were pushed through the Special Regional Development Project by the Ministry of Construction and Transportation. Examples include the Naepo cultural area in South Chungcheong Province (designated in 2004) and the ancient cultural area around the Yeongsan River of South Jeolla Province (2005), both of which are scheduled to be completed by 2015. Despite an increase in culture-based development projects, the nation lacked a proper system to deeply examine and preserve the history and culture of each region. With most of the projects focused on tourism, they often resulted in the dilution of the regions` unique characteristics and damage to their historical and cultural significance. The attempt to manage the cultural resources at a larger district level began in the 1980s but was not pursued continuously. Such examples were projects to preserve folk villages including Nagan-eup Village (South Jeolla Province), Haehoe Village and Yangdong Village (both in North Gyeongsang Province) and Seongeup Village (Jeju Island). The act on the preservation of traditional buildings was enacted in 1984, under which not just individual architecture of `hanok` (traditional Korean house) but also the entire district was to be designated as a preservation zone. However, due to insufficient government support and compensation, the project was not successful and the special law was also abolished. In the late 1990s, the save-the-hanok-village movement began as a campaign closely related to the villagers` daily lives rather than for the sake of tourism. With the success of Jeonju Hanok Village (North Jeolla Province) and Bukchon Hanok Village (Seoul), there has been a growing movement to stimulate the regional economy by preserving traditional residences. Also, there is an increasing attempt to utilize historical and cultural resources in urban refurbishment projects, such as the creation of arts and culture streets, forging livable cities, and renewal of public facility designs. New culture-based approaches to territorial policy A new approach has emerged linking policies for regional development and cultural heritage conservation since early this decade. The initiative has proceeded in two ways: one is the creation of cultural and historical cities and enhancement of competitiveness of tourism and the other is the conservation of the ancient capitals to restore the nation`s historical identity. Major examples are culture city plans for Gwangju, Jeonju and Gyeongju. In addition, the Ministry of Culture, Sports and Tourism announced a policy in July 2009 to systematically develop tourism resources in line with the regional development policies. It envisioned a set of broad tourism networks linked with mega-regional economic zones - such as "peace-life zone," a southern coastal tour cluster, three major cultural regions, and central inland regions. As for the preservation of ancient cities, the government expanded the scope of conservation from each single relic to the entire historical and cultural environment of a city. The Cultural Heritage Administration enacted the Special Law for the Preservation of Ancient Capitals in 2004. Under the law, the government has preserved historical and cultural assets on a city level, provided compensation to residents, and boosted the local economy. These ancient capitals abound in tangible and intangible traces of the ancient regimes such as royal palaces, `jujakdaero` (the main roads from palaces lined by administrative offices), fortresses, temples, royal tombs, and other nationally managed historical relics. Gyeongju (the capital of the Silla Kingdom) and Buyeo, Gongju and Iksan (the capitals of the Baekje Kingdom) have been designated as ancient capitals under the law. Gyeongju has a total of 297 pieces of cultural heritage, 70 percent of which are state-designated cultural heritage. Buyeo, Gongju and Iksan have 187, 185 and 86 pieces of cultural assets, respectively. However, these remains are dispersed and isolated, and surrounding areas are poorly managed - some cultural assets are surrounded by high-rise buildings - making it difficult to savor the ancient capitals. To address such problems, the law articulated the protection of residents` property right, which was excluded in the former cultural asset preservation policies, and stipulated city-level management of the cultural environment. The Ancient Capital Preservation Plan is aimed to recreate the historical context using the spatial planning concept and the historical identity as well as to improve residential environment and revive the regional economy which had slowed down due to development restrictions for the protection of cultural assets. It seeks to restore and preserve the ancient capitals in the entirety including the geographic and urban conditions such as mountains, roads and waterways, palaces, fortresses, temples, dwelling places and markets. Under the plan, mountains, rivers, palaces, castles and other assets that constituted the pillars of ancient capitals are designated as "special preservation districts." Residential areas and farmlands surrounding the core spaces are named as "historical environment districts," forging a harmonious setting of the ancient capitals.

Three aspects have been considered in the establishment of the Ancient Capital Preservation Plan. The first aspect concerns preservation. The plan is designed to conserve ancient capitals` historical reality and identity. Through analysis of geographic conditions, historical and cultural relics and spatial structures, the plan seeks to sort out places that must be preserved or restored, that is, rediscover and evolve the DNA of the ancient capitals. The second aspect concerns breathing new life into the cities. The plan seeks to create vibrant living conditions by regenerating the dilapidated areas in the cities in harmony with the historical and cultural environment. Finally, the plan is intended to showcase ancient capitals. It seeks to generate high values by harmonizing historical and cultural assets with local residential spaces and transform them into tourism resources. Basic surveys for the four ancient capitals were conducted between late 2005 and mid-2007. The conservation plan for Buyeo was completed in early 2009 and plans for Gyeongju, Gongju and Iksan are in the making. Once the plans are completed, the ancient capital conservation project will begin. The Ancient Capital Preservation Plan is different from the existing cultural city creation project. The latter`s focus is on tourism such as the development of tourist attraction and film contents while the former`s main focus is on demonstrating the historical truth and improving the residential environment. The Ancient Capital Preservation Law elevated the management and conservation of individual cultural heritage and projects such as the Hanok Village Project to the city level. Breaking away from the uniform cultural tourism, it tried to restore geographic characteristics and historical identity of ancient cities and use them as tourism resources for the future. Policy directions for cultural territory in Korea As discussed above, Korea`s regional development`s focus has progressed from economic development and industrialization to development of tourist sites and to the revival of historical identity and local economy through historical and cultural assets. The crucial agenda of the regional development policy and territorial management policy will be to utilize historical assets and restore the territory from damages done by reckless development in the past. Ancient capital projects will be the starting point for enhancing the cultural value of the national territory. In light of regional development and territorial management, the Korean government is committed to creating internationally competitive tour sites and preserving Korea`s unique cultural identity. For this it has pushed a policy of cultivating historical and cultural environment at the regional level. This would help create a culturally competitive national territory where the historical identity of each region is alive and historical assets blend in harmony with the environment. This will further help establish pleasant conditions for living and doing business. [Territorial Policy in Korea (3)] Saemangeum: Arole model of green growth Saemangeum is a 401-square kilometer-wide plot of reclaimed land on the southwestern tip of the nation. Separated from the sea by the world`s-longest sea dike, at 33 kilometers, the area is about 60 percent the size of Singapore, 67 percent of Seoul, 3.7 times bigger than Paris and five times bigger than Manhattan. The reclamation project began in 1989 under the Saemangeum Comprehensive Development Plan. After three years of preparation, the sea dike`s construction began in 1991. According to the original plan, 283 square kilometers of land, which is approximately 70 percent of the total area, was to be used for farming, with the remaining 118 square kilometers to be turned into a freshwater lake that would supply about 200 million cubic meters of water for the farms. However, following the contamination of the Shiwha Lake created by a similar reclamation project on the western coast in 1997, environmental and civic groups demanded that the Saemangeum project be stopped. They argued it would be difficult to meet the water quality target, that leaving the tidal flats in the Saemangeum area as they are would create more economic value than the massive reclamation plan and that the development scheme might have a negative effect on marine life since the embankment blocks the flow of sea water. The government formed a joint investigation committee consisting of officials, civilian experts, plus environmental and civic groups for a comprehensive reexamination of the project. After 14 months of research, the panel identified problems and proposed countermeasures, but failed to reach a consensus on whether to proceed with the project or stop it. Based on the report, in 2001 the government came up with a new, environmentally friendly development plan. The new blueprint called for the development of the Dongjin River zone first, since the river completely satisfied the legal water quality standards. In opposition to the government`s decision, however, environmental and civic organizations and local residents filed a lawsuit against the prime minister and the minister of agriculture and forestry, seeking to pressure the government to withdraw the plan. The tedious legal battle ended in 2006 when the Supreme Court rejected the lawsuit and raised the hand of the government as the

victor. After 14 years and five months of work, the Saemangeum sea dike was completed in 2008. Right after the lawsuit was concluded in 2006, the government unveiled a new ambitious development plan for the Saemangeum area. According to the new plan, 202.5 square kilometers of land, or 72 percent of the total area, would be used as farmland, while the remaining 80.5 square kilometers, or 28 percent, would be developed for multifunctional purposes, including an industrial complex, a tourist resort, an energy park and an urban center. The incumbent Lee Myung-bak government, inaugurated in February 2008, revised the 2006 plan to meet the rapidly changing domestic and global economic circumstances and turn Korea into a leading economic hub in Northeast Asia. At the end of October 2008, the government prepared yet another new proposal, dubbed the Amendment of the Vision for Saemangeum Land Use, putting more emphasis on multipurpose land use. Based on the proposal, the Saemangeum Development Committee finalized the New Saemangeum Development Plan in July 2009. The new Saemangeum plan This plan has six major goals. First, it aims to turn the Saemangeum area into a hub in a new global economic system. By attracting foreign capital, manpower and technology, it expects Saemangeum to contribute to Korea`s competitiveness in international markets and help generate new growth engines for the economy. Second, it aspires to create an Asian cultural and tourism services powerhouse in the area. By using local historical and cultural heritage, natural environs such as the Gogunsan archipelago, ecological resources on the west coast and facilities like the Saemangeum sea dike, it aims to attract a large number of Korean and foreign visitors. Third, the plan seeks to develop Saemangeum into a leading low-carbon, green growth area. Adopting resource-recycling systems and a carbon-reduction method, it would serve as an example for green growth and future city development. Fourth, it intends to develop Saemangeum in such a way that its current "clean" environment and ecosystem are maintained. For this, environmental and ecological zones will be established throughout the area. Fifth, it aims to build Saemangeum`s image around the world as a premium global city through marketing and publicity activities. Last but not least, the new plan hopes to produce a new model of executing large-scale state projects. In other words, it seeks to develop the Saemangeum area complete with infrastructure and institutions that would be recognized overseas. To meet these goals, the government has suggested a development strategy for Saemangeum, which divides the reclaimed land into eight districts, considering national policies, local development, development potential and site suitability. These districts have multifunctional capabilities, such as farming, manufacturing, tourism/leisure, international businesses, science and research, renewable energy production, dwellings and environmental and ecological protection. Depending on the degree of development and its prospects, the new plan designates about 30 percent of the total reclaimed area for farming and about 70 percent for other functions. In detail, 85.7 square kilometers of the reclaimed land is to be allocated for farmland, 39 square kilometers for industrial complexes, 24.9 square kilometers for tourism and leisure, 20.3 square kilometers for new and renewable energy resources, five square kilometers for international businesses, 23 square kilometers for science and research, 14.6 square kilometers for residential site and 59.5 square kilometers for water quality and ecosystem conservation zones. In addition, because the reclaimed land would be very large in area, but is not well equipped with infrastructure, the plan reserves 45.0 square kilometers, or 15.9 percent of the total land, for future demands. The reserved site will be used for farming until new land use is determined. The zoning of the area was decided on the basis of the results of site suitability analyses that took into account accessibility, environmental and economic factors and the relationship with other areas under development, as well as various legal and technical restrictions. As a result, the industrial complex site was put in the northern part of Saemangeum in order to develop it in conjunction with the Gunjang National Industrial Complex. The tourism and leisure zone was located in the southern part in view of its proximity with the Byeonsanbando National Park. In addition, the international business zone -- part of the industrial complex which is the foreign direct investment area -- and the renewable energy site were placed in the middle to serve as a new urban development axis. It will be ultimately connected to Jeonju and other cities near Saemangeum. <**5> However, the government decided to put off the designation of a location for the science and research zone within the new and renewable energy site and an urban residential site until the master plan to create a "Premium MultiCity" in the core area is completed. The most significant feature of this new plan is the government`s vision to create the "Premium Multi-City" in Saemangeum. For this, it has designated a "core strategic area" which includes the foreign direct investment zone, the international business zone and the tourism and leisure site. The government has been accepting professional advice on its development from experts. The government will make a final decision after gathering enough opinions and reviewing the validity of designs. The feasibility review of the development plan has been conducted in four fields: 1) environmental conditions and effects; 2) the volume of water usage and its supply source; 3) traffic volume and required transportation facilities; and 4) the volume, source and supply of sand and stone for engineering projects. In environmental terms, the review concluded that the Dongjin River zone would meet national freshwater quality standards, while the Mankyeong River zone would require the installation of an additional chemical sewage processing facility at the Iksan and Jeonju sewage

disposal sites. The review suggested that the water quality in the area bordering the sea dike would deteriorate. Secondly, as for water supply, the review said that as much as 522,000 cubic meters of fresh water per day would be required for living and industrial activities and water can be supplied from Yongdam Multipurpose Dam. Thirdly, regarding transportation, the review expected that there would be no problems if the current construction plans for transportation facilities are carried out. To provide better conditions, however, it proposed two alternatives for urban transportation in Saemangeum: 1) a three-by-four grid and a cyclic highway network and 2) a radial and cyclic highway network. In addition, it included a plan to introduce state-of-the-art transportation systems, such as magnetic levitation trains so as to contribute to green growth. Fourthly, in terms of engineering, the review estimated that about 600 million cubic meters of sand and stone would be needed for the project and the stable supply of sand or stone could be secured by dredging the port and sea areas of Gunsan Port. Core strategic area The Prime Minister`s Office, the Ministry for Food, Agriculture, Forestry and Fisheries and the Ministry of Land, Transport and Maritime Affairs are currently working together to draw up a master plan for construction of infrastructure, such as transportation and water supply facilities, based on the newest Saemangeum plan. Under this plan, efforts will go into controlling water quality so Saemangeum`s unique status as a "City of Water" will be realized. In developing inner-Saemangeum, the green growth concept will be applied and in constructing buildings and facilities, low-carbon urban planning principles will be adopted. To turn it into a logistics center of Northeast Asia, the construction of a new port will be prioritized. As noted above, the most significant project in the new plan is the development of the core strategic area. It is hoped that Saemangeum`s core area will attract foreign direct investment. Improving on the 2008 development plan, the new plan reflects global design trends and aims to develop the core area into a self-sufficient site. The government proposed three design alternatives: 1) Sha-Ring City, 2) Full Moon City and 3) Floating Delta City. In order to select the best, it will evaluate the three options based on such criteria as suitability, economic and environmental viability. The government will make a final decision among the three alternatives around December and embark upon the development of the core strategic area from 2010. Implementation The first stage of the development plan was building the sea dike and turning reclaimed land into solid areas that could be used immediately. The next stage is the actual construction of the industrial complex site and the tourism/leisure site. The reserved land would be used for farming until new land use is demanded. Additionally, the implementation plan includes a principle that a variety of measures for thorough environmental management should be adopted before development begins. For the Saemangeum area to serve as a global free economic hub and attract foreign companies and capital, further deregulation and incentives are necessary. To achieve this goal, the implementation plan suggested a strategic principle, the so-called "3Ss" -- super, simple and speed. Administrative procedures must be reformed, focusing on the elimination of red tape to improve business conditions and to liberalize foreign exchange transactions. In addition, it is necessary to introduce incentives. These could include tax reductions; lease reductions; free education and health care for foreigners; financial support for employment, R&D and the introduction of new technologies; and the relocation of strategic industries. According to the environmental management outlook, a chemical processing method would be introduced to process sewage and wastewater and measures will be taken to stop the inflow of sewage and wastewater altogether. Also, the plan emphasizes eco-friendly development by creating swamps and water retention areas to purify pollutants in natural ways. Together with this approach, the plan suggested establishing "buffer green zones" on riversides and minimizing fertilizer use by farmers. These measures will specifically manage pollutants from a variety of sources. For waste disposal in the area, the foremost emphasis is placed on reducing waste production thoroughly and increasing the ratio of recycling. In the long term, a system of waste management will be sought to introduce a natural circulation system. Such a system could even generate energy from the process. Ultimately, the region will serve as a role model of green growth. [Territorial Policy in Korea (4)] Territorial policies aim for green growth Territorial policies reflect the national demands of the time. In the 1960s when Korea suffered a severe deficiency in resources and food, building production bases was the top priority of its territorial development. Urgent need for economic development left no room to consider regional balance and the environment. Growth remained the top territorial policy agenda in the following decade, though some attempts were made to restrict development in Seoul and its surrounding area while improving the environment. Under the influence of "The Limits to Growth" (1972) by the Club of Rome, policymakers in the 1980s embraced the harmony between development and conservation as the underlying idea of territorial policies. The prevailing theme of the 1990s was sustainable development, which sought to simultaneously achieve economic growth, environmental protection and balanced development. The concept evolved into the current green growth strategy to tackle climate change and reduce the use of fossil fuels. Territorial policies have changed a lot and environmental protection has improved much. But

they remained in the old premise of the fossil-fuel era. Industrialized countries have already been implementing new strategies for post-fossil fuel economics through state-of-the-art technologies. They knew that the fossil fuelbased system dominant since the Industrial Revolution will no longer be able to sustain growth. Korea needs a new clean energy system to replace fossil fuel-based system as we enter the new era of energy and climate change. Based on green technologies, the new development model will enable us to achieve economic growth without harming the environment. The ability to produce clean electricity, water and air will determine the economic strength of any country in this new era. Korea`s new territorial policies require a virtuous circle between economic growth and environmental protection. It means maximizing the synergy of the two: advanced technologies improve the environment while environmentally friendly technologies trigger economic growth. Green growth is a national development strategy that seeks to change the overall lifestyle as well as economic and industrial structures into low-carbon, eco-friendly structures through green technologies that enhance energy efficiency, generate renewable energies, mitigate environmental pollution, etc. (Path to Green Growth , Presidential Council for Future & Vision (Feb. 2009)) For green growth, a green revolution of the territory is indispensable. National territory is where most energy is supplied and consumed. It is where the human activities responsible for climate change take place as well as where we can resolve the problem by controlling such activities. National territory is the site where green growth policies are implemented and its effects are demonstrated. Therefore, green growth requires a reorganization of the framework of territory. Green growth vision In his Liberation Day speech on Aug. 15, 2008, President Lee Myung-bak declared that "low carbon, green growth" through green technologies and clean energy to be the new national vision for the next 60 years. In the inaugural Green Growth Forum on Sept. 9, the president`s secretary for future vision announced 10 guidelines for Korean-style green growth: 1) low-carbon policies to reduce greenhouse gas 2) turning green technologies into new growth engines 3) promoting cutting-edge fusion technologies 4) creating new jobs 5) reinforcing corporate competitiveness 6) revamping national territory, cities, architecture and traffic systems 7) revolutionary change in lifestyle including consumption patterns 8) green cultural policies 9) eco-friendly tax reforms and 10) diplomacy to boost the national image. The Prime Minister`s Office unveiled a comprehensive set of Low Carbon, Green Growth policies on Sept. 17, 2008 detailing its background, concept, direction, implementation strategies and future plans. The concept breaks with the stereotypical view that "green" and "growth" contradict each other and pursues the maximum synergy of the two. On Jan. 6 the government announced the "Green New Deal" plan involving nine core projects and 27 related projects aimed at creating 960,000 new jobs by investing 50 trillion won through 2012. By combining low-carbon, eco-friendly and energy-saving green growth strategies with job creation policies, it purports to not only cultivate potential growth engines but also produce practical results. At the 29th National Science and Technology Council meeting and the 3rd Future Planning Council meeting on Jan. 13 the Ministry of Education and Science and Technology and the related branches finalized a plan for comprehensive countermeasures for research and the development of green technologies. This represents a new governmental paradigm. The main topics involved the concept and spectrum of green technologies, the current status of the development of green technologies at home and abroad, direction for investment in green R&D and the strategy for the development of green technologies. The plan called for the doubling of investments in green R&D from 2008 until 2012 and the sorting out of 27 main technologies for promotion. The key directions were the promoting of the convergence of green technologies, expanding basic research, the "greenifying" of old industries and nurturing new growth engines and building infrastructure for green technology. On July 6, the government unveiled the National Strategy and Five-Year Plan for Green Growth. The goal is to make Korea one of the world`s top seven countries in terms of green competitiveness by 2020 and top five by 2050. "Green competitiveness" means the development of green technologies and industries, the capability of responding to climate change, plus energy independence and welfare. To this end, the government is committed to spending 107 trillion won over the next five years, or 2 percent of its gross domestic product every year, in green growth sectors. The investment is expected to generate an output effect worth 182 trillion-206 trillion won and create jobs for 1.56 million-1.81 million people. The Five-Year Plan through 2013 is a mid-term plan to facilitate the national policies for green growth. The plan will be a stepping stone for accomplishing the long-term goal set for 2050. It entails three strategies, plus action plans for 10 major policy directions. <**3> New growth strategy The Low Carbon Green Growth Strategy published by the Prime Minister`s Office on Sept. 17, 2008 said the concept of green growth starts with the abandonment of the stereotypical view that economic development and environmental protection cannot go along and aims at the maximization of the synergy of the two. It is the first

time the government has specified the concept of green growth. There are three aspects to the policy directions for green growth. The first is prompting a new type of national development by beefing up new growth engines. It refers to cultivating green industries as new growth engines, decoupling environmental destruction from economic growth, transforming industry structures to high-value added, knowledge-based ones, complying with international environmental standards by reducing greenhouse gases, improving global competitiveness and healing our economy`s current malady of jobless growth. The second is boosting citizens` quality of life and improving environmental conditions. It means minimizing social expenses arising from traffic congestion, environmental pollution, etc. by building inexpensive and highly efficient spaces and housing. It also includes awakening the public to the seriousness of climate change and pollution, plus encouraging them to practice green culture in daily life, thereby permeating green culture throughout all of society. It also means protecting citizens from natural disasters and climate change that poses health threats and guaranteeing a safe, pleasant environment. The third is contributing to the international community`s key agenda. It aims at elevating Korea`s international status by contributing to the world through actions such as providing aid to underdeveloped countries and proactively dealing with global issues. Green New Deal The plan for the Green New Deal for job creation released on Jan. 6 called for a shift to a green economy and laid out select projects that would generate growth and jobs. They are 1) energy saving, recycling, clean energy development and other projects that help save resources, 2) green transportation networks, clean water provisions and other projects to improve quality of life, 3) proactive and preventative projects for the Earth and future generations such as CO2 reduction and water resource projects, and finally 4) development projects in industrial and information infrastructure, as well as technology essential to improving energy efficiency and preparing for the future. The Green New Deal projects consist of 1) sectors highly eco-friendly and having high employment effects among previously announced Korean-style New Deal projects and new growth engine industries and 2) other green industries with high employment effects. They are mostly public investment projects that create jobs on a large scale. The core projects are the restoration of four major rivers, green transportation networks, the information infrastructure for green territory, hydroelectric power plants and dams as alternative water resources, green cars and clean energy; expansion of resource recycling, forest biomass, green homes, offices and schools, and eco-friendly living conditions. Five-year plan for green growth The National Strategy and Five-Year Plan for Green Growth released on July 6, 2009 is based on the Article 9 of the Framework Act on Low Carbon, Green Growth. It is the supreme national plan for low carbon, green growth which delineates its long-term vision, strategies, and five-year action plans. It tries to bring about a more concrete and practical approach to the rather abstract and broad concept of sustainable development (integration among economic growth, social equity, and environmental protection), by adopting practical policies for implementation. More specifically, it refers to generating economic growth, while at the same time transforming the growth pattern into one that is eco-friendly (economic development which is sustainable in terms of its relationship with the environment), maximizing the synergy of the environment and economic growth by creating a virtuous circle between the two, revolutionizing the lifestyle, improving quality of life and solidifying Korea`s international standing. The Five Year Plan contains concrete tasks for green growth and their annual budgets and project budgets. It is a mid-term plan that would serve as a vehicle to accomplish the national vision. The Five Year Plan differs from the previous Five Year Economic Development Plan in that it emphasizes a new paradigm of green growth. The Five Year Plan details three major strategies, specific action plans for 10 major policy directions, and annual investment plans from 2009-2013. The National Strategy for Green Growth envisions Korea`s advancement into the top seven green growth countries by 2020, and further into the top five by 2050. To accomplish this vision, it suggests three major strategies: 1) adapting to climate change and securing energy independence, 2) exploring new growth engines and 3) improving quality of life and elevating national status. The 10 policy directions are: 1) reducing greenhouse gases 2) overcoming oil dependency and seeking energy independence 3) increasing capabilities to adapt to climate change 4) developing green technologies and growth engines 5) greenifying existing industries and nurturing green industries 6) advancing industrial structures 7) building infrastructure for a green economy 8) creating a green national territory and green transportation network 9) revolutionize lifestyles and 10) becoming a model country for green growth. Green territorial policies Among the national green growth policies, promoting green buildings, restoring the four major rivers, expanding forests, eco-rivers, green zones, and green villages, the use of bicycles and green modes of transportation, as well as breeding regional development through resource recycling are all related to the creation of a green territory. The promotion of green buildings includes adopting an eco-friendly architecture certification system, expanding an energy efficiency rating system, and building green homes, green public office buildings and green schools. The river restoration plans are intended to significantly improve water quality and prevent floods through pangovernmental efforts and an IT-integrated system. The forest expanse will be increased from 1,800 hectares in

2009 to 2,500 hectares in 2013, and the percentage of eco-rivers will be augmented from 60 percent in 2010 to 70 percent in 2013. A nationwide bicycle network will be established and the use of bicycles encouraged to increase the portion of bicycles used in public transportation from 1.5 percent in 2009 to 5 percent in 2013. Also, to expand the use of eco-friendly green transportation, the government will increase the portion of railways in public transportation from 18 percent in 2009 to 22 percent in 2013. To promote resource recycling in regional development and expand green zones, areas such as Saemangeum will be designed as a new renewable bio-energy complex. Model cities will be built to demonstrate successful low-carbon green growth. A hundred green village centers will be established by 2013 and 12 pilot low carbon green villages using waste biomass will be built by 2012. Source: Sola power complex located in Shinan-gun in the southwestern region of Korea, a good example of a green territory. (Picture provided by Shinan-gun) To move away from fossil fuel-based growth and refurbish the national territory, it is desirable to promote green growth through all sectors including land use, housing, transportation, construction, industries, infrastructure and the environment. To build a green national territory, above all, institutional improvement should be considered to incorporate cutting-edge technologies, i.e., information technology, bio-technology, cultural technology, nanotechnology. Clean energy resources, low carbon industrial complexes and green buildings, and energy saving through resource recycling can only be possible when cutting edge technologies are applied at the planning, designing and construction phases. Therefore, for green growth projects, experts in technology and planning and policymakers should work together. Green growth is a core strategy for the future that will improve Korea`s global competitiveness. It is essential to create future-oriented territorial spaces, abundant with culture and natural environment. It is the sustainable development strategy for the future generations. Korea`s green growth policies are attracting international interests. The United Nations Environment Program selected Korea`s Green New Deal policies as a role model for "Global Green New Deal" and highly praised the river restoration projects. Furthermore, in "A Climate for Recovery" program, HSBC called Korea`s Green New Deal a pioneer in the field. As Korea is receiving such a vast amount of global attention, the Korean government and citizens should make a concerted and creative efforts to achieve a successful and global model of green growth.

[Territorial Policy in Korea (5)] High-speed rail centerpiece of green growth The Korea Train Express, or KTX went into operation in April 2004, making Korea the fifth nation to run a highspeed rail system. The first phase - covering a 293.1 kilometer route between Seoul and the southeastern city of Daegu - was completed 12 years after construction began in June 1992. The KTX cut travel time by between 33 and 46 percent - it takes 34 minutes from Seoul to Cheonan/Asan, 49 minutes to Daejeon, 1 hour and 39 minutes to Daegu, and 2 hours and 40 minutes to Busan. One major reason for the high-speed rail construction was the revival of the waning railway industry. Until the mid-1960s, railways attracted more investment than roads. But transport investment then concentrated on building highways, at the expense of railways. Improved income in the 1980s led to a sharp increase in the number of cars. More people began to use private vehicles for leisure and holidays. Cargo transport also rose, causing congestion on expressways. The problem was most serious on the Gyeongbu (Seoul-Busan) line, the logistics backbone that had played a crucial role in Korea`s economic growth. In 1982, 65.8 percent of the population and 73.7 percent of gross domestic product were concentrated around the Gyeongbu corridor. It accounted for 66 percent of passenger transport and 70 percent of cargo shipping. Thirtyeight percent of the Gyeongbu Highway suffered from chronic congestion while the Gyeongbu Railway also reached capacity. Traffic worsened in the late 1980s, increasing logistics costs and impeding economic growth. That gave rise to demand for a new high-speed link. The primary purpose of the new "bullet train" system was to augment the shipping capacity of the Gyeongbu corridor and address the traffic congestion stemming from the concentration of population and industry. Construction of the second phase of the Gyeongbu Line, linking southeastern cities of Daegu, Gyeongju, Ulsan and Busan, started in 2002. When it is complete in 2010, the highspeed track will extend to 418.7 kilometers and the travel time between Seoul and Busan will be reduced to 2 hours and 10 minutes. Construction of another high-speed network will begin shortly. The 231.2-kilometer Honam Line will branch from the Gyeongbu Line in the central town of Osong and stretch southwest to Iksan, Gwangju and Mokpo. The new line will contribute to improved traffic conditions and regional development in South and North Jeolla provinces. The Osong-Gwangju section is scheduled to be completed by 2014 and the remainder by 2017. The travel time between Seoul and Mokpo (352.7 kilometers) will be cut to 1 hour and 46 minutes from the current 2 hours and 38 minutes. Change in national territory brought by KTX The KTX brought

about significant changes to the nation`s territorial space. First, the nation became smaller in terms of travel time. The new train system has reduced the travel time from Seoul to Busan by one and a half hours (33 percent), to Daegu by one hour and 24 minutes (46 percent), to Daejeon by 49 minutes (46 percent), and to Mokpo by one hour and 34 minutes (35 percent). By 2010, the travel time from Seoul to Busan could be cut to 2 hours and 10 minutes - 23 percent less than now. Second, improved transport links across the country have expanded the scope of activities. The KTX significantly increased the reach of economic activities. With commuting times shortened, businessmen can spend more time at home or work, which should help improve productivity. For instance, when using the Seoul-Busan KTX, the time saved using the faster network means that 90 minutes are freed up to do additional business. Furthermore, the operating time has been extended; in Busan the last regular train bound for Seoul leaves at 8 p.m., but the last KTX leaves at 10:05 p.m. Accordingly, the time Seoul-based KTX users can remain in Busan on a day trip has in effect increased by 4 hours and 35 minutes. Third, as commuting distances increased, the number of regular KTX users surged. The KTX speeds from Seoul Station to Cheonan/Asan Station in 34 minutes and to Daejeon Station in 50 minutes, not much longer than commuting times within the capital region. People who work or live around stations can use the KTX to commute. In 2008, the number of KTX pass users amounted to 3.8 percent of all passengers. Fourth, the transportation system changed greatly. The number of rail passengers rose while highway traffic decreased. In 2008, the number of KTX passengers increased by 2 percent from a year before to 38 million. The number of airline users dropped sharply. Regular flights between Seoul and Daegu - a one and half an hour distance by KTX - were canceled in October 2007. Fifth, the KTX made it possible for people in Seoul to commute to other cities. An increasing number of people who live in Seoul and work in other cities come to Seoul on Friday night and return to the town where they work on Monday morning. Development of "mega-city regions" <**3> As the KTX allows people to travel across the country within three hours, Korea can evolve into a mega-city region. A mega-city region refers to a wide economic zone with a population of over 10 million, formed around a core city and functionally linked together, in which all areas can be reached within one day. Today, nations around the world are striving to establish regional development strategies to enhance their global competitiveness. According to experts, a country as small as Korea can develop into one mega-city region. Peter Hall, a professor of the College of London and a world-renowned urbanologist, on his visit to Korea last July, remarked that Korea should not be seen as dichotomous regions - capital and provincial regions - but as one mega-city region that is organically connected by transport and communications networks. To establish a competitive mega-city region, accessibility among cities must be enhanced. The high-speed rail system improves accessibility and exchanges among regions and stimulates the economy. A case in point is the Netherlands. Recently, the Netherlands formulated plans to turn its western area into a globally competitive urban network comparable to London, Paris and Frankfurt. It is a plan to merge four cities - Amsterdam, Den Haag, Rotterdam and Utrecht - into one megacity. To promote economic growth, the Netherlands plans to build a ring-shaped high-speed train network across these cities. However, the examples of Japan and France demonstrate that high-speed trains do not automatically revive the regional economy. High-speed trains are essential but do not necessarily guarantee regional development because the degree of spatial, social, and economic changes depends on the policies on the regions around high-speed train stations. Therefore, for development of the cities with high-speed train stops and their surrounding areas, high-speed rail services should be accompanied by policies to vitalize the regional economy. The government is pushing policies to turn the cities with KTX stations into central cities for economic development. The number of passengers using KTX stations has increased by 10 to 90 percent since it entered service, whereas the number of passengers at non-KTX stations has dropped. Due to the movement of people, the areas around KTX stations may see economic growth. Capitalizing on this opportunity, the Korean government is devising a strategy to form KTX economic blocs in order to spur regional development. The plans envision the entire nation as one mega-city linked by KTX stations. Regions with KTX stations will be developed as core bases for development and each region needs a specialized development strategy. The creation of the KTX economic blocs would cause the regions around KTX stations to be developed into highly dense, multifunctioning complexes, which could help solve urban problems. KTX stations are located mostly within existing towns, which are old and dilapidated and give off a negative impression. Through KTX, depressed urban regions will, no doubt, be regenerated into new residential quarters and urban centers. The development of the regions around KTX stations could contribute to recreating the national territory into one gigantic mega-city region. Future vision of KTX By 2017, it is expected that the entire nation will be merged into one economic bloc, in which most places are reachable within two hours` travel. In addition to the Gyeongbu Line currently in operation and the Hanam Line to be built, the nation is considering building a high-speed rail traversing the southern coastal region. If the southern coast high-speed rail linking Busan and Mokpo is completed, the travel time across the south coast region could be reduced to two hours. A plan for a high-speed link from Seoul to the east coast is being discussed.

Also, a high-speed rail in the eastern coastal region is under consideration. If the high-speed rail network has been built across the country, the entire country may be transformed into one mega-city region (Refer to Figure 3). Spatial planning shall, accordingly, be conducted under that assumption. Supposing that areas within one hour`s travel are considered as belonging to one commute zone, many cities with KTX stops will be included. Residential complexes and service industries will likely be concentrated around KTX stations, and a new pattern of economic activity may ensue. Once the second phase of the Gyeongbu Line and the Honam Line are available, most of the nation will benefit from high-speed rail and KTX will become a central mode of public transportation. When the service of new sections of Honam high-speed rail begins, the nation will become integrated more rapidly space-wise, and regional disparities will ease. The Honam axis will provide better accessibility than the Gyeongbu axis, and there is likely to be an influx of population and companies into the Jeolla provinces. When this happens, the Jeolla provinces with KTX stops, plus the small and medium-sized cities around KTX destinations will all be included in the economic bloc, and the conflict between the capital region and the noncapital regions the nation is seeing today is expected to dwindle. The cumulative number of KTX passengers as of the end of July 2008 reached 150 million. The fact that the number of rail passengers has increased since the service started and the traffic congestion on highways has decreased seems to indicate that the high-speed line has met its purpose. The KTX boasts a record of near-perfect operation with a zero accident rate. KTX-related technologies have also improved significantly and KTX can now run at the top speed of 350 kilometers per hour. With five years of commercial experience, Korea is now confident in its capability to export high-speed rail technology. Initially Korea depended on France for its technology but through the operation of a Korean-style KTX, Korea developed and accumulated its own unique technologies. Since several years ago, Korea has been staging overseas marketing for its high-speed rail technology, and it appears that technology exports will soon be realized. The KTX is a world-class high-speed transportation system suitable for the green growth era. Last February, when the U.S. government passed an economic recovery bill, it allocated $8 billion for the construction of new high-speed rail systems. In this era of green growth, high-speed rail will get more attention, and therefore needs to be developed continuously. KTX is the result of the state-of-the-art technologies. KTX will lead the era of green growth by incorporating home-grown information technology and green technology (Refer to Figure 4). In the near future, Korea will see the entire nation linked by high-speed rail and evolve into a mega-city region. [Territorial Policy in Korea (6)] Preparing Korea for the age of water Extreme meteorological phenomena such as heavy rainfalls, droughts, heat waves and powerful tropical storms have increased recently as a result of climate change. The average temperature in Korea rose by about 1.5 degrees centigrade over 99 years between 1906 and 2005, showing a faster pace of climate change than the global average. The number of rainy days has declined. But the overall amount and intensity of precipitation increased and the frequency of super typhoons affecting the nation has also increased. Two-thirds of the country`s annual precipitation falls from June to September, exposing areas to the danger of flooding. But during nine months of the year, rivers tend to be short of water. The May-June 2009 edition of Foreign Policy, a U.S. journal on diplomacy, presented post-economic crisis global issues. Water is one of the most important factors it said will affect the world. "Water is the new gold, and a few savvy countries and companies are already banking on it," the journal said. As climate change proceeds, it predicted securing water sources would be essential for the existence and prosperity of human beings. Korea has rich saltwater source, being surrounded by the sea on three sides. And although there are few freshwater lakes, there are a large number of rivers. Four of the largest are the Han, Geum, Nakdong and Yeongsan rivers. By utilizing this distinctive geographical feature, Korea can enhance its national competitiveness responding to the changes in global economic trends and sense of values. The government has launched the Four-River Project, aimed at cleaning up and reviving the major rivers and spurring regional and national development. It is a multi-purpose project to better prepare for the future. As part of efforts to combat climate change, the project seeks to prevent flooding and water shortages. It also aims to use expanded water networks for leisure and cultural activities and contribute to refined territorial space by revamping "riverscapes" in harmony with surrounding urban centers. The four rivers are valuable resources shared by many local governments as the basis for mutual development and regional cooperation. The Four-River Project will be developed into a new multipurpose strategy to benefit all the regions by supporting regional development to overcome the current economic crisis through green growth. It will also help create jobs and invigorate regional economies. The Four-River Project is a nationally planned comprehensive project that incorporates cutting-edge technologies. The project is related to not just water resources, but also to other various fields such as ecology and urban and regional development. Cooperative systems were established on central and local government levels to coordinate positions of relevant parties key to success of the project. Multi-purpose strategies The Four-River

Project pursues multiple goals: It prepares for climate change and promotes coexistence between man and nature. It also seeks to renew the national territory, foster balanced regional development and build bases for green growth. Source: Four-River Project Master Plan (June 23, 2009) Its major strategies are: 1) establishment of comprehensive preventative countermeasures; 2) creation of hi-tech waterside networks that incorporate IT, ET and GT; 3) making Korea an internationally recognized green country through with an advanced flood control system; and 4) establishment of a collaborative governance system in which local citizens play a central role. These strategies employ five basic principles. First, we need to take proactive approaches toward climate change. In order to tackle drought, water resources must be secured, and investment must focus on preventative measures rather than just recovery from flood damage. Second, we have to diversify the channels to obtain water resources including dredging, setting up barriers, improving (expanding and connecting) water resource facilities, and consistently developing new facilities. Third, a new approach in river management and locally customized countermeasures should be applied. Flood control ability can be maximized through dredging and sediment control, fit for different regional characteristics. Fourth, the rivers can be utilized as multi-purpose spaces where nature and humans intermingle. We will create recreational facilities along the rivers, build a beautiful riverscape, increase accessibility to the rivers, and promote regional development and culture. Lastly, ecological integrity should be restored and water quality must be improved. Farming within the river banks must end. The old river paths should be restored and biodiversity should be achieved through wetlands and water-side ecological belts. Source: Four-River Project Master Plan (June 23, 2009) Four-River plan details The core aspects of the FourRiver Project include dredging rivers, building barriers, creating "ecological rivers," fortifying levees, building dams and flood retention basins, constructing reservoirs for irrigation and establishing measures to improve the quality of water. The plan is estimated to cost 16.9 trillion won. Also, 5.3 trillion won will be invested in measures for the Seomjin River and its major tributaries, expansion of reservoirs for irrigation, and water quality enhancement projects. The overarching goals of the Four-River Project are: 1) storing a sufficient amount of water resources to prepare for a possible shortage, 2) creating organic measures for flood prevention, 3) improving water quality and ecological health, 4) creating multi-purpose spaces for local citizens, and 5) spurring regional development around the rivers. To prepare for the looming water shortage, projects need to include dredging rivers and building barriers, small- and medium-sized dams, and reservoirs for irrigation. Some 800 million tons of water can be obtained by dredging rivers and building barriers, and the water stored within the barrier can be used in multiple ways, such as keeping the river from being dried out. Types of sluices can be selected based on the water pressure at ordinary water levels. Barriers can be built as regional landmarks by adopting designs that match the surrounding environment, and eco-friendly features such as fish paths and wetlands can be constructed. Flood prevention projects will include dredging river sediment, building flood retention basins and riverside reservoirs, refurbishing old banks, installing more sluice gates at banks on estuaries, and building dams. In the past, the focus was on increasing the height of existing levees and restoring damage after natural disasters struck. However, the Four-River Project seeks to shift to a new flood control measure of eliminating the root cause. The plan is to maximize the use of the natural environment to expand the width and the depth of the main rivers. Flood retention basins and riverside reservoirs will be built to protect the lower part of the river in times of flooding. At regular times, the river areas will be turned into spaces for improving ecological integrity. <**2> To improve water quality and revitalize ecology, 34 highly polluted river valleys should be monitored systematically. More facilities should be built to prevent pollutants from spilling into the river in the first place. For undeveloped riverside areas, the government plans to establish multi-functional recreational sites, improve accessibility to rivers, revitalize nearby urban areas, use waterfronts in various ways, and create beautiful civic spaces. It is also planning to construct bicycle paths connecting the upper and lower parts of rivers. Recreational features will include esplanades, inline skating rinks, and facilities for water sports and camping areas and rest areas. The link between rivers and urban areas should also be reinforced by eliminating spatial interruptions caused by physical barriers like roads and banks. Other goals are to develop riverside regions into urban areas, renew old city centers, create tourist attractions, and establish riverside landmarks that reflect unique regional and spatial features. Historical and cultural riverside belts can be formed by linking riverside landmarks and recreational facilities with historical spots in the region. These belts can be designed according to geographical features of the rivers and the surrounding areas, the landscape, and cultural and historical facts. Moreover, by constructing bank protection, waterfronts, banks and buildings, the government aims to design integrated, multidimensional waterfront spaces, instead of disconnected and monotonous spaces. Projects to enhance related regional development around rivers will include repair and reconstruction of tributaries, building nearby cultural facilities, creating vibrant and beautiful rural areas, and encouraging green-growth industries utilizing the four major rivers. Green tourism can be promoted by offering riverside tours, including vacation packages that include

trips to various local attractions. Each river area would be developed and marketed according to its unique features. Furthermore, the government is planning to provide support to develop a new base for economic growth of struggling inland regions and agricultural and fishing villages near the rivers. Fusion of technologies Various leading technologies will be incorporated into the Four-River Project. A comprehensive river management system that adopts a high-tech water monitoring system based on a multi-sensor platform will be built to manage the water resources in an environment-friendly manner and monitor the water level on a real time basis. Underwater sensors will be developed to monitor the water quality, and cutting edge IT will be utilized to restore the four rivers. Various sensors will monitor the water quality of the rivers on a real time basis and when pollution levels rise, it will be dealt with immediately and systematically through the help of a geographic information system (GIS). These will help reduce non-point source pollutants at cities and rural areas, prevent accidental water pollutions, and help respond rapidly to unnatural conditions. Additionally, to transform the four rivers into a digital cultural tour complex, a four river digital tour system will be built. The system digitalizes the cultural heritage around the four rivers using remote communication and GPS technology. Implementation of the project The government decided in December 2008 to promote the Four-River Project as part of its Green New Deal. It is investing a lot of money in a short period of time to solve water pollution problems and to rebuild territory around rivers. Since then, pilot projects have been launched in Andong, Naju, Chungju, and Busan. The government Office of Four-River Project was created within the Ministry for Land, Transport and Maritime Affairs on Feb. 5. On April 14, the vice-ministerial-level office was expanded and reorganized into a ministerial-level commission. The purpose was to reinforce its external function of moderating different opinions among the ministries. The Council of Governmental Support, a pan-governmental council run by the Prime Minister`s Office, and Regional Councils for each river were set up to solicit opinions of the local governments. A conference hosted by the three committees directly under the control of the president -- the Regional Development Committee, the Green Growth Committee, and National Construction Committee -- the Ministry for Land, Transport and Maritime Affairs, the Ministry of Environment, the Ministry for Food, Agriculture, Forestry and Fisheries and the Ministry of Culture, Sports and Tourism took place on April 27. A regional conference on May 5, a conference of related ministries on May 11-15, and consultation with professionals held May 14-22, and a May 25 public hearing followed. These meetings led to the development and publication of the Four-River Project Master Plan on June 8. Source: FourRiver Project Master Plan (June 23, 2009) Global model The Four-River Project is not simply for river restoration but represents a change in the river and water management paradigm. It is also environmentally friendly. Its aim is to not just prevent flood damages and solve water shortages, but revive the rivers all across the country through comprehensive and fundamental renewal of rivers, which includes water quality improvement, promotion of riverside cultures, and construction of recreational areas and refined riverscapes. It also involves promoting green growth by drawing the local residents closer to the rivers and making them build their lives around rivers. The restoration of the four major rivers, which constitutes 70 percent of national territory, will benefit most citizens nationwide. It is a green new deal and a core green growth project that would incur regional development, create jobs for 340,000 people, and contribute to the production of about 40 trillion won worth of goods. In conclusion, the Four-River Project will generate water-spatial synergy by promoting development of mega economic zones, renewing cities, and spurring urban and rural development and integration, and thereby play a core role in building a new type of national territorial development paradigm. On April 1, Hillary Benn, Secretary of State for the Environment, Food and Rural Affairs of the United Kingdom and Mr. Pavan Sukhdev, the project leader for the green economy initiative of the United Nations Environment Program, during their meeting with President Lee Myung-bak, emphasized that Korea`s Four-River Project is one of the five principal projects the United Nations is espousing to meet the demands of climate change. Secretary of State Hillary Benn remarked that Korea`s Green New Deal is an economic development policy for overcoming the global financial crisis, and at the same time, it is a global example of low carbon policy to meet the challenges of the climate change. He also commented that the green growth policy of Korea is drawing considerable interest from the world`s leaders at the G20 summit meeting in London. Furthermore, on August 20, in its `Interim report on Korea`s green growth policy,` UNEP stated that if the Four-River Project, which is the core green growth project of UNEP, succeeds, enough water might be procured to solve the water shortage and drought caused by the climate change. If the Four-River Project is successful, it will tackle climate change effectively, bring about an improvement in the river management method by introducing cutting edge technologies, and provide a new vision for Korea by reorganizing the national territory around rivers under multi-governance. In addition, the Four-River Project will become a global model for green growth that helps overcome the economic crisis and lead the regional development. The experience and technology accumulated through the Four-River Project will advance Korea to be among the world`s top nations in terms of water resources.

[Territorial Policy in Korea (7)] Global strategy for overseas construction After decades of exponential growth in overseas markets, Korea`s construction industry earlier this decade faced the need for a fundamental shift in the way they did business. The government thus came up with the first Overseas Construction Promotion Plan (2005-09) in 2004 to sustain and build on Korea`s strong market position. The bold initiative set a new vision with three major goals. In pursuit of qualitative, not just quantitative, growth, the plan envisioned an overseas construction business as a higher value-added export industry. It sought to globalize and upgrade Korean contractors` business structure and practices. The plan also aimed to boost overseas orders by enhancing their competitiveness. (1) Promotion plans and key policy trends The five-year plan provided momentum for the government to shift its policy focus from a simple quantitative expansion to high-value activities that generate larger margins. Practical measures to realize the vision included improving the way the government supports builders in their overseas businesses; bolstering their ability to win contracts; diversifying the markets and strengthening "construction diplomacy"; and building a comprehensive market information system as well as nurturing competent manpower for the industry. While the plan was proceeding, Korea`s overseas construction orders jumped from $7.5 billion in 2004 to $16.5 billion in 2006 and to $39.8 billion in 2007. The changing market conditions prompted the government to revise the plan for implementation from 2007-09. Figure 1 describes its key elements. The new plan set the vision of overseas construction as a new growth engine industry. It aimed to maintain annual orders received at more than $30 billion from 2008 on and establishing it as one of the nation`s top-five export sectors. The revised plan elaborated on five major tasks and 20 specific action programs to achieve these goals. They included penetrating new markets that will substitute existing ones in the Middle East and Asia; enhancing government support for small and medium-sized companies` overseas business; developing and supporting strategic export products such as "ubiquitous city"-type urban development; and promoting higher value-added activities such as engineering and construction management. The first of the five major tasks was the enhancement of Korean builders` global competitiveness. Action plans for this included activating SMEs` entry into foreign markets, enhancing basic engineering capability in the plant sector, improving the capability to carry out engineering BOT (Build-Operate-Transfer) projects and expanding their presence in other higher value-added segments of the market. The second key task was the enhancement of financial support. The plan encouraged increased financing from Construction Guarantee, public institutions and the Export-Import Bank of Korea as well as the creation of new funds specialized in offshore construction. The third was developing new products, which required activating investment-development businesses, supporting new contracts through package deals linked to other projects, aggressive measures to expand u-city projects and greater support from government-run investment funds. The fourth task of forging an advanced management framework called for building comprehensive information networks and integrated support systems, promoting effective risk management schemes and enhancing safety management. Lastly, for a broader basis of overseas contracts, sufficient human resources should be secured, financial support for exploring new markets expanded, global marketing activities invigorated and general cooperation with foreign countries broadened through construction diplomacy. (2) Basic policy direction As the first five-year plan based on the Overseas Construction Promotion Act expiring at the end of 2009, the government is drawing up a second plan for 2010-14. It will be a new mid- and long-term strategy to cope with the fast-changing global market environment. The new plan will contain concrete measures to diversify the markets and project types as well as a set of specific strategies to explore future growth industries such as green technology-related businesses. Ways to venture into new, higher value-added areas -- such as green energy plants -- and other niche markets will be the plan`s other key elements. The upcoming plan will focus on practical strategies for a shift to higher value-added businesses, improved profitability and the development of niche markets. It will seek to diversify Korean firms` project portfolio to prioritize new business areas such as nuclear energy, gas and green energy facilities. Another focal point will be improving the profitability of such areas as SOC engineering and plant construction in which Korea is ahead of its competitors. The plan will also address how to diversify Korea`s markets in Central Asia and Africa. In addition, the new plan will seek to bolster pubic companies` role in exploring new overseas markets. Guidelines for package-deal business models and ways to maximize profits through them will be presented. Separately, it will propose strategies in five different spheres to cope with major current challenges in the international construction market. As for market diversity, the plan will come up with measures to expand Korea`s presence in Africa -- currently concentrated on oil-producing countries like Nigeria and Algeria -- to Congo, Cameroon and other markets. For Central Asia including Azerbaijan and Uzbekistan, in which Korea already has strong footholds, the plan will advise on how to develop higher value-added construction management businesses. The government will also establish a comprehensive master plan -- from construction methods to equipment procurement and to financing -- to enter the market for green energy resources such as nuclear, water,

wind and tidal power, which has taken on greater significance since last year`s hikes in oil prices. Breaking from the old pattern of business focusing on quantitative factors such as the amount of projects undertaken and labor involved, the new plan will identify demand, and present effective business models for technology-based, higher value-added businesses such as development of new cities and construction of large-scale bridges. Five global strategies The global strategies for Korea`s offshore construction industry can be summarized as; 1) diversification of markets and project types, 2) activation of an investment-development-type business, 3) penetration into new growth areas and higher value-added businesses, 4) enhanced support for SMEs and the promotion of their partnership with large companies for overseas ventures, 5) package deals linked to provision of Korea`s expertise and experience in territorial development. These strategies are to contribute to mutual interests of Korea and customer nations through international cooperation and partnership. Diversification of markets and project types: The new plan seeks to promote international cooperation in the construction industry to broaden Korea`s markets, currently concentrated in the Middle East and Asia, to other regions including Central Asia, Africa and Latin America. The Korean construction industry has pursued market diversification as a key strategy in the hopes to overcome business instability that resulted from its geographically limited reach. Full-fledged efforts are being made in all fronts to make inroads into new markets with huge growth potential in Africa, Central Asia and Latin America. Korean builders are also striving to diversify their business areas. They are looking beyond their mainstay area of plant construction in pursuit of new opportunities that promise robust growth and huge potential demand. Such efforts are critical to meeting changing demands and securing more stable market. The diversification of markets and project types are the centerpieces Korea`s efforts to solidify ground for its sustained growth in the global construction market. Investment-development scheme: Korean firms are increasingly required to enhance their project financing capability. Overseas contracts have been made largely through bidding. But recently construction projects employing a builder financing scheme have been increasing in developing countries in Latin America, Africa and Southeast Asia. Homebuilders are also more actively taking part in new city development projects overseas which require more sophisticated financing ability. <**3> Investment-development businesses require significant amount of capital and thorough prior examination of profitability. To diversify financing methods and enhance their funding ability, the government is running Global Infra Fund which aims to raise 2 trillion won by 2012. In addition, the government is encouraging public and private firms to synergize their strengths through joint projects in infrastructure construction, in which Korean builders have been highly successful. It is also considering forming off-shore infrastructure funds in the future. New growth, higher value-added businesses: New areas of business promising a strong growth potential and higher added value -- such as green construction based on IBEC (information, biological, energy and cultural technologies) -- are emerging as new pillars for Korea`s overseas construction industry. This is a vital strategy for the sector to switch from quantitative to qualitative growth, the major goal of the first Overseas Construction Promotion Plan and its revision. To translate the plans into action, the nation needs to find out and strategically nurture new growth engine areas. It also needs to promote the higher value-added area of design-engineering by expanding the market for construction engineering, raising awareness of its importance as well as strengthening engineering firms` competitiveness through the economies of scale. Other tasks include expanding investment in and developing original technologies for higher value projects, enhancing prior-design capability, nurturing globally competitive talents, strengthening project financing for investment-development and businesses linked to energy resources development, improving risk management capability and securing stable supply channels for equipment and materials. Small and medium-sized players: Small and medium-sized contractors have been vigorously engaging in overseas businesses since the mid-2000s as domestic demand slowed. But new entrants to overseas markets are facing difficulties due to insufficient information and lack of business experience. The government has established the Small and Medium Contractors Business Center in April 2006 to support SMEs in overseas construction business. The government has continued to enhance the center`s function to provide tailored services -- from specialized education and training, to financial support and to consulting -- to help them successfully develop overseas markets. The government has also established legal, institutional frameworks for supporting SMEs. In addition, the government is encouraging cooperation between large and small companies to jointly target overseas markets and share business experience. It needs to provide more systemic support for SMEs and to develop business strategies relevant to different regions and markets. Development support and package deals: Korea`s support for developing countries -- including the Economic Development Cooperation Fund and the Korea International Cooperation Agency`s development survey expenditures and Official Development Assistance -- have proven to be instrumental in securing overseas contracts and improving business conditions for Korean firms. Using such financial support, Korea is providing developing countries with its expertise and experience in territorial and urban development. The development assistance in turn facilitate Korean firms` proactive engagement in overseas infrastructure, urban development and plant construction works.

To more effectively implement such strategies, the government is seeking to expand the amount of EDCF and improve terms for assistance. KOICA is also increasing its spending on development surveys and trying to ensure an effective linkage between feasibility surveys and follow-up construction projects. In addition, the government is stepping up efforts to help firms clinch contracts through package deals, which link resources development to provision of infrastructure for countries short of capital. The government is developing and conducting measures to support such a scheme. Korea needs to employ diverse linkage strategies that take advantage of its strengths, such as connecting resources exploration to urban development projects and information technology-based u-city businesses. The government is vigorously pushing policies to export Korea`s expertise, including enactment of a special law for supporting overseas new city projects. Korea should ensure that such a partnership with developing countries brings about win-win results for both. Through such projects Korea can take part in development of developing countries which have ample demands for urban and territorial development but lack necessary capital and technology. International cooperation and partnership The global strategy for Korea`s overseas construction should be pushed in a way that would promote international cooperation and mutual partnership. Such a strategy will contribute to the internationalization and development of contractor countries, thus raising Korea`s prestige in the world and maximizing mutual benefits for Korea and its partners. Transferred technology and shared development experience will lay the groundwork for mutual development and contribute to the partner countries` construction industry by boosting its productivity and technological capability. This global strategy will also help Korea perform its role as the host country of the Group of 20 summit next November. [Territorial policy in Korea (8)] Toward smarter, safer, greener transportation Korea has made an extensive investment in expanding and modernizing its transport infrastructure since the 1960s, aiming not only to ease traffic congestion, but also to enhance growth potential and improve quality of life. From 2005-09, despite relative increases in government expenditure on welfare and education, transport infrastructure investment has gained 7.8 percent on average, on a par with the 7.9 percent expansion of the overall national budget. Infrastructure investment accounted for 7.7-8.7 percent of total public expenditure during the same period, attesting its importance for national growth and advancement. In 2009, the government raised its spending on transport infrastructure to assist regional development by a whopping 26 percent, far higher than the average growth rate of 3 percent during 2004-08. With continued increases in infrastructure investment, the nation could expand its transportation stock, complete the frame of a nationwide transport network and sharply increase transport capacity for both passengers and freight. The stock of roads that connect key regional hubs has jumped 2.5-fold from 40,000 kilometers in 1970 to 104,000 kilometers in 2008. Roads currently account for 95 percent of passenger traffic and 96 percent of freight transport. Through the 1980s, it became evident that congestion problems could not be resolved simply by building more roads. The Korea Research Institute for Human Settlements thus came up with "The Master Plan to Establish a Nationwide Arterial Road Network" in 1992. The plan detailed measures for building a systemic arterial road network that could disperse traffic flow by means of a stratified road structure, and contribute to more balanced regional development as well. Though revised to reflect changes afterward, the latest version still retains the underlying philosophy and contents of the 1992 master plan. The current plan envisions the establishment by 2020 of a "7 by 9" nationwide arterial road network, consisting of seven north-south and nine south-east corridors. Once completed, main roads in the network will be reachable from anywhere of the nation within 30 minutes. Of its total length of 6,527 kilometers, 55 percent, or 3,447 kilometers of those highways have already been completed while another 1,570 kilometers of sections are in construction or design stages. Only 23 percent, or 1,500 kilometers of the envisioned network remain to be started. In the meantime, the government is pushing for a national research and development project for a "smart highway," seeking to combine Korea`s accumulated know-how in road construction and management and its advanced information technology. It aims to chart new business opportunities by crafting future-oriented, high value-added road technologies and entering overseas markets for high-function roads. The project envisions an IT-powered intelligent road system, which will enable interactive communications of traffic information anywhere, anytime. The system is expected to help cut the nation`s road accident rates by 60 percent to reach the G7 average and improve the road mobility by 30 percent through a speedier road construction. The R&D program began in 2008 for completion by 2017. Diverse trial services will be conducted on a 58.1-kilomter section of highway that links Seoul to the new Sejong administrative city, which is now under construction. Sluggish for decades, investment in railways has also gained a new vigor. The opening of the first phase of the Gyeongbu (Seoul-Busan) High-Speed Railway has greatly contributed to putting much of the nation within half a day`s travel as well as helping to balance the national transport system, which had relied heavily on automobiles. The Korea Train Express (KTX) has the design speed of 330 km/h and a maximum service speed of 300 km/h. Once

the remaining 167.2-kilometer Daegu-Busan section of the Gyeongbu line and the 230.3-kilometer Osong-Mokpo section of the Honam line are completed -- planned for 2010 and 2015, respectively -- the KTX will connect more of the nation, helping solidify national competitiveness and social cohesion. The nation also plans to develop high-speed electric tilting trains and next-generation light trains based on new materials for operation in areas where KTX cannot run. As for air transportation, Incheon International Airport serves as the nation`s hub for external connection. To accommodate a ever-growing flight demand, the airport is set to expand its passenger and cargo terminals and concourse in steps. The scope and timing of a third phase of expansion will depend on future travel demand. Seaports are another pillar of transportation in Korea. With the completion of Busan New Port and the expansion of Gwangyang Port. the nation achieved its long-anticipated "Two-Port System," adding momentum for the nation`s ambition to become a Northeast Asian logistics hub. In addition, with the aim of increasing the annual cargo handling capacity at seaports from the current 423 million tons to 1.01 billion tons by 2019, the government plans to put port bases in operation in each of six mega-regional economic zones, including the greater Seoul zone, develop more logistics complexes in port hinterlands, and build Saemangeum New Port as part of the development plan for the Saemangeum area of reclaimed land. The master plan also looks to construct a nationwide logistics network by expanding and refurbishing large-scale inland freight docks in five regional economic zones. The government will consider constructing two or three more such facilities depending on future demand. Vision and objectives of transport infrastructure policies In transport infrastructure policies, the nation set its sights on the enhancement of national competitiveness by lowering logistics costs. It also aims to improve of quality of life through higher mobility, better accessibility and greener transportation. In addition to measures to address the above problems, the transportation authorities have established a set of policy objectives to proactively deal with expected changes in domestic and international transport conditions. The first objective is to establish more capable transport infrastructure facilities. As information and communications technologies advance, transport methods and networks evolve and the awareness of a global community spreads, the concept of an economic border is becoming increasingly obsolete. Especially in Northeast Asia, where the momentum for free trade is building quickly, the movement toward the consolidation of transport markets and ultimately toward a single regional market in the sector is expected on a fast track. The second objective is to achieve an efficient, sustainable integrated transport system that will better conform to a new socio-economic environment. Drastic spatial changes are expected to take place in the near future as new territorial development projects based on mega-regional economic zones will unfold and key national functions will likely be dispersed geographically with the planned relocations of government facilities. Transportation policies should proactively prepare for and assist such changes. Moreover, given that the fiscal operation plans of late indicated a gradual decrease in resources for transport infrastructure investment, the nation needs to further sharpen investment efficiency by minimizing overlapping, excessive and dispersed infrastructure outlays. In the other hand, it is crucial to ensure seniors` and vulnerable people`s access to transport services and develop more environmentally-friendly and energy-saving transportation. <**2> The third objective is to develop technologies to upgrade the nation`s transport and logistics systems. One priority task in this aspect is to improve efficiency, mobility and accessibility of existing systems using cutting-edge technology. The industry must enable road informationization and the intelligent road system, and must strategically respond to changes in relations between different transport means such as high-speed rail and airplanes. Informationization and the intelligent road system are key to the competitiveness of the transport and logistics industries at a time when the society is moving toward a ubiquitous communications environment free from restriction by time and space. Strategies for transport infrastructure policies Establish an integrated national transport system: The plan calls for a systemic dispersion of traffic taking into account different characteristics of transport modes. Long-distance passenger traffic can be transferred to high-speed trains while short- and middistance travelers can be encouraged to use expressways and low-capacity national roads. Long-haul freight movements can be dealt with by rail and costal shipping. Though an appropriate level of infrastructure investment should be maintained, efforts should be doubled to improve efficiency by avoiding overlapping and excessive investment and properly allocating funds to different transport modes. The master plan seeks to increase the transport adequacy ratio to the gross domestic product from 34.1 percent in 2003 to 45.5 percent by 2019, considering factors like transport facility stock, private capital stock, the output elasticity of transport facility capital, expected future economic growth rates and depreciation costs. To establish effective links between different means of transport, the government plans to build multi-function transit centers at major transport nodes. The plan also seeks to ensure that the national arterial road network of expressways is accessible from anywhere within 30 minutes. Integrated shipping systems should be installed at major logistics bases like seaports and industrial complexes to better meet the changing demand and make the industry more competitive. Improve mobility and accessibility of the arterial land transport network: To promote balanced regional development and

meet growing transport needs, the government seeks to finalize the lattice patterned arterial road network to bring the entire territory within half a day`s travel. Railways will be extended in stages from the current 3,300 kilometers to 4,800 kilometers. The plan also calls for the improvement of wide-area transport systems in metropolises to help strengthen competitiveness of cities. Above all, mass transit networks will be expanded at metropolitan areas including the greater Seoul zone. Wide-area transport coordination bodies will be formed to address various urban traffic problems while measures to manage transport demands will be taken more actively to ease congestion. Realize a sustainable transport system: In preparation for a new climate change pact, the nation needs to build an environmentally-friendly transportation system by prompting a switch to an environmentally-friendly one. Investment should be aimed at encouraging wider use of public transport and building safer, more convenient pedestrian-only roads and bicycle paths. Korea aims to improve transport safety level to rank 15th in the Organization of Economic Cooperation and Development by 2019. The government will try to improve the road safety rate and increase transport safety measures, aiming to reduce the nation`s death toll from car accidents to half the number of 2005 by 2019. Greater transport access will be provided to the economically and socially disadvantaged and a user-oriented transportation system will be introduced. The government will prioritize the values of sustainability, increasing investment in transport services for seniors and the disabled, and reducing unnecessary social costs through user-charge policies like congestion road pricing and parking pricing, both of which would discourage personal vehicle use. Establish an international transport system to cope with changing external conditions: As globalization builds, the plan seeks to create a single transport market in Northeast Asia. Such a market would bring mutual benefits to countries in the region, the last remaining part of the world devoid of an economic community. As a short-term preparation, the government will strive to globalize domestic logistics firms that have grown accustomed to protectionist transport policies. In the long term, Korea will phase out physical and institutional barriers to the operation of international logistics networks, for example through connecting domestic networks to the Trans-Chinese Railway and the Trans-Siberian Railway and liberalizing its airline market. The nation will establish an air transport system of G7-level quality, hub ports and global maritime networks. A third phase of expansion is expected to equip Incheon International Airport with facilities and systems necessary for it to serve as a regional hub. The government will push for an open-sky policy to cope with the ever-expanding market in and outside the region. Logistics infrastructure at Busan Port and Gwangyang Port will be developed to allow them to increase their significance as freight hubs and become key maritime bases in Northeast Asia. The plan also demands the preparation for inter-Korean transport links in line with improvement in ties across the border, and continental connections through the Asian Highway and the Trans Asian Railway. The government will consider establishing a comprehensive plan for transport networks covering the entire Korean Peninsula in preparation for the South-North integration. Build an intelligent transport system and develop related technologies: Korea is looking to apply IT solutions to informationize transport and create an intelligent road system. These will boost operational efficiency through real-time transport management, improve safety through a tighter control of dangerous factors that cause accidents, and make roads more convenient by providing real-time transportation information. The nation needs to expedite the development and commercialization of cutting-edge transport technologies by encouraging both public and private sectors to engage more in research and development of core technologies. The government is striving to speed up penetration into ITS and other next-generation transport management system markets with its mid- and long-term R&D, strategy choices and investment in the development of ubiquitous network-based transport systems. Enhance competitiveness of the transport and logistics industries: The government seeks to enhance transport competitiveness by restructuring vulnerable businesses and encouraging private sector participation in transport facility management. It plans to restructure the industry by encouraging private sector competition, to boost investment in transport facilities by easing regulations. It will consider ending the current monopoly in facility maintenance and management. The government seeks to strengthen the competitiveness of the logistics industry through higher value-added logistics systems, informationization and standardization, and integrating its logistics policies. To this end, the government plans to nurture logistics companies by expanding local complexes of airports and seaports. The government will also operate an integrated national logistics information center to support corporate logistics activities with one-stop information services. Scale and effects of transport infrastructure investment The implementation of the above-mentioned transport infrastructure strategies is estimated to cost about 291 trillion won (based on 2005 prices) between 2007 and 2019. Of the total, the government is required to pour in an estimated 193 trillion won. The sum translates into an average annual spend of 14.8 trillion won, not far different from the current government budget set aside for transport infrastructure (amounting to 14.2 trillion won as of 2004). The remaining 98 trillion won, or an annual average of 7.5 trillion won, is not impossible to raise, given that the government has attracted about 8 trillion won per year from public firms such as Korea Express Corporation and Korea Rail Network Authority and private companies. But detailed

investment, timing and resources will be reviewed along with the overall budget operation planning when the government sets up a new five-year mid-term plan for transport infrastructure investment. Meanwhile, the huge investment should have significant social effects. The expansion of expressways and railways alone is expected to cut transit time, vehicle operation costs, car accidents and environmental costs, together equivalent to an estimated 132 trillion won. The investment is also expected to generate 819 trillion won in output and added value and create 4.17 million new jobs. [Territorial policy in Korea (9)] Seoul-Incheon looks to global business hub The Seoul-Incheon megalopolis has achieved exponential growth for the past half a century. The area has led innovation, creation and national advancement to emerge as Korea`s economic center and a Northeast Asian business hub. Its population has increased from less than 10 million in the 1960s to 24 million as of 2009. SeoulIncheon`s gross regional product reached 409 trillion won ($348 billion) in 2007, accounting for 47.7 percent of the national GDP. Goods handled there make up 86 percent of the national total. In terms of industrial structure, it is the center of knowledge and information-based service industries and high-tech manufacturing businesses. Information and communication services and equipment, digital contents and semiconductors have registered continuous growth there. Seoul-Incheon also boasts Korea`s highest concentration of knowledge assets of manpower, research and technologies. About 90 of Korea`s 100 largest companies and 68 percent of venture firms have their headquarters there. New patents issued in Seoul-Incheon exceeded 120,000, or 79 percent of all intellectual property rights issued domestically. With its international business capability and management function enhanced, the megalopolis will have better conditions for international and knowledge-based businesses. The Northeast Asian economy is fast expanding, becoming one of the world`s three largest trade zones along with the European Union and the North American Free Trade Agreement area. Its contribution to the global GDP is expected to grow to 30 percent by 2020 from 21 percent in 2004. It accounted for 30 percent of global goods traded as of 2006 compared to 27 percent in 1998. Seoul-Incheon will play a more important role in line with the regional growth. So far, government policies on the megalopolis have focused on preventing concentration and curbing overcrowding. Such restrictive policies had many negative side-effects. Stiff regulations have dampened corporate investment and hindered Seoul-Incheon from developing into a global hub with competitive strength. Location regulations caused many difficulties for high-tech industries especially in hiring R&D manpower. In line with changing internal and external environments, the Seoul-Incheon megalopolis is now required to chart a new path of development. Internationally, a new economic order characterized by globalization and a knowledgebased economy has made the concept of a global city-region an important geographical unit of competition. Major cities like London, Paris and New York have emerged as core driving forces of the global economy. SeoulIncheon should enhance its competitiveness against such global city-regions. The rapid growth of Seoul-Incheon has also left it with an excessive concentration of population and function, incurring huge social costs in terms of housing, transportation and the environment. This poses to the megalopolis another major challenge of promoting sustainable development and improving the quality of life. Deregulation to enhance competitiveness The government has continued to improve regulations to address problems with the current policy and management systems of Seoul-Incheon. On Oct. 30, 2008 the Lee Myung-bak administration announced a set of regulatory reforms for the megalopolis as part of more effective territorial policies to boost national competitiveness. Firstly, the government has relaxed regulations regarding the establishment, expansion and relocation of factories. Companies have been allowed to build and expand factories more freely in industrial towns which have been planned and developed by the government, even if they are located in areas subject to stricter counter-congestion rules. The ceiling on the scope of expansion of existing factories, especially in the high-tech sector, was also raised in order to develop the city-region into a knowledge business center. Secondly, government-developed industrial zones such as the Incheon Free Economic Zone were excluded from output restrictions that applied to ordinary industrial complexes. The government also decided to permit construction of smaller (less than 10,000 square meters) knowledge, cultural and IT industrial complexes in Seoul, which already has mature conditions for such high-tech businesses. Restriction on the total amount of plant construction was eased; the rule now applies to facilities larger than 500 square meters, in comparison to the previous 200 square meters. Thirdly, the government plans to gradually revamp plant location regulations in environment protection zones on the condition that industrial facilities do not harm nature. Environmental regulations will be methodically upgraded from restricting the location of certain facilities to controlling the kinds of materials emitted and their total amount. For example, the government will approve more development projects -- while ensuring their systemic planning -- in areas where a ceiling for water pollution applies. Other various unreasonable regulations hindering the development of Seoul-Incheon have been redressed. Facility location rules in the IFEZ were mitigated in order to attract more

investment. Financial firms in financial business districts and R&D institutions inside industrial complexes will be exempt from congestion subcharges that are imposed on large buildings in other parts of the capital. The rates for real estate acquisition and registration taxes on business start-ups (three times as high as the basic rates) will also be readjusted. <**5> The plan also laid groundwork for mutually beneficial economic relations with other regions. Economic gains from deregulation in Seoul-Incheon will be channeled into investment in other provincial areas. They will be used largely to support local governments` development programs. The central government will induce local entities to attract investment more actively and will develop institutional systems for a fairer distribution of resources. Infrastructure policies to enhance competitiveness In addition to efforts for sustainable development and regulatory reforms, the government is implementing measures to rev-up infrastructure for the megalopolis` competitiveness. Building on its strong knowledge assets, namely high-quality human resources, R&D infrastructure, universities and research institutes, the government is building a mega-regional development base and infrastructure. Under a new spatial strategy, each of the megalopolis` lower geographical units will be functionally specialized and linked with each other. Seoul and its vicinity will be developed into a financial and international business belt. Incheon and western coastal areas, where Incheon International Airport, Incheon Port and Pyeongtaek Port are located, will focus on maritime logistics businesses while the IFEZ will become an international business center. Southern parts of Gyeonggi Province will become an IT, electronic and knowledgebased manufacturing base. Seoul-Incheon is exploiting its ample innovation infrastructure to promote and cluster new businesses. The government is developing and globalizing energy, environmental, bio-industrial and digital contents, while trying to create knowledge-based business clusters. One of the most important policies to make it a global business hub is the IFEZ plan. The project seeks to build an international business center by 2020 on 200 million square meters of land that include Incheon International Airport, Songdo International City and Cheongna District. Songdo is being developed into an international, knowledge-based and financial industry town. It will have knowledge, information and biological industry complexes as well as state-of-the-art bio-business centers and convention facilities. Yeongjong District will serve as a logistics base supporting free trade at the airport and will become a new maritime tourism and leisure complex. Cheongna District is being transformed into a multifunctional business city combining sports and leisure facilities, high-tech floral towns, top-quality transport and logistics infrastructure, and a convenient and comfortable living environment. Another pillar for future competitiveness of Seoul-Incheon is the Gyeongin Canal which will link the West Sea and the Han River. Scheduled to be complete by 2011, the new waterway will diversify transport modes currently resorting heavily on automobiles, thus drastically upgrading the logistics system of the megalopolis. It will also help resolve congestion at Incheon Port and improve traffic conditions on inland transport networks. Containers from Busan and Gwangyang ports, steel from Pohang, cars from Ulsan and sand from Ongjin will be transported through coastal shipping. The canal is expected to cut logistics costs, reduce air pollution and traffic accidents, as well as enable the nation to better handle trade with China and North Korea. The Lee Myung-bak administration is pushing the mega-regional economic zone policy to promote greater links and cooperation among regions beyond administrative boundaries and to enhance regional competitiveness through the economy of scales. A recently issued mega-regional economic zone plan for Seoul-Incheon aims at developing it into a globalized business hub leading national development and the economy. Key tasks are establishing mega-regional infrastructure and enhancing the links of regional development bases. On the side of the spatial structure, the plan pursues the formation of a multi-nuclei -- a dispersed structure of mega-regional living zones and their self-sufficient connection. To reduce congestion and environmental costs, the plan seeks to nurture major growth axes and develop mega-regional base cities, regional base cities and sub-central districts at the intersections of growth axes. It also calls for functional specialization of city centers and base cities as well as implementation of development strategies tailored for each growth axis. Pubic transportation and transit systems such as mega-regional express railways, highways, and bus rapid transit will be established in each growth axis to enhance their links with Seoul as well as the functional connection and networking between major cities. The plan is aimed at forming megaregional living zones and enhancing their efficiency through those measures. Ambition for smart growth With the spread of globalization and increasing competition among large cites around the world, Korea should break from the conventional policies of restricting quantitative concentration and instead develop globally competitive central city-regions through systemic planning and management and integrated remodeling. In this regard, the government seeks to introduce a planning-oriented management system for the Seoul-Incheon megalopolis. Unlike the previous spatial management, which centered on the central government`s strict regulations, new planning-oriented management means that central and local governments should cooperate in establishing plans and jointly promote and manage the megalopolis` qualitative development and growth. While previous management leaned towards uniform location regulations, the new system should focus on improving the quality

of life and spatial rearrangements through well-crafted planning and flexible management. A planning-oriented management requires a cooperative governance between central and local governments so that they autonomously set objectives and manage operations through mutual consensus and broad participation in the processes. Efforts should also be made to forge a mature social circumstance that enables the megalopolis and other provinces to overcome their structural conflicts and promote mutually beneficial development. In this regard, the transition to a planning-oriented management requires phased preparations and institutional improvements. Experts have been pushing a joint study on the transition to the new system for more effective mid- and long-term management of the megalopolis. The government-civilian council for policy innovation consisting of central and local governments, non-governmental organizations and civilian experts is collecting diverse opinions and preparing for concrete measures including institutional reforms. The government plans to push the improvement of institutions step by step for the new management system. The Seoul-Incheon megalopolis has developed for the past 50 years into a mega-city region leading Korea`s economic growth. It is located in a strategic base point that connects major cities that form a trans-border corridor of Northeast Asia such as Shanghai, Tianjin, Beijing, Dalian, Vladivostok, Seoul, Incheon, Busan, Fukuoka, Osaka and Tokyo. The megalopolis will establish itself as the base to realize Korea`s ambition to become the center of not only Northeast Asia but also the world around. By Kim Tae-hwan [Territorial policy in Korea (10)] Mega-regional economic zones power growth With globalization accelerating, a nation`s competitiveness increasingly depends on its regions. In its May-June, 2009 edition, Foreign Policy, a U.S. journal on diplomacy, picked the city-region as one of the "next big things" that would shape the post-crisis world. In what the writer, Parag Khanna, calls a neo-medievalism, city-regions will be dominant players of the future economy concentrating people, capital and information, just as city-states were the center of production, commerce and trade in the Middle Ages. Indeed, 40 city-regions account for 67 percent of global economic activity and 90 percent of new technologies. The future economy will be led by core city-regions and a nation`s prosperity will depend on how successful those city-regions are. To gain the upper hand in an escalating global competition over place, the United Kingdom, France, Germany, Japan and other major advanced economies are rearranging their administrative and economic districts into broader units with a certain size of population and industrial base. The Obama administration has also initiated a new territorial policy vision of "MetroNation" as a key solution to help the U.S. economy out of recession. As the new driver of national growth, metropolitan regions make up the lion`s share of the U.S. economy. The 100 largest city-regions occupy only 12 percent of the territory but account for 75 percent of GDP, 65 percent of the population and 68 percent of employment. Specialization and competitiveness Far removed from a global perspective, Korea`s past territorial development policies were obsessed with the goal of leveling development among regions and dominated by a petty-region egoism long embedded in the nation`s 100-year-old local administrative division system. The previous government` policies to diffuse functions of the Capital Region to provinces and balance regional development caused serious side-effects like a sharp rise in real estate prices. The central government was still in the driver`s seat on regional policies, giving rise to a new centralism - an increasing dependence of provinces on the central government, an ever intensifying competition among local governments to secure a bigger share of the national budget, and a reckless implementation of regional development projects with overlapping purpose and content. In the Capital Region, regulations to curb concentration in effect restricted corporate investment and caused inconvenience to residents. Despite the balanced development drive, the nation has suffered from increasingly acute conflicts between the Capital Region and provincial regions. The incumbent government inaugurated in February 2008 found the past territorial polices to be lagging behind the global trend toward metropolitanization and decentralization of power. To better cope with globalization and localization, the government launched a new regional development initiative in 2008. It is aimed squarely at enhancing Korea`s global competitiveness by opening the spatial structure of the national territory. This meets the increasingly pressing need to strengthen the competitiveness of mega-regions in line with the trends toward globalization, localization and open territorial space. It also represents a paradigm shift in regional development policies toward specialization and competitiveness. The new paradigm underlies a major policy transformation: from the past focus on the mechanical balance of regions and narrow local interests to a new framework pursuing a relative development that maximizes the regions` absolute developmental capacity; from a top-down implementation led by central government to a decentralized regional development; from smallscale, dispersed investment on the basis of current administrative units to the pursuit of economies of scale and agglomeration, made possible by inter-regional development and networking; from perennial, wasteful confrontation between the Capital Region and provincial regions to a productive, mutually beneficial

development; and from inward-looking balancing among regions to an ocean-oriented, more open territorial development that braces for the era of Northeast Asia. The new policy envisions "the development of regions that are competitive and capable of guaranteeing jobs and the quality of life." Major strategies for achieving the vision are building mega-regional economic zones, maximizing the growth potential of the entire territory, exploring new growth engines and stimulating specialized development of regions, advancing decentralization and empowering local governments, supporting mutual development of the Capital Region and provincial regions and reorganizing major institutional measures for new regional development policies. The mega-regional economic zone strategy is the centerpiece of the new policy. Three-layered territorial development strategy By revising the Special Act on Balanced National Development in April 2008, the government set the institutional framework for new policies to promote specialized development and cooperative interconnection of regions beyond their existing administrative boundaries of metropolises and provinces. The revision introduced new concepts of economic units - basic residential zones, mega-regional economic zones and supra-regional belts. The law also set the legal foundation for new government committees in charge of studying, planning and coordinating mega-regional development plans as well as a new five-year regional development plan. The amendment kick-started a three-layered territorial development strategy aimed at fully delivering the entire territory`s growth potential. The strategy centers on mega-regional economic zones linked with and complemented by basic residential zones and supra-regional belts. Mega-regional economic zone strategy Mega-regional economic zones have been drawn up in consideration of their economic and industrial structure and historical and cultural homogeneity. The policy is designed to more effectively improve regional competitiveness through interconnection and cooperation among individual regions. The rezoning was made on the basis of population, industrial agglomeration, location, infrastructure, historical and cultural characteristics and local administration and sentiment. The nation`s 16 metropolises and provinces have been grouped into five mega-regional economic zones, each with about 5 million population, plus two relatively independent special mega-regional economic zones with about 1 million people. The economic zones are the basic units to power the nation`s global competitiveness. The system enables an interconnected development on a mega-regional scope by encouraging cooperation and coordination among local governments within each zone. It breaks with the past segmented regional development policy framed by the administrative units of metropolises and provinces. Promotion of new growth engine industries and other projects critical for the nation`s future are now conducted at the mega-regional level. The policy aspires to grow a multitude of immense regional economies comparable to the Capital Region by making each zone have its own leading industries to generate growth and jobs as well as core universities to enhance human capital and research capability. The central strategies, current status and future plans for mega-regional economic zones are as follows; Firstly, each zone must have leading projects. Pushed under the central government`s guidance to reinforce the nation`s growth potential, those projects will also serve as the key driver of growth and prosperity of each mega-region. The government selected 30 projects - three to five for each zone - in September 2008, taking into consideration factors like regional priorities, compatibility with national-level plans and regional specialties. The central planks of leading projects - the development of core industries, human resources, growth bases and infrastructure - are being carried out as state businesses. In particular, one or two new growth engine businesses were chosen for each zone to propel sustainable development and job creation. To foster leading industries, the government is trying to boost research and development activities led by the private sector. The government is also seeking to achieve the critical mass of industrial clusters through inter-regional connections and to maximize added values of existing infrastructure by making a more effective use of them. Twenty specific projects centering on private-sector R&D were selected in May 2009. To cultivate manpower, the government will support educational and training centers at 19 universities which were picked in June 2009. As key growth bases for mega-regional economic zones, the government is developing free economic zones, national industrial complexes, science-business belts, high-tech medical industry complexes, Saemangeum, Yeosu Expo, Sejong City, innovation cities and corporate cities. To promote economic and social integration and improve accessibility, transport infrastructure such as the 7x9 arterial road network, railways and international airports and seaports will be built. Secondly, the new policy requires various conditions for leading projects. Making more land available for development is a prerequisite for smooth implementation of those megaregional leading projects. To this end, the government is easing land use regulations in core areas with high demand for corporate investment. Other measures include the designation of five additional national industrial complexes in Daegu, Gumi, Pohang, Gwangju and Seocheon; the provision of more land for shipbuilding through reclamation; the expansion of land for technology industries by redeveloping and restructuring old industrial complexes; and the transformation of outworn ports in Busan, Mokpo, Gunsan and Mukho into multi-functional

bases for culture, tourism and business. Thirdly, steering organizations for mega-regional economic zones are being established including the launch of committees for the development of mega-regional economic zones in July 2009. The panels are in charge of formulating development plans, exploring regional cooperative businesses, distributing resources within each zone, as well as examining and approving mega-regional businesses. The committees will guide developmental cooperation beyond existing administrative districts and push for largerscale, specialized and substantial regional development. Basic residential zone strategy Basic residential zones correspond to space of local residents` everyday life and are the basic units for policies to improve their living standards more effectively. A total of 163 cities and counties - excluding wards in Seoul and other metropolises - were designated as basic residential zones. They accounted for 54 percent of the nation`s population as of 2007. Population in rural basic residential zones (agricultural, fishing and mountain-area villages) had decreased by 14.7 percent between 1995 and 2007. In those places, the aging rate (the percentage of the population that is 65 years or older) has reached 21.6 percent and residents are still suffering from poor medical services and water supply and drainage, amongst other problems. The strategy envisions "the creation of regions where dreams are alive and people want to live" by ensuring stable jobs and incomes and accommodating everyday demands. As major tasks to achieve the vision, the plan calls for both local entities` own efforts to foster their growth potential and the central government`s support to guarantee the minimum level of living conditions. It seeks to present development directions for rural villages and smaller provincial cities, which have so far been sidelined in the nation`s metropolis-focused development policies. In addition, the strategy would be complementary measures for cities and counties which could be excluded from the benefits of the mega-regional development policy. Supra-regional belt strategy The strategy of supra-regional belts is meant to promote linkage and cooperation in industry, culture, tourism and transportation between mega-regional economic zones and between local governments belonging to different mega-regional economic zones. The government has designated four supra-regional belts - east, west and south coastal belts and a (South-North) border region belt - and will establish additional inland belts. The east coast belt consists of 15 cities, counties and wards in Ulsan, Gangwon Province and North Gyeongsang Province. The west coast belt links 25 such units in Incheon, Gyeonggi Province, South Chungcheong Province and North Jeolla Province. The south coast belt includes 35 in Busan, South Jeolla Province and South Gyeongsang Province. The three coastal belts encompass a total of 75 cities, counties and wards, or 33 percent of such lower administrative units nationwide. Together they occupy 30,900 square kilometers of land mass, or 31 percent of the entire national territory. Their residents totaled 13.2 million as of 2008. They generated 31 percent of the national GDP as of 2006. The (South-North) border region belt comprises 15 cities and counties south of the Civilian Control Line in Incheon, Gyeonggi Province and Gangwon Province. Its size is 8,100 square kilometers, and its population is 660,000. It includes some cities and counties in Incheon and Gangwon which also belong to the west and east coastal belts. Supra-regional belts represent new territorial growth axes combining industries, culture, tourism and infrastructure. The strategy aims to enhance the nation`s global competitiveness through an open spatial structure. It seeks to make the best use of the geoeconomic advantage of the nation, which is located at the center of Northeast Asia and positioned to serve as the gateway both to Pacific Rim and Eurasia. It is also intended to nurture globally competitive and open economic bases as well as to establish new growth axes, thus helping ease the nation`s excessive dependence on the Capital Region. Through economic cooperation, the policy seeks to overcome the deep-rooted regional animosity between east and west and between north and south. It would play a major role in forming substantial co-development zones which will help promote harmony and common prosperity across the country. The strategy enables mega-regional economic zones to plan and push joint projects and pursue interconnected development, thus boosting the nation`s global competitiveness. The three coastal belts have geoeconomic advantages in accessing the fast-growing Northeast Asian economic zone of China, Japan and Russia and the rest of the Pacific region. In industrial terms, the nation`s backbone sectors of steel, automobiles and shipbuilding are concentrated in those areas. New growth engines can be created through enhanced productivity and environmentally friendly development of these industries. The areas are also rich in oceanic resources, crucial to preparing for energy and resource crises in the future. Especially, islands like Dokdo, Ulleungdo, Yeonpyeongdo, Baekryeongdo and Narodo are highly valuable in terms of both geopolitics and science and technology. The inter-Korean border region belt stretching along the Demilitarized Zone has different purposes and characteristics from the coastal belts. It features a variety of ecological resources, serves as a new base for international peace and can be developed into the center of inter-Korean exchanges and cooperation. The government has presented five major implementation strategies to fully deliver the potential of the supra-regional belts - the establishment of transportation networks linking toward Northeast Asia and Eurasia and the enhancement of exchanges and cooperation among major cities; the construction of a square-type high-speed rail network and supra-regional infrastructure nationwide; the development of the world`s top-class industrial belts

and tourism belts; a regional development based on natural resources (rivers, mountains and the sea) and historical and cultural heritage; and the formation of inter-Korean exchange zones in preparation for national reunification. The government has set different development directions for those supra-regional belts. The South Coast Sun Belt is envisioned as an economic hub focusing on oceanic tourism, logistics and industries for Northeast Asia. The East Coast Blue Belt will serve as a green growth base centering on energy and oceanic tourism. The West Coast Gold Belt will be developed into a Northeast Asian hub of international business and new industries. The Border Region Peace and Eco Belt is envisaged as the world`s sole peace and ecology belt. In the future, the government plans to develop a variety of inland belts based on supra-regional industrial infrastructure, natural resources, history and culture - in types of a high-tech industrial belt, a river basin belt, a mountainous nature belt (such as the Baekdudaegan mountain range stretching throughout the country), a history and culture belt, and a growth promotion belt for underdeveloped areas. Harmonizing global competitiveness and quality of life To address defect in the past territorial development polices and to actively respond to the megatrends of globalization, metropolitanization and decentralization of power, the Lee Myung-bak government has shifted the paradigm of regional development toward specialization and competitiveness. At the heart of the new paradigm is the three-dimensional territorial development which centers on mega-regional economic zones linked with and complemented by basic residential zones and supra-regional belts. The government is making all-out efforts to create jobs through mega-regional economic zones, raise the quality of life through basic residential zones and create an open territory to compete with the world through supra-regional belts. The government announced a five-year regional development plan in September 2009, elaborating on the three-layered strategy and specifying future regional tasks. It is a comprehensive legal framework and a mid-term action plan linked to the state budget for implementation in 2009-13. The blueprint is based on the central government`s plans for mega-regional economic zones, basic residential zones and supra-regional belts as well as mega-regional committees` development projects. Plans for basic residential zones will be established in late 2009. An overall development plan for the supra-regional belts and comprehensive plans for the four individual belts will also be prepared until that time. A basic plan for specialized inland belts will be set up until the year`s end and its comprehensive plan will be finalized next year. The government has also mapped out concrete investment plans. About 52.4 trillion won has been earmarked for mega-regional economic zones for five years until 2013 in order to build leading projects, central industries and human capital. It is part of a 126.4 trillion won investment in regional development during the same period. Of the sum, 71.2 trillion won, or 56.3 percent, will come from government coffers while 30.9 trillion won will be financed by the private sector. The investment in regional development is expected to create 1.9 million new jobs. As plans for basic residential zones, mega-regional economic zones and supraregional belts have been established under the new paradigm of regional development and investment is made in accordance to the plans, the nation will be able to forge an advanced national territory in which global competitiveness and the quality of life harmonize through continued job creation. [Territorial policy in Korea (11)] Stable, affordable housing for low-income families Declaring 2008 to be the starting year for the advancement of the Republic of Korea, the Lee Myung-bak administration proclaimed a national vision of "an advanced, top-notch nation," which pursues "a rich people, a warm society and a strong country." To realize the vision, the government set five national goals, 20 policy strategies and 100 policy tasks. The five national goals are "a government serving the people," "a lively market economy," "active welfare," "a country rich in talent" and "a global Korea." Under the active welfare goal, the government seeks to lay the foundation of a lifetime welfare system, customize welfare benefits, stabilize the lives and housing conditions of low-income citizens and make people feel rewarded for their work. An important action plan to stabilize low-income citizens` lives and housing is the so-called "nest housing" policy. In his Liberation Day address on Aug. 15, Lee promised to give priority to stabilizing housing for low-income people. The government is developing five indices to measure their quality of life - income, employment, education, housing and safety - and pushing decisive policies to help citizens without their home own one. Supplementing a previous nest housing plan, the government worked out "the plan to stabilize low-income dwelling conditions by increasing nest housing units and improving housing supply system" on Aug. 27. It is designed to help people realize their wish of home ownership early. To increase supply of nest housing dramatically, the government decided to speed up development of development restriction areas in the Capital Region. Under the previous plan, development of those areas was to proceed gradually until 2018. The government is advancing the schedule to complete development by 2012 before the president`s term ends. The number of nest housing units to be built by 2012 in the Capital Region, where houses are expensive and insufficient, was also revised from 400,000 to

600,000. In particular, 320,000 units will be available at low prices in greenbelt zones close to downtown areas. A new apartment application bank deposit for first-time buyers was also introduced to give more opportunities to newlyweds and young workers. From straw-roofed houses to new towns We spend half of our everyday lives at home; therefore housing is the primary concern. A Korean proverb says, "Leave home and you are in trouble." Traditional Korean houses came in two types. Straw-roofed houses suitable for agricultural life were typical for low-income brackets while middle and high-class families lived in tile-roofed houses. In the past, single-family houses accounted for more than 60 percent of Korea`s total dwellings. With the advent of the urban industrial society, convenient apartments became popular beginning in the 1980s. Today, apartments make up more than 60 percent, bringing major changes to housing culture. <**2> Housing-related laws Korea`s housing policy is based on Article 35 of the Constitution which states that all citizens shall have the right to a healthy and pleasant environment. Its ultimate goal is to realize housing welfare for the people: providing all citizens with comfortable and pleasant housing at affordable costs in places they want to live in. It seeks to meet the basic housing demand and improve the housing welfare of individual families and the entire nation, thus achieving social integration. The Housing Act is the basic law on the housing policy containing rules on the Comprehensive Housing Plan, raising and operating housing construction funds, the minimum residence standard, housing construction standards and housing supply. The Rental Housing Act regards the construction and supply of public rental housing. The Residential Site Development Promotion Act relates to the development and distribution of public housing sites. The Special Act on Nest Housing Construction, etc. is the legal framework for the construction and supply of nest housing, currently the central policy for low-income families. The Act on Supporting Improvement of the Quality of Life of Dwellers of Long-Term Public Rental Housing was enacted in 2009 to support the improvement and maintenance of existing long-term public rental housing and establish facilities for economic activities and welfare services for low-income and socially weak citizens. The Urban and Living Environment Improvement Act was established for the redevelopment and reconstruction of aging singlefamily houses and apartments and projects to improve living environment for low-income urban residents. Housing supply for different income levels The main objectives of the current administration`s housing policy are establishing housing safety nets for lowincome and socially vulnerable citizens, promoting home ownership for middle-income households and stabilizing house prices for the high-income brackets. The government is pushing a variety of supportive programs on both supply and demand sides. Supply-side programs include ownership housing and low-cost pubic rental housing including small unit apartments, permanent rental housing, long-term (five-year and 50-year) public rental housing, rental housing provided through redevelopment, reconstruction and living environment improvement projects, long-term deposit-basis rental housing and corporate rental housing. Demand-side programs include loans for rental deposit money for low-income renters, support for housing costs for those dependent on basic living subsidies, graded rents for public rental housing, housing voucher (trial implementation is scheduled for 2010) and rent control (limiting rent increase to 5 percent annually). To enhance housing safety nets, the government is pushing diverse assistance programs in accordance of income levels and family types, including extending zero-interest loans covering 50 percent of key money for households living in substandard housing, lowering rents for national rental housing for low-income brackets and supplying urban lifestyle housing (such as one-room and dormitory-style units) for low-income and one- or two-member households. <**4> Improvement of housing levels Korea implemented seven Five-Year Economic Development Plans beginning 1962. It pushed a plan to construct 2 million homes in 1988 and a plan to build 1 million national rental housing units in 2002. The Lee Myung-bak administration embarked on a project to supply 5 million homes including 1.5 million nest housing units in 2008. Especially, five new cities - Bundang, Ilsan, Pyeongchon, Sanbon and Jungdong - have been constructed in the Capital Region within a 2-kilometer radius around Seoul since 1989. The new city projects set a new milestone in the history of Korea`s housing policy by constructing a total of 289,000 units to accommodate 1.176 million people. Korea`s housing supply ratio was less than 80 percent until the early 1990s. As a result of continued housing expansion including the 1988 plan to build 2 million units, the ratio increased to 105.9 percent in 2005. But the nation is still far short of meeting housing needs. The number of homes per 1,000 people was 279.7 nationwide, 254 in the Capital Region, 236.4 in Seoul as of 2005, compared to 399 in Japan (1998), 419 in the

United States (1995), 417 in the United Kingdom (2001), 462 in France (2001) and 445 in Germany (2000). The housing density in Korea has been decreasing due to expanded supply and a decrease in the average number of members of a household. The average dwelling size per household increased from 63.1 square meters in 2000 to 66 square meters in 2005. The average size of housing per person increased from 20.2 square meters to 22.9 square meters. Family members per room reduced from 0.9 to 0.8. Housing prices fell recently due to the global financial crisis but are still high compared to other advanced countries. The government plans to build 5 million units for 10 years (2009-2018) - 500,000 units every year - aiming to raise the nation`s housing supply ratio to 107 percent, the level of advanced countries, homeownership to 65 percent and the proportion of public rental housing in the total housing stock to 12 percent. 5 million homes The government plans to construct 5 million units by 2018 and supply appropriate housing in accordance of income levels. It will provide 1.5 million nest housing units -150,000 per year- for low-income families for the next 10 years. They include 100,000 permanent rental units, 400,000 national rental units and 300,000 public rental units (partial ownership and deposit-basis rental housing) for those who are in the bottom 40 percent of the income scale and lack ability to pay for rents and buy homes. For those who are in the 50-60 percent ranges of the income scale and can buy a home in case the government supports, the government will provide 17 million ownership housing units including 700,000 publicly built homes, 400,000 small and medium-size privately built homes and 1 million multi-family and single-family houses. By region, 1 million units will be built in the Capital Zone, where housing costs are relatively high and housing supply falls short of demand while 500,000 units will be constructed in other regions. The nest housing policy is aimed at supplying affordable homes to low-income families around cities, providing homes customized in accordance of income levels, promoting low-carbon, green growth and building self-sufficient, compact cities where homes are close to work. New nest-housing districts The government seeks to develop four nest-housing model districts - an eco-friendly garden village in a city downtown, a green growth model district, a content media park and a clean, green city. The eco-friendly garden village will be built in Gangnam, southern Seoul, with a green network linked in harmony with natural environment, skylines fitting the natural topography, walks linked to forests and comfortable and natural waterfronts (near Segok Stream) Some blocks will be developed into a design nest housing area through international design bidding. The green growth model district will be built in Seocho, southern Seoul. Preserving green space of Mt. Umyeon, it will adopt an energy-saving design and use solar and other renewable energy sources. It will have a waterfront park and will become a "walker-friendly, e-green city." The content media park will be built in Wonheung, Goyang. It will host local strategic businesses including a media park and secure local growth engines by nurturing the cutting-edge digital industry and supporting media and content businesses. The clean, green city open to the Han River will be built in Misa, Hanam, envisaging a green water city, a green traffic city (for walkers, runners and bike-riders) and a green culture city. Korea has significantly improved its dwelling conditions with a massive housing supply in line with its high economic growth for the past 40 years. With improvement in incomes, housing demand has also diversified. Reflecting the trend, the government plans to build nest housing complexes in environmentally friendly and future-oriented ways. It will build nature-friendly "cities in forests" including green homes and eco-friendly cities. Nests for birds should weather rains and wind and guard against natural enemies. Nest housing - meaning homes for newlyweds in Korea - should be comfortable and safe both mentally and physically. The nest housing policy will enable the government to provide comfortable housing services at affordable costs in places where people want to live in. Korea`s housing welfare will reach the level of advanced countries by late 2010 when housing safety nets for low-income families are established and the government`s policy goals are achieved. [Territorial policy in Korea (12)] Territorial policies aim to lure foreign capital Countries around the world are striving to attract foreign direct investment to capitalize on the positive effects it can have on their economies. FDI has a capital formation effect of boosting investment and facilitating economic growth, a capital deepening effect in which fixed costs are lowered in the process of introducing new capital goods. This promotes balanced growth, and begins a technology transfer effect stemming from the spread of advanced management skills. FDI also has a trade promotion effect because foreign-invested companies generally are highly international trade-oriented. There is a competition effect in which inflows of new capital and technology stimulate competition in the domestic market. Because of all these factors, FDI has proven to help increase employment.

Current state of FDI Global FDI totaled $1.833 trillion in 2007, up 34.6 percent from 2003. In contrast, FDI into Korea was in retreat during the same period. After peaking at $7.7 billion in 2004, FDI into Korea continued to decline, reaching $2.6 billion in 2007. Asia received $319.3 billion, or 17.4 percent of global FDI, and the region`s share has been on the rise. China took the lion`s share of FDI into Asia, accounting for 30.1 percent. It was followed by Hong Kong with 16.4 percent and Singapore with 7.7 percent. Korea took a meager 2.3 percent of FDI that entered Asia between 2003 and 2007. By investment type, FDI for mergers and acquisitions has sharply increased recently, largely in advanced industrial countries. M&As accounted for 67.3 percent of global FDI and rose 41.4 percent per year from 2004 to 2007. But in Korea, while green field-type investment increased, the M&As` proportion continued to decline 48.2 percent in 2004, 45.5 percent in 2005, 38.3 percent in 2006, 23.6 percent in 2007, and 37.8 percent in 2008. With the nation diversifying strategies to attract investment, FDI into Korea has turned around recently. A total of $4.644 billion was reported in the first half of 2009, a 2.1 percent increase from $4.548 billion in the same period of 2008. This indicates that FDI into Korea is recovering from the aftermath of the global economic crisis. But foreign investment in free economic zones has been on the decline since registering a high point in 2005. Korea`s attractiveness as investment destination Despite falling or stagnating FDI into Korea, foreigners generally have a positive outlook for its economy. Invest Korea, the FDI arm of the Korea Trade-Investment Promotion Agency, surveyed investment advisors and major foreign-invested companies in 2005 about how they assess Korea`s attractiveness as an investment destination. According to the survey report, "Why Korea: 10 Reasons to Invest in Korea," foreigners regarded "talented human resources" as the best merit of investing in Korea. Chief executives of multinational companies operating in Korea gave high marks to the Koreans` sincerity, diligence and high level of education. The Korean work force also ranked high in many studies conducted by international organizations. According to the 2008 OECD yearbook, 31.6 percent of Koreans aged 25-64 had received post-secondary education, higher than the OECD countries` average of 26 percent. Korea`s ranking in that measure moved up from 10th in 2005 to 8th in 2006. In an international assessment of scholastic ability, Korean students led the world in terms of reading and problem solving and ranked second in mathematics and fifth in science literacy. In the 2006 PISA (Program for International Student Assessment) comparative study of 15-year-old students` scholastic performance, Koreans dropped from first in 2000 to fourth in 2003 and to 11th in 2006. However, their academic abilities are evidently still highly regarded. The Invest Korea survey found a substantial domestic economy as the No. 2 merit of investing in Korea. The nation recorded $929.1 billion in gross domestic product last year with its global ranking falling from 11th in 2003 to 15th in 2008. But the nation is expected to join the club of the 10 largest economies. This is primarily because of its fast economic recovery and the stabilization of the won. Korea`s trade volume exceeded $500 billion in 2005 and grew to $857.3 billon in 2008, becoming the 11th largest trade country in the world. The third merit was found to be profitability and productivity. The survey showed that Korea`s profitability and productivity is regarded as higher than those of its Asian competitors, including China. Associations of foreign firms operating in Korea said multinational companies achieved more profitability in Korea than anywhere else in the world. Other factors listed by the survey making Korea an attractive investment destination were an advanced IT environment, strategic regional location, creativity, infrastructure, world-class multinational companies, strong government support and a stimulating lifestyle. Korea`s role as a creativity-driven high-tech test bed means that world-class multinationals have emerged in the last three years that can differentiate Korea from competitors that lack such conditions. Korea needs to make more efforts to strengthen those features and publicize them to the world. Especially notable is the fact that the domestic market size and profitability and productivity ranked second and third above factors like IT environment and strategic regional location, both of which were conventionally regarded as Korea`s strongest points. It showed that foreign investment is strictly oriented toward market conditions and profit. The government plans to highlight Korea`s attractiveness in terms of market and profitability in its activities to draw foreign investment, diverse investor relations events and publicity materials. The government will also provide consistent and unified investment information and materials, which the nation lacked in the past, and enhance cooperation with local governments in attracting foreign investment.

Special economic zones As part of their efforts for free and vibrant corporate activities, the government is operating special economic zones. Their main objective is to promote national competitiveness, balanced growth and regional development by drawing foreign and domestic investment. With regard to free corporate activities, the government is focusing on two aspects. The first is to make them ultimately regulation-free zones by minimizing and abolishing regulations and the second is to provide support in finance, taxes and business environment. Korea`s special economic zone policies began with the designation of a free export zone in Masan in 1970 that aimed to achieve national and regional economic development by promoting exports, increasing the number of jobs and advancing technology through foreign investment. In 2000, free export zones, which focused on manufacturing, were expanded into free trade zones which encompass trade, logistics, information and service industries. Also, to attract investment from high-tech firms, the government began in 1994 to set up foreign-only industrial complexes, offering benefits such as cheap factory sites and low lease fees. In 2000, Jeju Island was named as an international free city of tourism, knowledge and financial businesses, which guarantees free movement of people, goods and capital and competes with Hong Kong and Singapore. Starting with the Incheon Free Economic Zone in 2003, the government has been running six free economic zones, the pillar of SEZ policies. While SEZs were industrial complexes, FEZs are conceptualized as cities functioning as bases of production, life, distribution, education and tourism. As Northeast Asian economic hubs, FEZs seek to improve management environment and living conditions for foreign businesses to attract FDI, enhance national competitiveness and promote balanced regional development. Strategies to attract FDI 1) Improvement of investment environment The government embarked on the Three-Year Plan to Improve Foreign Investment Environment (2008-2010) in 2008 and established a permanent system to find new tasks to ameliorate FDI conditions. It plans to operate a taskforce of officials from related ministries and public organizations to address the problems foreign investors face. The government will take additional measures to help foreign investors in business entry, investment, corporate management and adaptation to local life. As part of such efforts, the government will recognize the transfer of earned surplus reserves to capital as FDI in accordance with OECD standards beginning this year. It will also within the year improve location regulations including adding condominiums and training centers as FDI facilities and refurbish rules on arbitrary contracts. In addition, standards on small- and medium-sized enterprises will be eased, retention charges attached to new city developments will be relaxed, support in labor affairs will be enhanced and measures related to intellectual property rights, medical service, education and housing are being improved. Global standards are being introduced in corporate regulations regarding tax, accounting, foreign exchanges and intellectual property protection. In particular, the government seeks to improve labor-management relations, boost labor market flexibility and make industrial relations fairer and stricter. Korea`s labor relations and productivity still remain at lower levels in international comparisons of labor regulation indices. Thus the government is seeking to raise labor market flexibility, ease rules on hiring foreigners and boost industrial peace by supporting labor affairs management in FEZs. Korea also offers investor-oriented services and incentives and is eliminating red tape. To improve the incentive scheme for foreign-invested firms, the government will focus cash grants on priority target sectors, temporarily suspend the requirement of at least $10 million worth of investment to be eligible for the grants until 2012 and double the ceiling of the cash support amount. In the mid-term, the support system in tax, location and cash grants will be switched to a system of a total ceiling of incentives with options available. With other countries competitively cutting taxes to attract FDI, Korea this year cut the corporate tax rate from 25 percent to 22 percent for 200 million won or more and exempted foreigninvested companies from corporate taxes depending on industries. As corporate tax cuts lead to increases in both foreign and domestic investment, the government needs to lower the rate to a similar level with rival countries. The government is making full-fledged efforts, including cash grants and reduction of retention charges. It is also implementing or preparing other diverse incentives, including relaxing standards for designation of recipients within foreign investment zones, reducing development-related charges and recognizing the transfer of earned surplus reserves to capital as investment.

Also the government will continue to ease diverse regulations deemed hindering foreign investment, treat domestic and foreign firms equally and shift to the negative-list method in FEZ regulations. 2) Improving FDI attraction system The government is emphasizing selection and concentration in drawing foreign investment, focusing on core competitiveness and future growth sectors. It also takes into consideration regional specialties to ensure that investment is made in ways that contribute to regional development. Green growth and 17 new growth engine sectors are priority areas for FDI and procedures for selecting potential investors and setting priorities have been established. The government assigned target investors to ministries and local governments and had them provide support throughout the process from investment inducement to aftercare services. A three-way FDI support system has been established - the central government is in charge of overall FDI management, local governments are responsible for prompt business approvals and administrative support and Invest Korea contacts overseas target companies and address domestic investors` demands. Given the fact that M&A investment has ample room to grow, the government is focusing on improving institutions for M&As. It is also seeking to encourage resident companies to make additional investments, which is a more effective way of increasing FDI. The Foreign Direct Investment Committee`s planning and coordination functions have been enhanced and each ministry was assigned with their respective FDI goal. To enhance supportive organizations, the FDI Policy Center was installed under Invest Korea and the Foreign Investment Ombudsman`s authorities were enhanced. The government is also establishing a comprehensive national plan to induce investment. It is shifting the basis of investment targeting from nations and regions to industries and companies. It also works together with domestic businesses which can serve as leverage for attracting investment. 3) Expanding target regions and deregulations The government is stepping up efforts to develop FEZs, the key bases for attracting foreign investment. It will establish a basic plan for FEZs by next year containing FEZ development goals, phased deregulations and measures to spread its effects nationwide. It will include streamlining FEZ committees` decision making processes, curtailing the average time taken to permit business plans from the current 5.4 months to one month, introducing competitive systems among FEZ authorities and differentiating the amount of state support for FEZs depending on their achievement of FDI. It will also articulate supportive measures for prompt vitalization of FEZs including procedural deregulations such as their exemption from the rule on ceiling of property sale prices, reduction of development charges and agricultural land preservation charges, faster land expropriation and delegation of authorities to permit projects, as well as support for early construction of national infrastructure like international airports and seaports and early implementation of large-scale land development plans. High land prices are a barrier to attracting foreign investment. The government provides foreign-only complexes and lease factories to help foreign companies with greenfield-type investment to save on initial costs. It designates foreign investment zones and finances half of formation costs, and exempts companies there from corporate taxes for seven years and cuts 50 percent of corporate taxes for three years after the period. It lowered fees of leasing R&D facilities for businesses specializing in R&D, parts and materials. The reduction rate of lease fees in parts and materials complexes for companies investing more than $5 million has been raised from 75 percent to 100 percent. Wages of multinational firms` regional headquarters will also be included in items for cash grants. 4) Improvement of living conditions The living conditions for foreign investors being brought up to global standards is just as important as the improvement of the corporate investment environment. Living environments such as hospitals, schools and leisure facilities should meet global standards so that foreign businessmen and engineers should not face difficulties in everyday life. FEZs will be able to function as cities that ensure convenient corporate activities and lifestyles for foreigners. Regulations have been eased on facilities for foreigners. Foreign educational institutions in Korea will have an increased share of Korean students and foreign-licensed medical workers can be involved at foreign hospitals. Also Koreans will be permitted to use foreign hospitals. But the improvement is not sufficient yet. The government will expand the Korean students` proportion at foreign schools within FEZs to 30 percent and allow non-profit corporations` overseas remittances in a scope not hindering school operations. To attract more foreign hospitals, the government will further expand work areas open to foreign-licensed medical workers

(nurses and medical engineers in addition to doctors and pharmacists) and will allow Koreans to use foreign pharmacies when they receive prescriptions from foreign hospitals. The government selected eight key tasks to increase foreign investment. They are continuously exploring investment interest objectives, linking foreign investment with national industrial and economic growth strategies such as green growth and regional development, strategizing investment inducement activities, enhancing a practical investment support system, establishing investor-oriented location and incentive policies, adapting corporate regulations to global standards, improving labor-management relations and overcoming anti-foreigner sentiment, and promoting living conditions fit for global cities. Along with these diverse efforts, new thinking on FDI attraction will increase foreign investment into Korea. [Territorial policy in Korea (13)] Global city-region strategy in green growth era Two megatrends are sweeping the world: globalization and action over climate change. As the spread of free trade agreements quickens trans-border economic openings all over the world, national economies are fast being integrated into one world economy. While the role of territorial nations is diminishing, regions are gaining everincreasing importance. In the industrialization era, regional competitiveness rested on cities and industrial towns which were central bases of population and industry. Now, with the wave of economic liberalization, high-speed transportation and communications networks, and agglomeration of economic activity and living space, cityregions have emerged as the core geographic unit for regional development. Major countries are pushing forward policies centered on vast economic zones that link large cities and their surrounding suburbs -- metropolitan areas in the United States, city-regions in the United Kingdom and metropolitan regions in Germany. As climate change is becoming a worldwide phenomenon, sustainable economic growth with less emission of greenhouse gases has emerged as a major challenge. Countries are actively promoting green growth policies to revive their economies, protect the environment and improve living standards. While being key drivers of national prosperity, cities and their suburbs are also responsible for a considerable portion of energy consumption and heat-trapping gas emissions. Therefore, metropolises and city-regions are shaping up as crucial areas in green growth efforts. These developments require a new paradigm for territorial and regional development, capable of turning the currents of economic liberalization and climate change into new opportunities for growth. To this end, Korea needs to nurture dynamic city-regions so that its policy of mega-regional economic zones can bear fruit. City-regions which shape around key metropolises will play the driving force of regional development by forming wide-area clusters massing together population, industries and economic activity. Metropolitan areas should also be turned into the forefronts of environmentally-friendly development so that they can play a key role in an emergent green growth economy. Development of city-regions also requires policymakers to give up the conventional thinking framed in individual cities and regions. It demands a new perspective of a network economy and a new strategy for comprehensive development interconnecting economically and geographically close cities and regions. They should be recreated into international city-regions equipped with cutting-edge technology, vibrant green industries, flourishing culture and arts, and advanced living conditions. A broadly shared consensus on the need of city-regional development should be built. Policymakers must map out strategies for development tailored to characteristics of the broader mega-economic regions they belong to. Development directions Following are key policy directions for Korea`s efforts to develop city-regions. 1) FTA-based global economic hub: As trans-border economic liberalization speeds up, inter-regional trade will be expanded, substituting trade flows among nations. As a result, city-regions will play an increasingly important role as the center of global trade networks involving business, production and consumption. With the advent of an era of inter-regional trade, city-regions must become free economic zones and be developed into a hub of capital, human resources and information. 2) Driver of mega-regional economic development: Specialized development of city-regions and the resulting simultaneous growth of core metropolises and their suburbs will advance the government`s new initiative for the "five-plustwo" system of mega-regional economic zones and will contribute to strengthening the nation`s territorial competitiveness. 3) Low-carbon, green growth hub: Green growth management can be carried out more effectively when a multiple of adjacent local governments work together in operating, managing and monitoring transportation, environment water and energy resources than when individual cities separately conduct those tasks. Integration of diverse green assets at the city-regional level will maximize their utility for environmental protection and economic growth. 4) Center of "soft network development." High-speed transport and information networks have enabled people to reach anywhere in the nation within a day and are activating direct exchanges with overseas markets. These will drive a major change in the nation`s residential structure into one centered on city-regions equipped with global infrastructure and high standards of living. Policymakers should abandon the "hard space" framework of regional policies based on the existing administrative districts and should embrace a

"soft space" perspective, which derives regional competitiveness from city-regions` diverse networking. Development model To fulfill their potential as globally competitive growth hubs, city-regions must build organic networks at intra-regional, inter-regional and global levels. At the city-regional level, new growth centers including industrial towns and FEZs as well as education, research and infrastructure should be developed in an integrative manner so that a city-region`s overall capabilities can be maximized and its specialty be promoted. In addition, industrial and infrastructural links within mega-regional economic zones and between city-regions should be enhanced so that city-regions could serve as growth centers of the mega economic regions that they belong to. Globally, city-regions should boost their relations with Northeast Asia and other major economic blocs in industry, transport, logistics and tourism. They should either strengthen international infrastructure including airports and seaports, or improve their accessibility to those transport hubs. Location In general, the location and boundaries of city-regions is determined by consideration of population distribution, geographic proximity, commuting patterns, industrial structure, functional links, and historical and cultural aspects. In addition, cityregions aspiring to become global competition hubs must have accessibility to global transport networks and feature knowledge-based facilities, such as corporate headquarters and international financial institutions. Taking these into account, metropolitan areas -- interwoven metropolises and their hinterland cities and counties -- as well as groups of smaller cities or new growth bases with great potential of integrated development -- can be considered as city-regions. In designating city-regions, opinions of local communities should be sufficiently reflected and the overall process should be led by the regions involved. Rather than starting with too many cityregions, the nation needs to focus on a small number of strategic places and increase the number over time, given that city-regions should drive mega-regional growth and enhance global competitiveness. Development strategies 1) City-regions as free economic zones: With growth of inter-regional trade, city-regions should be the center of investment, trade and business. They should become FEZs with investment and living conditions that are attractive to multinational companies and their staff. The government needs to consider deregulations and advantages in land use and taxation that are more drastic and generous than those available in existing FEZs and corporate cities. Turning city-regions into FEZs will facilitate the spread of FEZs across the nation and lay the foundation for the nation`s emergence in the future as a global growth hub. 2) City-regions as IBEC industrial valleys: City-regions should have industrial competitiveness based on highly converged IBEC technologies (information technology, biotechnology, energy and environmental technology, and cultural and content technology) in connection with leading growth engine projects of mega-regional economic zones. City-regions can also utilize IBEC technologies to upgrade existing industries, resulting in the enhancement of the cityregions` overall growth basis. To nurture new, innovative industry sectors, the three-way network of business, education and research should be enhanced, business clusters should be promoted and if necessary, industrial parks devoted to those sectors should be considered. 3) City-regions as global networks: City-regions should be linked to major global destinations through high-speed transport and logistics networks such as international airports and seaports. Also, effective transport networks should be built around city-regions to interconnect megaregional economic zones. Wide-area transport networks that link major posts such as new growth bases of cityregions will boost the nation`s overall transport efficiency. Improving management of wide-area transport needs at the city-regional level is also important. Intelligent transport networks like a smart highway based on IT-ET convergence as well as low-carbon, green transportation systems should be expanded. Comprehensive policy studies are needed for more effective connections of metropolitan and national transport networks. 4) City-regions as "smart growth" bases: City-regions` competitiveness greatly depends on capabilities of housing, education and medical welfare services. To attract high-quality businesses and talents from overseas and improve the living standards of residents, housing, education and medical services should be upgraded. Specialty high schools and foreign schools should be established so that distinguished personnel and their families would want to live there. Regional hospitals should grow globally competitive and more medical care facilities for foreigners should be established. City-regions should extend integrated educational, medical and cultural services to rural areas. Aging industrial complexes and hinterlands of KTX high-speed rail stations should be renovated as part of development of advanced creative city-regions. Old housing, industrial towns and ports should be refurbished with improvement in terms of economy, the environment, culture and landscape so that they can contribute to cityregions` image and economic vitality. Making the best use of KTX stations` role as centers of exchanges in and outside city-regions, multifunctional facilities for business and culture and mega-regional transit systems should be built around them. 5) City-regions linked to water space: We need a new paradigm of territorial and regional policies which looks at the synergy effect of linking water and spatial development. Almost all major cities in Korea have rivers and large streams running through them. More attention should be directed to water spacelinked city-regional and mega-regional development. Both public-interest and economic functions of waterfront should be delivered by positioning public facilities, museums and galleries there. Historic and cultural belts can

be formed utilizing regions` landmark facilities and historic and cultural sites. Facilities for leisure activities, sports and refreshment should be in place around the waterside to improve living conditions and promote regional development. Especially, rural towns close to rivers will be able to benefit from river tourism combining ecological villages, experience programs and accommodation facilities. 6) Resource-recycling green city-regions: Green growth policies should be implemented through city-regional cooperation. Based on a national strategy and five-year plans announced in July, detailed green growth plans at central and local levels are under consideration. At the metropolitan level, environmentally-friendly model sites are being established. Plans by sector -- buildings, transport, water resources, urban development, etc. -- are being prepared. Integrated green growth at regional and city-regional levels should be pursued through combination of strategies pertaining to cities and sectors. One example is the establishment of mega-regional transport networks that can save energy and cut carbon gas emissions. Facilities for solar and other renewable energy resources and resource-recycling systems for waste and water should be established and managed at city-regional and mega-regional levels. Diverse green assets dispersed in city-regions should be networked and integrated. Integrated city-regional planning and management of green infrastructure such as open space, rivers, streams and seashores will help improve resource efficiency and reduce energy consumption. 7) Global soft cooperation among city-regions: Networks for city-regional development should be expanded into partnerships with major city-regions around the world. Global city-regional cooperation can assume various forms depending on their economic, industrial and cultural characteristics. Such cooperation is exemplified by the relationship between Busan in the southern coastal region and Kyushu of Japan. Korea`s western coastal city-regions are also establishing relations with their Chinese counterparts including Shanghai and Beijing- Tianjin city regions. City-regional cooperation with developing countries will focus on sharing knowledge and experience of Korea`s industrialization. Policymakers need to consider setting up coordination channels and working group meetings to explore global city-regional partnerships. Such cityregional cooperation will catalyze trans-border common growth across the world. Future practical tasks With the global rise of city-regions, Korea should promptly establish city-regional development plans. The most urgent tasks are: First, the government should establish basic guidelines for promotion of city-regions and push for cityregional development strategies corresponding to the characteristics of each mega-regional economic zone. Second, those strategies should be tailored to city-regions` competitive capabilities in consideration of diverse factors including their scale and industrial characteristics. Third, an effective cooperative system is needed between the central administration and local governments. The latter should take the lead and former should play a supportive role in the city-regional policy process. Fourth, metropolitan and provincial governments and lowerlevel city and county governments should share the cost of developing city-regions, while the central government needs to consider providing support through the national balanced development budget and other related expenditures. Lastly, an institutional foundation for the formation and development of city-regions should be promptly established through related law revisions. City-regional strategies should shift Korea`s regional development from a mosaic type characterized by spatial divisions to a network type defined by links and integration of regions and sectors. Moreover, it will enhance Korea`s geographical competitiveness by breaking away from the hub-and-spoke territorial structure -- based on a dual structure of the Capital Region and the rest of the nation -- and reshaping it into a polycentric hub-and-hub structure. [Territorial policy in Korea (14)] Korea seeks to upgrade real estate market After peaking in 2007, the Korean real estate market has been slowing down as a result of a series of government measures to stabilize housing prices and the global financial crisis stemming from the U.S. subprime debacle. Advanced countries like the United States and Britain were battered by sharp falls in home prices and massive foreclosures. Korea was no exception. Home prices tumbled in the latter half of 2008 and unsold new houses piled up in provincial areas, plunging a large number of builders into financial difficulties. Given that the global financial meltdown originated from the subprime mortgage crisis, stabilizing the housing market was a principal task for an economic recovery. The government accordingly took an array of measures to prevent a precipitous decline in the real estate market, including easing regulations drastically, supporting disposal of unsold homes, supplying cheaper houses for low-income families (called nest housing), reducing capital gains taxes and providing liquidity to construction companies. Combined with macroeconomic steps such as interest rate cuts, increased monetary supply and stimulus spending, these actions were highly instrumental to pulling the economy out of the downturn. Beginning in 2009, home prices in some parts of the Capital Region, including the premium residential districts in southern Seoul, have been recovering quickly enough to spark concerns of overheating. Inventory of unsold homes also dropped from 166,000 to about 120,000. Trading has steadily increased. Home supply is still on the decline but the Nest housing policy is expected to help resolve the shortage. Turnaround in

the property sector has contributed substantially to the nation`s overall economic recovery. In the United States, Britain and other advanced countries, instability in the real estate industry remains a key hurdle to their economic upturn. The residential property sector in those countries is in the doldrums and distressed commercial properties are still weighing on the markets. In this regard, Seoul`s strong property market measures constitute an effective response to fend off the global financial crisis. Current status and characteristics of Korea`s real estate market Korea`s real estate market, especially housing, has shown three distinct trends through its changes in recent years; the decoupling in market movements from advanced counties, deepening and widening polarization and relatively high prices of homes, including apartments. First, Korea`s housing market began to show some clear differences from the United States and other developed markets. This was especially so in the way of extending home-backed financing, the epicenter of the latest global market turmoil. In most of advanced countries, financial institutions provided mortgage loans amounting to 80-90 percent of home prices and even 100 percent in case of subprime lending. The slump in home prices undercut the value of security, directly leading to market instability. In contrast, Korea has restricted mortgage lending to appropriate levels to prevent overheating as well as set up buffer measures to cushion the effect of price falls. Another difference is that, though Korea`s housing supply rate is more than 100 percent, its housing stock is still insufficient to meet growing demand, a key factor that helped property markets restore normalcy so promptly. Second, the market polarization along different regions and housing types has deepened. Since 2000, the average home price across the nation has increased by 5.5 percent annually. In comparison, the average apartment value in Seoul has risen by 11 percent. By housing type, the average apartment price has jumped by 7.5 percent, while those of multi-family row houses and single-family detached houses have recorded gains of 4.5 percent and 1.9 percent, respectively. These gaps have widened this year. In 2009, market recovery was led by flats reconstructed or set for reconstruction in high-demand districts in southern Seoul and Gwacheon on the capital`s outskirts. But provincial markets remained sluggish. From January to October, the prices of apartments in Gangnam, southern Seoul, moved up by 6.5 percent while those in nonCapital Region areas were still on the decline and an abundance of newly built houses remain vacant. As of September, the number of unsold new homes in provincial areas was tallied at 106,000, making up more than 80 percent of such units across the nation. Third, though the housing market remains stable, prices are high relative to the nation`s economic conditions. Korea has a higher price-to-income ratio, the basic affordability measure for housing in a specific area, than other countries. In particular, the ratio in Seoul is 10-to-one, meaning low- and middle-income brackets have difficulties in buying a home. The ratio of land prices to the gross domestic product in Korea is 3.6-to-one, higher than in Japan and the United States. Such high prices negatively affect not only housing welfare but also national economic development. <**2> Policy guidelines: Price stabilization and market system advancement Real estate policies are generally aimed at forestalling cyclic price instability, improving dwelling conditions and supporting a healthy economic growth. Two underlying currents can be found in the nation`s diverse real estate policies -- a short-term goal of price stabilization and a mid- and long-term goal of advancing the market system. In the past, the government used real estate policies to stem speculation at a time of overheating and to stimulate demand when the market is contracting. Such indiscriminate interventions in the market did work in the short term but also had many negative side effects in the long run. The incumbent government shifted the policy focus from direct regulations such as restricting transactions to indirect measures designed to nudge prices to stabilize. Such changes are best exemplified by restrictions of home-backed lending in accordance of the loan-to-value and debt-to-income ratios recently applied to Seoul and its surrounding areas. Furthermore, the government is expanding supply of Nest housing units to assuage market concerns on demand-supply imbalance, a key factor weighing on market stability. It is increasing publicly financed homes for low- and middle-class families and raising the stock of low-cost rental housing to levels in advanced economies. Nest housing units are provided at below-market prices to improve housing welfare and help lower prices. On the other hand, the government is endeavoring to foster a fair, transparent and real consumer-oriented property market. Korea`s real estate market should be upgraded to a system based on fair transaction, open information, rational rules and stable supply. Such advancement requires sweeping deregulations, rational tax policies, reliable financial markets, stable housing for working citizens and workable information networks. Major policies To achieve the goals of market stabilization and advancement, policymakers should improve policies and systems to nurture a real consumer-oriented market and generate a virtuous cycle between the real estate industry and the national economy. The government is strategizing each policy arena such as taxation, finance, market management, information and housing supply. 1) Real-estate taxes: The government is trying to mitigate excessive regulations and fix unreasonable real estate taxes. While raising effective property tax rates, the government is seeking to maintain them at reasonable levels. It has also relieved excessive burden of the comprehensive real estate tax by adjusting the threshold of value of property subject to

the tax and base prices for tax assessment. As for the capital gains tax, the government has rendered its rates and brackets equal to the comprehensive property tax, tightened the single-home ownership requirement, and is adjusting the tax flexibly in accordance with market conditions. Acquisition and registration taxes were also lowered to alleviate financial burden involving property trading. These changes are aimed at normalizing taxation and will also help stabilize the market. 2) Financial policies: The government is nurturing the secondary mortgage market for mortgage-backed securities and bonds and activating REITs to encourage indirect investment. To maintain price stability and create a real consumer-oriented market, the government is imposing loan-to-value and debt-to-income lending restriction as a key market control tool. Especially, the government is increasingly interested in enhancing supervision of financial markets, considering the global crisis was caused by moral hazard among financial institutions and laxity in financial supervision. 3) Market management: In a shift from previous regulation-centered policies, the government is giving more weight to the autonomous functioning of the market and emphasizes flexibility in its response to market changes. It has scrapped regulations such as transaction restrictions while focusing on measures to stabilize first-sale prices and expand support for real consumers. It is also taking diverse steps to dispose of unsold homes, crucial to the market recovery. 4) Real estate information: The government has established comprehensive information networks to provide accurate and objective market data swiftly. Such efforts include the collection and disclosure of real transaction prices, the production and improvement of diverse statistics and the establishment of the Onnara real-estate information portal service. The government has also made it mandatory to report real transaction prices to the authorities, which is widely praised as the cornerstone for the nation`s property market advancement. It is also working to develop new price indices based on real transaction values and improve tax assessment standards. 5) Housing supply: The government is pushing for massive supply of Nest housing as a key policy to improve housing welfare for ordinary citizens. With an aim to raise the share of long-term public rental housing to 12 percent -- as with advanced countries -- by 2018, the government plans to provide 800,000 public rental homes and 700,000 small-sized homes. It has also substantially cut prices of publicly built houses to enable more low-income families to afford a home. On the back of these measures, the nation`s housing supply ratio is expected to rise to 107 percent and housing welfare for ordinary citizens should be considerably improved. Policy directions Korea`s real estate market faces two major challenges -- maintaining market stability and developing policies for upgrading the market system in consideration of rapid changes in its environment. In the first half of 2009, housing prices were climbing excessively, risking destabilizing the market and disrupting economic policies. Policymakers need a balancing act to revive the real estate market while preventing it from overheating. Factors behind price hikes can be found in both sides of demand and supply. The government should manage demand at a proper level and continue to supply homes. On the demand side, the government should restrict the inflows of short-term floating capital into the sector. Lending controls such as LTV and DTI adjustments can help curb speculative demand while not much impacting real consumers. On the supply side, it is important to ease concerns about housing shortage by continuously supplying homes from both public and private builders. Also, an effective monitoring mechanism should be in place so that market conditions can be assessed properly and countermeasures can be set up timely. Lagging government responses often triggered market overheating or contraction in the past. The same mistakes should not be repeated. In this respect, tools like K-REMAP, which is being developed by the Korea Research Institute for Human Settlements to track the current and future market movements, will greatly help stabilize the sector. The government not only needs to fix outstanding problems but also improve policy effectiveness in tax reforms, financial market management, production and disclosure of information and other various policy areas for property market advancement. Reasonable taxation, pricing policies based on real transaction values, an active secondary mortgage market, enhanced supervision of the real estate financing, accurate statistics and information networks are among the key elements of policy efforts to lay the foundation for long-term stability and systemic advancement of the real estate market. With these efforts, stability can be maintained and a transparent and fair market system can be built. Then the real estate industry, which has often marred the national economy and people`s lives, will be able to contribute to economic growth and better living conditions. [Territorial policy in Korea (15)] Green infrastructure key to sustainable growth Green growth has emerged as the central agenda to lead the post-crisis world economy. Governments around the world are racing to promote environmentally friendly industries, technologies and jobs. "Green" has become a keyword of major economic policies and an indispensible term for social issues. Infrastructure construction, which once represented development without considering the environment, is no exception. The New Economics Foundation of Britain has proposed the "Green New Deal" initiative to overcome the triple crunch of the credit crisis, climate change and high oil prices. Green infrastructure is a representative

policy for the Green New Deal which simultaneously pursues environmental protection and growth. The term of green infrastructure has been used since the mid-1990s to emphasize the importance of protecting the natural environment in land development. Combined with the green growth concept, the term now has a broader meaning referring to new infrastructure businesses that underpin sustainable development and future growth engines. From the intellectual transportation system to smart grids, and smart highways to green buildings, green infrastructure mitigates greenhouse gas emissions, minimizes the impact of development on the natural environment and drives new growth by utilizing and converging information and communications technology, biotechnology and nanotechnology. Governments have pursued policies for sustainable and environmentally-friendly infrastructure for a long time. But those policies were tied to the somewhat passive objectives of reducing environmental destruction in the process of development. New green infrastructure policy is based on a fundamentally different perspective. It looks to a positive harmony between the environment and growth. As such, recent government investments in infrastructure aimed at overcoming the economic crisis are focusing on green infrastructure businesses. Renewable energies, green homes and smart grids take the lion`s share of expansionary fiscal expenditures across the world. The United States for example earmarked 10.4 percent of its stimulus spending for investment in energy efficiency, renewable energy such as wind power and green energy industries. China`s planned investment in wind, solar and other renewable energy sources makes up 37.8 percent of the state outlay to boost the economy. Green infrastructure policy Korea`s green infrastructure policy started in earnest with the low-carbon, green growth initiative which the government adopted in August 2008. The government unveiled the Green New Deal policy in January 2009 promising to invest 50 trillion won and create 956,000 new jobs. Top on the list were green infrastructure projects involving green living space (homes, offices, schools, rivers and streams), the cleanup and renovation of four major rivers, environmentally-friendly mid- and small-sized dams, green transportation, renewable energy and green information networks. Green infrastructure figured prominently in other national initiatives such as the strategy to promote new growth engine businesses. The policy goal of green infrastructure can be summarized as "the development of new growth engines that prop up green growth." The government has set four policy directions to achieve the goal - a transport system with less carbon emissions, developing clean energy to replace fossil fuels, boosting efficiency and safety through new technologies, and fostering new growth engines based on green technology. 1) Low-emissions transport system: Korea is focusing its emissions mitigation efforts on the transportation sector, in which the nation registered two times as fast emission growth as the OECD average. As for automobiles which account for 78 percent of emissions by Korea`s transport industry, the government is working to speed up the commercialization of electric vehicles and build necessary infrastructure. Korea`s latest standards of fuel efficiency (more than 17 kilometers per liter) and emissions ceiling (less than 140 grams per kilometer) set in July 2009 are stricter than those of the United States. The government plans to apply the regulations to all vehicles by 2015. It is also implementing various measures to ease congestion, aiming to cut down emissions by an estimated 310,000 tons per year. For example, the transport authorities are expanding the wireless toll payment system Hipass, providing drivers with traffic information through intelligent transportation systems and allowing driving on hard shoulders during peak hours. On the side of supply, the government is promoting novel road construction technology less dependent on carbon-heavy materials such as cement, concrete, steel and asphalt. The government is also seeking to make ports green by expanding the use of railways and marine transport for moving freight to and from ports, increasing use of renewable energy in handling cargo, promoting eco-friendly disposal and recycling of ocean wastes, developing port waterfronts and enhancing safety measures against the effects of climate change. 2) Clean energy alternatives to fossil fuels: Countries are waging cutthroat competition to take the lead in developing clean energy based on solar, wind, tidal and geothermal power. Advanced countries have already consolidated their presence in renewable energy industries through huge state spending on research and development. Korea, lagging behind in technology and production capabilities, is strategically focusing on areas in which the latecomer can take advantage of its natural environment. For example, Korea`s relatively large tidal range offers favorable conditions for tidal power generation. A tidal power generation plant is under construction around Sihwa Lake. With the world`s largest capacity of 254,000 kilowatts, the facility will be completed by the end of 2010 to meet the electricity needs of 500,000 people. Clean energy development still confronts many hurdles. Installation of solar panels and construction of wind power plants require vast sizes of landmass and space, and could damage the natural environment. For example,

building wind power complexes around mountain peaks could destroy forests. Tidal power plants also could degenerate marine eco-systems. Ethanol extraction for eco-friendly automobile fuels could result in massive destruction of Amazon forests. In addition, clean energy is still far behind fossil-based energy in terms of economic value. Its unit costs of development are high and its energy output efficiency is low. So, the promotion of development of clean energy requires massive financial support from governments. In this regard, the Korean government is directing its clean energy efforts toward minimizing the impact on the natural environment, overcoming deficiencies in technology and production capabilities, raising the technological localization rates and improving economic efficiency of green energy sources. 3) Higher safety and efficiency through new technologies: This is the core future-oriented policy direction for green infrastructure. Backed by advanced information and communications technology and infrastructure, Korea has a competitive edge in this area. By harnessing its novel technologies, the nation can reduce costs in meeting green infrastructure needs, which otherwise would cost a lot. Moreover, the increasing frequency and scale of natural disasters resulting from global warming and earthquakes have raised public awareness of the environment and heightened demand for infrastructure that is safer and more environmentally friendly. Projects aimed to boost efficiency of existing facilities, such as smart grids and intelligent water leakage control, will save considerable costs and reduce energy consumption, thus contributing to fighting global warming. A smart grid system applies information technology to existing electricity networks. Through two-way communication between power suppliers and consumers, it enables homes and factories to use electricity at offpeak hours. Ground was broken on the world`s largest, open test bed complex for the system on Jeju Island in August 2009. The center will be a cornerstone for the nation`s plan to commercialize and export smart grid and other related technologies, as well as give a chance to promote Korea`s advanced green infrastructure technology around the world. Other examples include the "mobile harbor" system poised to change the conventional location pattern of seaports which require deep waters. "Fog cannon" technology for controlling fog and air pollutants can be applied to diverse use including helping operations of airplanes, extinguishing forest fires and cleaning up the atmosphere in specific areas. 4) Fostering new growth engines based on green technology: The government hopes to develop green technology in the above-mentioned areas into the nation`s next-generation growth engines. The 17 new growth engine businesses announced in May 2009 included six green technology sectors -- renewable energy, low-carbon energy, sophisticated water treatment, LED applications, green transportation and green cities. Green infrastructure strategies Green infrastructure is a new policy paradigm which is vital not only to overcoming the current economic crisis but also to coping with looming environmental and energy crises, and pursuing a sustainable economic development. In the recent G20 Low Carbon Competitiveness Report published by Third Generation Environmentalism (E3G), a British think tank, Korea ranked 4th in the low carbon competitiveness index. The report citied "the highest level of high-technology exports, the most efficient electricity transmission network, high rates of investment in physical capital, and low rates of depletion of natural capital." But the nation placed 15th in the low carbon improvement index and 8th in the low carbon gap index, which measures the difference between the current and target indices. The government said, "The high ranking in low carbon competitiveness reflects the strong potential of Korea`s green industries and technology, and the government`s determination to develop them. But the low positions in improvement and gap indices showed that Korea still has room to make much more effort in comparison to its capacity to reduce emissions." The comment indicated the government`s firm commitment to a consistent and more active green growth drive. For a successful green infrastructure policy, the Korean government is advised to consider following strategies: First, the government needs to set clear and detailed policy goals embodying "green" and "growth" visions. Clearly stated goals relating to, for instance, emissions cuts, improvement of infrastructure service and contribution to economic growth, will give a clear definition to the concept of green infrastructure and facilitate the achievement of those goals. Second, green infrastructure requires a proper division of roles and a close cooperation between the pubic and private sectors. Private businesses should lead the way in developing green infrastructure, which is entirely based on creative technologies. But technological innovation has a high level of risks. So, the government should play a role of minimizing the risks while staying vigilant against possible moral hazards. The government needs to

strategically select and concentrate support on projects that best satisfy the standards of feasibility, effect, growth potential, and appropriateness of state support. Third, projects to improve efficiency of supply and maintenance of existing infrastructure facilities deserve more emphasis. Changing methods of supply and maintenance of existing infrastructure can reduce costs, improve services and deter demands for new infrastructure construction. This will help slash greenhouse gas emissions and significantly save state spending on infrastructure. In conclusion, the green infrastructure policy will contribute to the nation`s economic recovery and creation of green jobs. Green technology know-how obtained through the process will also boost exports and sustain economic growth by providing the nation with solid ground in new markets created by global responses to climate change, including the Clean Development Mechanism and the cap-and-trade system. [Territorial Policy in Korea (16)] U-City: Future of urban planning, management Korea boasts one of the world`s most advanced information and communication technology infrastructures. It ranks second in the National Informatization Index (National Informatization Agency, 2008), second in the ICT Development Index (International Telecommunications Union, 2007), eighth in the number of internet users per 100 inhabitants (ITU, 2007) and first in the high-speed internet penetration rate at 95 percent (Korea Communication Commission, 2008). Its electronic government system is rated as the fifth-best among 191 countries (2008), the number of internet banking subscribers stood at 52.6 million (Bank of Korea, 2008) and its e-commerce market is estimated to be worth 630 trillion won ($545.4 billion) (National Statistical Office, 2008). In the face of diverse internal and external challenges, Korea needs to make the best use of its superb ICT infrastructure as a major engine to propel its future development. It is said that the competitiveness of cities represents competitiveness of states. If the 20th century was the era of states in which nation-states competed with each other, the 21st century will be the era of cities in which cities are the principal unit of global competition. More than half of people around the world are living in cities. Urban inhabitants account for 90 percent of the population of Korea. Policymakers now should prioritize enhancing cities` competitiveness, which requires an effective integration of urban planning and ICT infrastructure. We should more actively combine cutting-edge ICT into daily living spaces in urban planning and construction. As part of such efforts, an increasing number of local entities are embracing the "Ubiquitous City" (U-City) as a core concept in their new residential development plans and citywide informatization projects. U-City is aimed at boosting urban competitiveness with digital and high-tech systems, making city management more efficient and enabling citizens to access necessary information anywhere, anytime. Already, some ICT-based systems (for example, intelligent transportation systems and underground facilities management systems) have been installed separately to address environmental, transport and other urban problems. But such isolated operations make organizational and prompt responses to emergencies difficult as well as render urban management unsystematic and dispersed. U-City, based on integrated city operation centers, overcomes such problems through integrated services and higher management efficiency. UCity is the trend of the times and a potential new growth engine by which the nation will be able to dominate the burgeoning global market and revitalize regional economies. Now the question is how to proceed with it. This article looks into the current status of U-City and tries to indentify its vision, goals, strategies and other crucial factors that policymakers should take into account for the future of cities. Current status, prospects One local government after another across the country is pouring out U-City construction plans. Begun by Hwaseong which completed the system in its Dongtan district in September 2008, 36 local governments (in 52 districts) - in existing cities including Seoul, Busan and Jeju and new cities such as Songdo in Incheon and Woonjeong in Paju - are currently pushing the projects, according to the Ministry of Land, Transport and Maritime Affairs. <**3> In the most advanced countries like the United States, Japan and in Europe, ubiquitous networking technology is emerging as a new paradigm for national informatization. Diverse efforts are being made to prepare for the advent of a ubiquitous network society including government investment, research and development and trial projects. Those countries are implementing high-tech urban development projects - including smart cities and intelligent cities - suitable for their infrastructure and environment. The prospects for Korea`s U-City industry look very bright. The country ranks fifth in the share of the global construction market and second in the ICT Development Index. Korea has a strong potential to lead the global market by taking advantage of its strength in both fields. It is time that the nation focused on enhancing its U-City capabilities including early localization of core technologies such as integrated platforms and mapping out comprehensive measures to support the industry. Strategies for future cities

To promote the industry at the national level, the Korean government has finalized the first Comprehensive UCity Plan (2009-2013) outlining the policy vision, basic direction, national steering systems and strategies and key tasks for each developmental phases. Three policy goals 1) Effectiveness of urban management: The plan aims to establish high-tech urban spaces and intelligent city management systems by integrating U-City technologies into urban infrastructure facilities. 2) Foster as new growth power industry: The U-City industry will be promoted as a new growth engine to enhance national competitiveness and create jobs. 3) Advanced urban services: The plan also looks to improve the quality of life through U-City-based urban services including finely customized services for residents. To achieve these goals, the government has established four implementation strategies -each with a detailed list of tasks. The strategies relate to preparation of institutions, development of core technology, support for industry growth and creation of sensible service. 1) Preparation of institutions: The government seeks to promptly consolidate a comprehensive institutional basis for the industry regarding planning, construction and management. This requires various guidelines for effective planning and management as well as effective measures to protect private information and prevent disasters, damages and infiltrations. For information connections and compatibility, which are key to UCity technologies, clear standards for information, core technologies and individual services should be set up. Another important task in this area is promoting the use of U-City information among private sectors, thus raising the information utilization rate. 2) Development of core technology: The government seeks to provide R&D supports early to localize and foster core source technologies. Strategic assistance will be directed to localization and export of core U-City solutions involving information collection, processing and utilization. The government is pouring 104.4 billion won into U-City R&D from 2007-12. New technologies will be swiftly put into test beds to examine their feasibility. The government will support tests of solutions, coordinate functions of related government ministries and branches, and promote common use of results from different ministries, thus maximizing the synergetic effect of innovation. 3) Support for industry growth: The government seeks to generate new jobs and boost national competitiveness by supporting and promoting the U-City industry. The government will support model cases of U-City construction and prepare a base to export U-City. The government`s important task is producing a professional workforce. It will nurture high-quality researchers and skilled workers in the sector and train local government officials with U-City capabilities. The nation will also play a leading role in expanding international networks such as "U-City World Forum" and offer overseas road shows and exhibitions. 4) Creation of sensible service: The government seeks to improve living conditions through practical services. It will develop new services and improve functions through R&D activities and public surveys. To find out diverse, creative services and disseminate them among local entities, the government will encourage active private-sector engagement in U-City planning and operations. Phased strategies The nationwide U-City drive aims to overcome the limits of conventional urban planning and management as well as recreate cities as a qualitatively new space offering better living conditions. It is the principal direction in the evolution of cities and a fundamental solution to surmount spatial limitation and sharpen competitiveness. In its initial stage, the government and the pubic sector need to lead infrastructure construction while private companies largely engage in developing creative practical services. Government support should be directed toward the provision of individual U-City public services, arrangement of institutions and nurturing human resources. In the expansion stage, the government needs to push industrial sophistication strategies including export support to develop it into a new growth engine business. For the period of the first Comprehensive U-City Plan (2009-13), the government is expected to spend 490 billion won. While trying to secure the necessary budget, the government needs to actively induce private corporations` participation. The state`s role should be focused on core infrastructure, technology development, legal and administrative institutions, supportive measures and human capital, while private businesses concentrate on advancing customized services. For systemic and effective policy implementation, the Ministry of Land, Transport and Maritime Affairs should be in charge of establishing overall plans and coordinating policies and other ministries are required to develop U-City services in their specific areas. [Territorial policy in Korea (17)] South Coast, Korea`s gateway to ocean economy We are accustomed to thinking of the Korean Peninsula as the shape of a tiger, with a Cintamani Stone in its mouth. But look at the map upside down and you will have a different vision; a continental tip pointing toward the vast ocean. However, the nation`s territorial development has been overly concentrated on inland areas while its great potential for ocean-bound growth has yet to be fully developed. For Korea to expand its competitiveness and cope with new challenges of a borderless global economy, a new, ocean-oriented development strategy is urgently needed. Territorial competitiveness is an integral aspect of national competitiveness. Shaping a territorial

structure suitable for the globalized era is one of the most important tasks for enhancing national competitiveness. The government`s strategy to develop supra-regional belts is meant to meet that purpose. The burgeoning initiative`s first and foremost frontline is the South Coast. Since the 1980s, many experts including the Korean Society of Future Studies have constantly urged development of the southern coastal regions, which can serve as a key gateway for Northeast Asia and abounds in ecological resources and valuable cultural assets. With the South Coast Belt development plan, the nation is taking the first step toward forging new competitive strength through mega-city-region strategies. The mega-city-region has emerged as a new core geographical unit of global competition. The South Coast Belt plan promises to bring prosperity and improve quality of living. It also provides linking and packaging for various businesses -- including tourism, seaport-based logistics, industries, transportation and energy -- effectively with surrounding areas. By doing so, the development scheme will lead the overall territorial restructuring necessary for the nation`s second leap forward. Supra-regional belt policy Transnational competition is ever intensifying with globalization and market opening, and global competition among mega-regions is becoming more important than that among nations in the world or among regions in a national economy. To better cope with this trend, countries are pushing megalopolization and decentralization simultaneously. The Korean government is also promoting a three-layered regional development policy to enable regions to live up to their growth potential to the maximum. The policy revolves around 163 basic residential zones, seven mega-regional economic zones and four supra-regional belts. Territorial policies based on a megaregional scale can be found in many other advanced countries, too. For example, the United States is proceeding with a plan to enhance global competitiveness of 10 or more mega-regions under the "America 2050" vision. The European Union is promoting 52 border-area projects and 13 transnational projects under a regional cooperation program among nations under a five-year (2007-12) program. Japan is also pushing regional development from a global perspective by establishing four supra-regional axes under a new territorial grand design strategy. The Lee Myung-bak administration`s supra-regional development plan is aimed at fostering open, outward-oriented economic bases and establishing new growth poles to overcome the current territorial structure excessively concentrated on the capital region. It would also help promote cooperation and mutual prosperity between regions east and west, north and south. The administration has set five major implementation strategies for supra-regional economic development: 1) laying the foundation for trans-national cooperation in Northeast Asia; 2) forging functional links and mutual development within each supra-regional belt; 3) nurturing world-class regional belts based on their specialized sectors such as manufacturing, logistics and green industries; 4) developing common projects in culture, tourism, ecology and other sectors based on their topography spanning a supra-regional scale (like four major rivers and the cross-country Baekdudaegan mountain range); 5) historical and cultural assets, and revitalizing inter-Korean exchanges and cooperation in industries, tourism and the environment. The government has designated four supra-regional belts -- the East Coast Blue Belt for energy and tourism, the West Coast Gold Belt for new industries, the South Coast Sun Belt, and the Border Region Peace and Eco Belt for inter-Korean cooperation. The East Coast Belt will be developed into a green growth base centering on energy and oceanic tourism. The West Coast Belt is envisioned as a Northeast Asian hub of international business and a cutting-edge industrial base. The South Coast Belt will grow into a Northeast Asian economic hub focusing on oceanic tourism, logistics and industries. The Border Region Belt will become the world`s sole peace and ecology belt. The new territorial policy approach shifts away from a closed, inward-oriented development toward an open, outward-oriented development in response to economic globalization. The plan also tries to make the most effective use of the geoeconomic advantage of the nation surrounded by the sea on three sides. It also seeks to execute territorial management at a peninsula-wide level with a long-term vision to foster an open, outward growth axis in East Asia and the Pacific Rim. <**3> South Coast Belt development policy The South Coast Belt encompasses 35 cities, counties and wards (nine wards and one county in Busan, four cities and 12 counties in South Jeolla Province and six cities and three counties in South Gyeongsang Province), according to the Special Act on Eastern and Western South Coast Belt Development. The special act expires in 2020, coinciding with the final year of the 4th Comprehensive Territorial Plan. The plan will present new growth strategies and development projects in seven arenas -- environmental protection, manufacturing innovation, tourism and resort industries, seaport-based logistics, infrastructure including roads, the structural upgrading of agricultural and fisheries sectors, and publicity and marketing of regions. The South Coast is endowed with a variety of outstanding growth potentials. Its strong industrial basis and rich tourist and cultural assets should catapult it as the nation`s new growth center on a par with the capital region. It has an optimal location to compete in the future ocean-centered global economy. Far away and functionally separated from the capital region, the South Coast Belt can make it into an independent large economic community. As the crossing point of West Sea Rim and East Sea Rim economic zones, it serves as a strategic center of Northeast Asian maritime trade. It also constitutes a multiple gateway axis for Northeast Asian

logistics, bridging the continent and the ocean. The robust industrial basis coupled with the nation`s best international trade environment is also one of its important potentials. Its strength in machinery, shipbuilding, materials and logistics should offer a fertile ground for the development of new future businesses through industrial linkage and technological convergences. Free trade zones, free economic zones, hinterlands consisting of small and large growth poles, as well as wide-area transport networks provide for its future industrial and logistics growth. With its temperate climate, rias coast and archipelago, the supra-region has a potential to emerge as an international tourist attraction. Two of the nation`s three coastal and marine national parks are located there. Well-preserved, undeveloped islets and coastal areas should meet growing eco-friendly tourism demands in the green growth era. It also has unique historical and cultural resources including sites related to Lee Sun-shin and Jang Bo-go, ancient Korea`s most respected naval admirals. The development plan will also provide an opportunity to promote harmony between western and eastern regions which have been politically and culturally alienated with each other for a long time. Economic, cultural and industrial exchanges should lead to enhanced voluntary cooperation among three regional governments as well as wider and deeper understanding and trust between their residents. Complementing weaknesses of each local area through well-coordinated developmental plans is crucial to national and regional competitiveness in the global playing field. By harnessing these strengths fully, the South Coast Belt will be able to grow into Northeast Asia`s new comprehensive economic center, generating values not only for the supra-region but also for the entire nation. It should utilize its strategic position as the center of a multiple triangles of the Northeast Asian economy; it is a newly emerging node linking capital regions of China, Japan and Korea. Vision and strategies The South Coast Belt has a set of favorable economic and geoeconomic conditions as follows. First, it is the center of the fastest growing Northeast Asian economic bloc and by fully delivering its potential capabilities can join the ranks of the top 10 economic zones of Northeast Asia. Second, it can be developed into a global logistics and business pole by accelerating industrial convergences. Third, it is a gateway allowing for simultaneous advances into the West Sea Rim, the East Sea Rim, the Pacific Rim and the continent. Lastly, it can become an international business center capitalizing on its existing manufacturing, seaport logistics, tourism and resort bases, and settlement conditions. In this regard, the government has presented Northeast Asia`s comprehensive economic center as the vision of the South Coast Belt. Key implementation strategies are as follows: 1) Develop a global tourism and resort hub by linking its cultural, arts, tourist and resort assets. 2) Form a Northeast Asian international exchange pole. The government seeks to develop three economic poles around its free economic zones, build a comprehensive economic belt by linking them, and lay the foundation for cooperative businesses with neighboring economic zones in Northeast Asia. 3) Promote industrial convergences and links. The government seeks to nurture new growth engine industries through IBEC technological convergences and lay the foundation for high value-added agricultural and fisheries industries and local specialization. 4) Establish an east-west integration zone. The middle point of South Coast Belt bridges Yeongnam (Southeast) and Honam (Southwest) regions. The government seeks to build the cities of technological convergence and cultural convergence as symbolic projects for mutual prosperity and reconciliation between the two regions. 5) Expand domestic and international transport networks. The government seeks to establish global transport links based on domestic wide-area networks that effectively connect maritime, aerial, rail and automobile transport modes. That would make any part of the South Coast Belt reachable within two hours. To push these strategies, the government plans a variety of development projects. They include highquality sojourn resort and leisure towns in the archipelago, Hallyeosudo and Namdo regions. The archipelago region (Shinan and Jindo) will host maritime sports and leisure towns, vacation villas for foreigners and cruise ship harbors. The Hallyeosudo region (Tongyeong, Geoje and Yeosu) will feature international amusement complexes including tourist towns for foreigners and environmentally-friendly resort facilities. The Namdo cultural region (Gangjin, Wando, Boseong and Hadong) will focus on eco-tourism including healthcare towns. The government also plans to foster cutting-edge, higher value-added industries such as aerospace, robotics, marine plant and oceanic life industry, building on established ones in the South Coast Belt. Busan and Gwangyang ports will enhance their capacity as logistics-oriented harbors by forming hinterland complexes and expanding free trade zones. In this regard, a Korea-China industrial cooperation town will be established, laying the cornerstone for expanding transnational cooperative businesses. To nurture agriculture and fisheries as strategic businesses, processing industry complexes will also be placed in some areas. In the region around Gwangyang Port, the middle point between east and west, cultural and technological cities will be established to promote regional integration. In time for the 2012 World Expo in Yeosu, tourism programs linked to neighboring areas will be offered and the area will grow into a new development pole combining industries, culture, arts and tourism. The railway along the south coast will be converted into a double-track railway and will be linked to north-south and east-west corridors to altogether form square-type national high-speed rail networks. Inland highways as well as east-west bridges linking islands to mainland will also be constructed. The government will

also push for cooperation with other Northeast Asian economic communities through establishing trans-border institutions like the Korea-Japan joint organization to deal with strait management. Ocean-bound development For a successful development of the South Coast Belt, the government will ameliorate core regulations that hinder domestic and foreign corporate investment and will simplify planning and implementation processes for the development. In addition, it plans to create new organizations and implementation systems to connect South, East and West coastal belts in a way that maximizes the synergetic effect. Along with hardware aspects such as implementation strategies and comprehensive plans, the development requires improvement in software aspects such as foreign investment, regulations and costal landscapes. The South Coast Belt will be a catalyst for the nation`s future growth by attracting foreign investors, creating jobs and boosting regional economy. It should pave the way for building a second capital region with robust competitiveness based on diverse regional resources. That will move the national growth pole from the capital region at the center of the Korean Peninsula down to the south coast, expediting the establishment of a new ocean economic zone and in the farther future the establishment of an ocean-oriented territorial structure. [Territorial Policy in Korea (18)] Sejong reshaped as science, business center The government announced a revised plan for Sejong City on Jan. 11. The city is under construction on a 72.9square-kilometer land in Yeonggi County and Gongju City, South Chungcheong Province, about 120 kilometers south of Seoul, under a 2006 plan initiated by the former Roh Moo-hyun administration to relocate part of the central government. Since ground was broken in 2007, 5.4 percent of the construction work has been completed. The original plan mandated that 13 central government organizations currently in Seoul -- nine ministries, two agencies affiliated to the Prime Minister`s Office and two agencies associated to ministries -- would move into Sejong between 2012 and 2014. The Lee Myung-bak administration has presented an alternative proposal, under which the new city will instead accommodate educational, scientific and business organizations. Flawed administrative town plan The administrative town plan has been criticized for three major problems. First, the plan is expected to bring inefficiency to government operations by dispersing its organizations. The proposed relocation of nine ministries and four subsidiary agencies out of the 15 ministries and 19 agencies could hold back swift coordination and communication, thus degrading the quality of policies and damaging national competitiveness. Public servants will have to make frequent trips between Seoul and Sejong, resulting in a considerable waste of money and time. The Korea Institute of Pubic Administration forecast that inefficiency stemming from the geographic division of administrative functions will cost the nation an estimated 3-5 trillion won per year. The only nation in the world currently doing so is Germany, where government functions are split between Berlin and Bonn. But the country`s policy functions are integrated in Berlin; chiefs of Bonn-based ministries usually stay in Berlin. In most advanced countries, such as the United States, Britain, France and Japan, the presidential or prime ministerial office, the parliament and administrative departments are located within 3 kilometers of the center of the capital city. Second, the original plan lacks measures to make the city fully selfsufficient. It envisioned a self- sustainable city with a population of 500,000. But a meager 6.7 percent of the land has been allocated for administration, educational institutions, industries, commerce, business and other functions for self-sufficiency, making the population goal virtually unattainable. The proportion of land for such purposes in self-sufficient cities is usually more than 20 percent. Even in Dongtan, a residential town in the Capital Region, the ratio reaches 13.8 percent, more than double that in the original Sejong plan. Third, the original plan is short of incentives to attract investment. Under the plan, the average land price per 3.3 square meters is estimated at 2.27 million won, nearly three times as high as 780,000 won in adjacent industrial towns. Nevertheless, there are few incentives in land costs, taxes and fiscal support, making it further difficult to induce businesses and schools. <**3> New vision, goals, strategies The revised plan set the new vision of an economic city centered on education and science. Its three major goals are a self-sufficient city with a population of 500,000, a new national growth engine of the future, and the hub city of the central part of the country. To achieve the goals, the amendment has established seven implementation strategies as follows. 1) Land use plans geared to synergetic effects: The new plan will use 15.08 million square meters of land, or 20.7 percent, for industry, education and other selfsufficiency functions, three times more than the original plan. The increase will help the city create 250,000 new jobs and accommodate 500,000 inhabitants. For better settlement conditions, one-fifth of the residents will be encouraged to live in the city`s suburbs. 2) Functional convergence: The plan seeks to foster educational, scientific, industrial, international and green capabilities and promote the city`s development through their convergence. First, the government plans to build an international science and business belt by 2015 with an

investment of 3.5 trillion won (excluding land costs) in an area of 3.3 million square meters. A research institute for basic sciences, a fusion research center, an international graduate school of science, and a heavy-ion accelerator will be set up in the science town. An additional 100,000 square meters of land has been allocated to 16 government-run research institutes including the Korea Development Institute and the Korea Research Institute for Human Settlements. Second, the government plans to establish an industrial town of 3.47 million square meters for high-tech and green industries. Global business groups such as Samsung (1.65 million square meters), Hanwha (600,000 square meters), Woongjin (660,000 square meters) and Lotte (66,000 square meters) have already decided to invest in the proposed industrial complex. Third, under the new plan, a total of 3.5 million square meters of land has been reserved for universities. Korea University and the Korea Advanced Institution of Science and Technology will each purchase 1 million square meters. The government is seeking to attract other universities to the remaining 1.5 million square meters of land. Fourth, a global investment town of 1.9 million square meters would be open to foreign business corporations. SSF of Austria has expressed its intention to invest $120 million in a 165,000 square meter plot. Also about 300,000 square meters has been designated as an international exchange district called Little Geneva to draw international organizations. Lastly, the plan envisions Sejong serving as a green model city harmonizing the environment and growth. The plan includes a 2.8 million square meter waterfront park for cultural, recreational and leisure activities and 400 kilometers of bicycle paths. 3) Incentives for self-sufficiency functions: The incentives for investors include provision of low-cost raw land, tax benefits and financial support, and deregulations. The government will provide raw land for companies and schools when they want, and allow them to develop basic infrastructure on their own. The prices have been set at the level of those in adjacent industrial towns minus costs for basic site development. The government also plans to provide foreign and domestic companies with tax benefits similar to those in government-designated enterprise cities. They will be entitled to exemption from income and corporate taxes for three years and 50 percent reduction for following two years. They will additionally be free from acquisition, registration and property taxes for up to 15 years depending on provincial government rules. Such tax benefits will be given to governmentdesignated innovation cities, too. As for fiscal support, the government will provide foreign-invested companies with employment subsidies. Lastly, as the international science and business belt, Sejong will enjoy eased regulations in education, medical services and other areas. 4) Quality settlement conditions: The plan calls for high-quality cultural spaces, a competitive educational environment and improved living conditions for foreigners. World-class culture, arts and recreational facilities will be built around the central park (centered on Korea National Arboretum). High schools of various kinds -- independent public and private schools, institutions specialized in foreign language, science and arts, foreigner-only schools and international schools -- will be established. For non-Korean residents, English-language translation and interpretation services, foreign-language signs, specialist educational and medical institutions, and residential towns customized for foreigners` needs will be established. 5) Effective transportation systems: Construction of highway networks linked to Sejong will be accelerated to make the city reachable from anywhere in the country in two hours. Convenient and comfortable cutting-edge intra-city transport networks will be established so that any places in Sejong can be reached within 20 minutes. 6) Support for native residents: A total of 500 apartment units for low-income households and 100 elderly welfare facilities will be constructed. They could move into those facilities by the end of 2011, one year earlier than originally scheduled. The government will provide immigrants and their children with occupational training, job placement and public sector work and enhance support for their settlement. 7) Balanced development: The government is pushing for balanced growth by spreading the effect of Sejong`s development to neighboring areas. The plan pursues development of the Chungcheong region by interconnecting the science and business belt with nearby areas. In this regard, designation as the belt`s functional districts of Daedeok (high-tech convergence and applications), Osong (biotechnology) and Ochang (information and environmental technology) will generate synergetic effects. To spread Sejong`s science capabilities nationwide, the plan also seeks to promote the joint use of core research and production facilities with other cities and will establish networks of cooperation and personnel exchanges. In addition, the government will promote interlinked development of three cultural zones in Chungcheong -- Baekje, Naepo and Jungwon. For the sake of balanced regional development, the plan has proposed a joint development system linking Sejong, 5+2 mega-regional economic zones, innovation cities and enterprise cities. Expected effects The new plan is expected to result in three times more jobs and residents than the original plan. It is forecast to create 246,000 jobs and induce 500,000 people in comparison with 84,000 jobs and 170,000 people expected from the former government`s plan. While the previous administrative city plan is expected to bring about inefficiency in government operations, the new plan is free from such a negative effect. According to a study by the Korea Development Institute, benefits from hosting research and education functions under the revised plan will be 10 times as much as those under the original plan. The alternative proposal is also expected to have about three times more economic effect on the Chungcheong

region. The plan is estimated to generate 30.9 trillion won in annual output, 14.4 trillion won in annual added value and 277,000 new jobs, compared to 10.2 trillion won in output, 5 trillion won in added value and 98,000 jobs promised by the previous plan. For the implementation of the redressed Sejong City plan, related acts should be revised or legislated. The government signed memorandums of understanding on Jan. 14 with companies and universities to locate there and is trying to attract more global companies, research centers and educational institutions. [Territorial Policy in Korea (19)] Digital geographic data opens new world Korea achieved brilliant economic growth through rapid industrialization. But the process left in its wake reckless territorial development and overburdened infrastructure facilities, which have caused various accidents. Such side effects increased inefficiency thus undercutting national competitiveness and productivity. As part of efforts to prevent or minimize these problems, the nation uses geographic information systems technology. GIS technology was introduced to the nation in the late 1980s. Initially it was used by some local governments and public institutions for facilities management. But the separate introduction by individual organizations led to overlapping investment and difficulties in sharing information. To overcome these problems, the central government launched the Korean Geographic Information Systems project in 1995, paving the way for a state-led, centralized implementation of the initiative. The KGIS project consists of spatial data, application and distribution systems, standardization, GIS technology, human resources development, and polices and institutions. The project has proceeded in three stages, each with different focuses. The first KGIS project (1995-2000) focused on establishing infrastructure to promote the use of GIS. Topographic maps, cadastral maps, and underground facilities maps were digitized during the period. Model application systems based on these digital spatial materials were also developed. The government actively spurred technology development to catch up with the more advanced countries in the field. The Act on the Establishment and Application of the KGIS was enacted in 2000 for a more systemic promotion. The second KGIS project (2001-2005) prioritized developing application systems based on spatial data established in the first period. The standard geographic framework data based on digital topographical maps, and the geographic information distribution systems designed to disperse those data were constructed. Application systems for handling administrative affairs including land management, cadastral management and land use planning were installed in local government offices. The government injected 482.2 billion won in the second KGIS project, a 70 percent increase from the first period. The increased portion of the budget was mainly spent on framework data and application systems, both designed to encourage sharing and wider use of spatial data. In particular, central and local governments developed internet-based information systems for residents, which helped improve public information service significantly. The third KGIS project (2006-2010) has focused on establishing systems to allow not only public institutions but also businesses and citizens to access shared geographic data. The Ministry of Land, Transport and Maritime Affairs is leading the development of integrated national spatial data systems while local governments are establishing spatial data warehouses for information sharing. Individual application systems are being linked and integrated. GIS has been introduced to more public organizations. All local governments currently use GIS in their administrative affairs. The KGIS project aims at the establishment of the Korean Spatial Data Infrastructure that will be available to public administration, corporate management and the daily lives of citizens. The government seeks to establish GIS-based e-government systems and promote new GIS-based businesses including location-based services. It also seeks to forge GISbased lifestyles using diverse content services provided by such GIS-based administration systems and businesses. Korean Spatial Data Infrastructure The KSDI was begun with the establishment of digital spatial data in the first-stage KGIS project. Diverse paper maps including topographic maps, cadastral maps, land use planning maps, and underground facilities maps were digitized. Digital topographic maps were created for the entire national territory excluding mountain areas on a scale of 1:5,000. Digital topographic maps for urban areas and mountain areas were also produced on a scale of 1:1,000 and 1:25,000, respectively. Digital mapping for 3,720 land plots across the country were completed. The data on parcels of land is essential to the transaction, assessment and use of land. The spatial information is widely used for administrative affairs, civil information services and corporate activities. Digital spatial data also include land use plan maps in 323 different types set by 87 acts on land use regulations, allowing users to easily learn what regulations apply to each land plot. Spatial data on urban underground facilities including water supply, sewage, electricity, communications and gas were established as a core KGIS project to prevent disasters stemming from damage and malfunctioning of those facilities. The data is shared by facilities management organizations. In addition, other diverse spatial data including forest type maps, geologic maps, land cover maps, and soil maps were created. The third KGIS project began to accumulate three-dimensional visual data such as satellite images and high-resolution aerial

photographs. Spatial data serve as infrastructure for diverse activities in public administration, businesses and everyday life. For a more systemic push of the KSDI, the Ministry of Land, Transport and Maritime Affairs is establishing information infrastructure for local governments first. The ministry carried out a model project for national spatial data systems in 2008 and plans to equip all local governments with the systems by 2012. The completion means the creation of the KSDI linking information infrastructure of local governments via horizontal and vertical networks. <**3> GIS-based e-government Diverse GIS-based application systems for public administration are under development. The Land Management Information Systems were developed for land management, transaction and assessment. In 2004 they were integrated into the Parcel-based Land Information Systems and the Korean Land Information Systems. All local governments currently use KLIS for land and cadastral affairs. Because land and cadastral data are essential to all administrative affairs of local governments, they are shared by other application systems. Information systems for urban underground facilities are being established for management of the nation`s water supply, sewage treatment systems, gas, electricity and communications. The project became a core KGIS project after a deadly gas explosion at a subway construction site in Daegu in 1995. Data systems for the water supply and sewage treatment systems are operated by local governments while those for gas, electricity and communications are run by supplying companies. Urban planning and management are more complicated than other kinds of administrative affairs and thus require more professional skills and knowledge. For an effective establishment of information systems in these fields, the Korean Planning Support Systems using GIS spatial analysis methods have been under development since 2006. The systems are designed to extract the information necessary for urban planning objectively and scientifically. The ministry supervised the KOPSS project and the Korea Research Institute for Human Settlements is developing the analytical model. Recently, GIS-based data systems are linked with other information systems that do not use spatial data. For example, construction administration information systems have been developed since 1998 and are widely used for construction permits, management and many other related tasks. They are among the most successful administrative information systems. But information use in the systems is limited in that they do not engage in location information of buildings and land use information. To overcome these problems, the government is working to link and integrate the construction administration information systems with the KLIS. GIS-based business The KGIS project also affects private corporate activities. Spatial data and applications systems are opening new markets which are constantly increasing in size. Spatial data also assists in the development of content service businesses. Recently, private companies` spatial data-based content services have been thriving. For example, the automobile navigation market is rapidly growing. With all cars likely to be equipped with navigators, the sector should expand further. A few years ago, internet portals provided simple location information services. But now they offer map information with spatial data with higher resolution than those offered by Google. In the past, information providers were not interested in map information. But spatial data is expected to become an important component of competitiveness for internet portals in the future. Domestic portal services are making and planning huge investments in establishing high-quality map databases. In the mobile internet environment, spatial information services are becoming an increasingly crucial means of business. Competition is expected to increase in the sector whose market will be worth trillions of won. GIS-based life The e-government systems built through the KGIS project have improved not only the productivity of administrative affairs, but also public information services for citizens. To receive public documents, for instance, people had to visit government offices, submit the request form, and usually wait more than 10 minutes. The government had to employ a lot of public servants. That caused a huge waste of resources and damaged national competitiveness. The KGIS project is offering a resolution to these problems. Land use plans for individual plots are now available via the internet with related documents easily downloadable. Internet services for land use information record an average 207,000 accesses per day. In addition, standard values and transaction prices of land plots are offered on the internet. The government-set zoning of every parcel of land and details of related regulations are available online. The sites register an average 37,000 visits per day. In addition, cultural, tourist, location, transport and other diverse information services are provided on the internet. GIS-based businesses also allow consumers to obtain diverse spatial information anywhere, anytime. Internet portals and wireless services provide information on location, restaurants, transport, oil prices, safety, weather, real estates and etc. Location-based services are incorporating increasingly diverse content. In the near future, all information necessary for everyday life will be available anywhere, anytime. Preparing next-generation KSDI Korea`s first national map using modern longitude and latitude and systemic cartography is Daedongyeojido. It was created by Kim Jeong-ho in 1861 and more than 60 woodblock copies were produced. Daedongyeojido included comprehensive territorial information spanning the entire country in the 19th century. The KGIS project can be said to be the creation of Daedongyeojido for a

knowledge and information-based era. On the policy side, it is about establishing a set of systems for shared spatial data for public administration, business management and citizens` everyday lives. It will eliminate inefficiency and create a new "blue ocean." The government has established a variety of spatial data within their distribution systems, as well as a set of necessary legal bases and cooperative frameworks. The outcome has been quite successful. Information technology is developing as fast as ever. Many experts anticipate the advent of a world of ubiquitous networking, in which people-to-people, people-to-things and things-to-things communications are conducted freely without being limited by time and space. In it, a brisker combination, integration and convergence of information will occur, creating new values and markets. To prepare for the future, the government is working to establish plans for the fourth KGIS project aiming to build an upgraded, next-generation KSDI. The government also overhauled related laws and organizations in 2009. Measurement acts were integrated. A new comprehensive act on national spatial information replaced the previous law on national geographic information systems. A new law was set up to promote businesses based on convergence of spatial data. The government drastically expanded the organization in charge of spatial information management. Korea is gearing itself for an approaching society of converging spatial information and ubiquitous networking. [Territorial Policy in Korea (20)] Cities get new life as growth centers This is the 20th installment in a series of articles shedding light on Korea`s territorial policies - an integral part of the nation`s development strategy. Researchers from the Korea Research Institute for Human Settlements, a staterun institute committed to studying means of enhancing the use of national territory, will deal with about two dozen themes related to formulating the territorial development strategy. - Ed. By Lee Wang-geun The spatial fabric of today`s cities bears the imprint of the central government-led economic growth and urban development which started in the early 1960s. Heading off absolute poverty was given national priority at that time. Policy planners strategically opted for an "unbalanced" regional development policy, which was supposed to be a more effective way to meet the goal. Location efficiency dictated where public investment would go; industrialization efforts were concentrated on regions equipped with sound infrastructure, capital and workers available. Under that policy, cities were more spatial means of economic development than places of living. Economic development in the 1960s turned cities from centers of administration and consumption to machines for delivering national growth. Driven by the central government, the nation underwent rapid industrialization and urbanization. Infrastructure supply, however, lagged behind urban growth, which brought with it huge streams of rural migrants and the pressing needs of industrial facilities. Therefore, filling the gap with quantitative expansion of infrastructure supply had to be the focus of urban policy of that time. Industrial complexes popped up across the country beginning in the southeastern city of Ulsan. Urban development was begun in Seoul`s Yeoido and Yeongdong, both of them now bustling business hubs of the capital. The Urban Planning Act and the Construction Act, both established in 1962, lay down the legal framework for urban policy. As urbanization accelerated in the Capital Region and other metropolises in the 1970s, policymakers focused on well-organized development and preventing sprawl. In line with this, inner city areas were redeveloped, cities were constructed in the hinterlands of industrial towns, roads were refurbished, and planning was made integral to housing site development. More importantly, the government introduced the greenbelt system, which has played a critical part in shaping the present spatial strands of cities. In the 1980s, while urbanization continued apace, urban policy underwent a drastic change, from one mainly characterized by short-term responses to pending problems, to one anchored on long-term planning and a comprehensive vision. The 1981 Basic Urban Planning system -- which still holds today -- made it mandatory for the government to take into account expected changes in population and industrial sectors spanning 20 years when drawing up plans for housing supply, district development and public facilities renovation. In addition, a new urban design system was introduced to provide for detailed and practical regulation on constructs at the district level. Meanwhile, supply-centered urban policy for meeting the development needs was enhanced during this period. The 1980 Act on Promoting Housing Development typified such a tendency. The law was aimed at supplying residential areas in large quantities, at low costs and speedily by developing new residential towns near existing urban areas. Under the policy, construction began in 1989 for five new cities -- Bundang, Ilsan, Pyeongchon, Sanbon and Jungdong -- within a radius of 20 kilometers of Seoul`s center. The rush to urbanize began to subside in the 1990s as the nation confronted its dark side. An increase in income heightened aspirations among Koreans for a better living environment. But urban lives were suffering from overcrowding, congestion, decaying old towns, pollution, and chronic traffic jams. As Seoul, Busan and other metropolises grew bigger, central cities lost population to their suburbs. Urban policy faced new challenges from expanding metropolises, urban-rural integration and increasing conurbations. It had to resolve conflicts among local entities over the location of public offices covering expanded jurisdictions. The government was also

in need of a system to allow for comprehensive management of urban development projects which had been governed by individual laws. The government strived to restrict development in rural and green areas with a 1993 revision to the Act on the Use and Management of the Territory, which allowed the authorities to designate and protect some non-urban areas as semi-agricultural regions. Such efforts notwithstanding, reckless developmental presented a serious social problem. Lodging houses and restaurants sprang up along highways and high-rise apartment blocks were built in agricultural areas adjacent to large cities, seriously damaging the natural environment and landscape. In the 2000s and beyond, Korean cities are facing ever diversifying, more complicated urban problems, which are threatening to stunt their competitiveness in this globalized, knowledgebased world economy. The Capital Region is mired by overcrowding and congestion. All levels of urbanism from city-regions, to individual cities and to neighborhoods are grappling with their own troubles in landscape, the environment, housing and so on. Between 2000 and 2005, 38 out of a total of 84 cities -- 35 of the 68 cities outside the Capital Region -- experienced population loss. Other socio-economic changes including an aging population, slowing economic growth, shifting industrial structures and bipolarization in income distribution also pose daunting challenges to today`s urban policy. New paradigm in urban policy These emerging challenges require new approaches to urban development policy. The supply-centered method of the high-growth era is inapplicable to today`s context. Continued focus on physical upgrade will only mean a faster deterioration of existing inner cities, worsening living and economic conditions in decaying inner cities, and an aggravating sprawl in suburbs. Problems will multiply; business in old downtowns will decline, infrastructure in aging residential areas will be dilapidated, and green space in suburbs will be harmed. These in turn will exacerbate city-wide complications such as increasing fiscal expenditures for public supply facilities and public amenity, traffic congestion, environmental pollution, and the dual-city phenomenon (the divide between new and old districts). <**3> Many advanced countries, which had earlier undergone urbanization, have shifted the paradigm of urban policy in a way of prioritizing sustainability. Rather than developing new districts, they focus on urban regeneration -- in other words, systemic renewal of existing districts. Urban regeneration seeks to more actively utilize unused or less-used land and systemically manage infrastructure in existing urban districts. More efficient land use helps to prevent unnecessary damage to green spaces, maintain a comfortable living environment and create jobs for those residing there. The contemporary form of urban regeneration takes on a comprehensive approach to inner-city decay. The initiative can be said to be a sort of spatial recreation involving a constant improvement in economic, social and environmental aspects. When regeneration projects manage to satisfy infrastructure demands -- such as revitalizing commercial centers, expanding common parking spaces, providing basic living services, and offering spaces for refreshment and cultural activity -- they will help improve the quality of life and thus fundamentally prevent inner city decline. (1) Enhanced status of urban regeneration policy Urban regeneration is taking on growing importance in Korea`s economic growth and urban policies. Under the Korean New Deal initiative, the Ministry of Land, Transport and Maritime Affairs is promoting 10 select industrial projects with a high potential of attracting investment and creating jobs. Among them are inner-city regeneration and the redevelopment of the Busan Northern Port. The fact demonstrates an ongoing transition of the nation`s urban spatial policy -- from one focusing on developing green spaces into residential, commercial and industrial towns to one geared to renewal of declining districts and more efficient land use. Of course, the government will proceed with planned housing projects in new towns as scheduled. The ministry is also preparing for legal and institutional frameworks for promoting urban regeneration. By giving adequate categorization to diverse renewal projects, the government will execute programs tailor-made for individual cities. It is also considering setting up a basic law on urban regeneration -- which will define the division of roles between central and regional governments, the establishment of public and private funds, and deregulations to allow for high-density, mixed-use regeneration -and revising other related laws. (2) Policy directions by regeneration type Energize old city centers: Urban regeneration can be divided into different types according to target areas -- old inner cities, mass transit impact areas, ports or harbor areas, decaying industrial complexes, urban riverfront and traditional markets. Preventing inner city decay is its foremost function. By developing a comfortable living environment and recovering economic activity, urban renovation can offer a promising solution to the hollowing-out of old provincial inner cities. Urban renovation is under planning or expansion in some cities including Seoul, which is supporting part of the costs for infrastructure construction to improve the profitability of regeneration projects and thus induce more firms to participate in the initiative. Develop areas around mass transit: The government is exploring new types of work that reflect the characteristics of such areas. It is considering relaxing project requirements, allowing for higher floor area per building, and other diverse measures to encourage regeneration projects. Around railway/subway stations with convenient transport links, the government plans mixed-used development for mass provision of affordable housing. In an effort to secure low-income residential space in inner cities, the

government has revised the Housing Act and is increasing the supply of multi-family housing blocks and dormitory-style and single-room dwellings. For low-income families in redevelopment areas, temporary homes will be provided by the Korea Land and Housing Corporation and more special loans will be arranged to help them buy a home. Redevelop ports and harbor areas: Cities with harbors that are aging and low in facility use efficiency are also in need of regeneration. The best example is the Busan North Port redevelopment plan aiming to construct a quality maritime-port city on a land mass of 1.52 million square meters. About 8.5 trillion won ($7.3 billion) from public and private sectors will be injected into the project. It is expected to be completed by 2015, four years earlier than originally scheduled, thanks to an increase in government funding. After the selection of private-sector contractors, coastal areas will be developed into public facilities such as an international passenger dock, and the hinterland will become a mixed-use area for commercial, business and information industry estates. Incheon Yeongjong Island, Gunsan Port, Incheon Inner Port and Gohyeon Port in Geoje are also subject to redevelopment. Regenerate old industrial complexes: Some industrial complexes built in the 1970s-80s are suffering from weak competitiveness and decrepit facilities owing to their failure to catch up with changing industrial structures. Regeneration is necessary to turn these industrial parks and factory estates into the centers of urban economies. Many necessary production bases should not only be maintained but also restructured into high-tech and knowledge-based business facilities if they are to help enhance their cities` competitiveness and create future-oriented jobs. There are some factors crucial to successful regeneration of ailing industrial complexes. First, their industrial structures should be redesigned by incorporating new urban-style industries or boosting existing facilities` abilities to create value, so that the complexes can serve as regional industrial centers. Second, the supporting function within the complexes should be expanded to play a leading role in provincial renovation. Third, production, research and inhabitation functions should be combined to create a spatial structure suitable for creative activities. Fourth, creative communities should be invigorated for vibrant communications and the active transfer and spread of knowledge. Fifth, those complexes should be harmonized with neighboring areas to be reborn as environmentally sustainable, local community-friendly industrial bases. Guro Digital Complex in Seoul, which has been transformed from a smokestack industry town into a digital media center, is a successful example of regeneration. Other cities seeking to upgrade their competitiveness through industrial enhancement could take a lesson from Guro. Refurbish urban rivers: Waterfront development is a promising project for successful urban regeneration. A towering example is the renovation of Cheonggye Stream in Seoul, which many other local governments are emulating. The central government is also pushing waterfront regeneration under the motto of "recreation of the territory with water," with the flagship project being the ongoing revival and renovation of the four major rivers. Riversides can be redesigned in a stepped pattern, in which flood-prone areas will be preserved as wetlands and other ecological spaces while other areas free from inundation will be used as cultural and arts spaces. Depending on region, footpaths, arched pedestrian bridges, shopping centers, street cafes and other diverse tourism-linked facilities can be developed.

[Territorial policy in Korea (21)] Coastal belts drive prosperity in globalized era The Korean government is formulating a supra-regional economic zone plan as part of a mid- and long-term strategy for open territorial development in response to an era of globalized economy. The plan is a peninsulawide strategy to prepare for an era of Northeast Asia and national reunification. It is at the same time a regional development policy to promote mutual prosperity through cooperation and connections among mega-regional economic zones. The plan encompasses four supra-regional belts and an inland belt to lead an open regional development as well as connect and complement mega-regional economic zones. (See "Territorial policy in Korea (17): South Coast, gateway to ocean-centered economy," The Korea Herald, Jan. 11) The four belts -- East Coast, West Coast and South Coast and Border Region belts are open to both the ocean and the continent and constitute territorial development axes connecting the Korean Peninsula and Northeast Asia. The East Coast Belt consists of 15 cities, counties and wards in two provinces and one metropolis stretching along Baekdudaegan (the crosspeninsula mountain range) and clean coasts. The West Coast Belt encompasses 25 cities, counties and wards in three provinces and one metropolis, which feature coasts with mud flats and a gentle offshore slope. The two belts have a huge potential as territorial growth centers serving as gateways to the Northeast Asian economic zone and Eurasia. The plan aims to foster specialized development that maximizes each region`s potential and transcends the boundaries of administrative jurisdictions and mega-regional economic zones. The government seeks to develop the East Coast Blue Belt as an energy industry hub to lead green growth and the West Coast Gold Belt as

the center of new industries for the West Sea Rim economic zone. Development plan for East Coast Blue Belt (1) Vision The East Coast Blue Belt is envisioned as an energy industry cluster and a key tourist base of the East Sea Rim. The plan sets two goals. The first is to develop a green growth center of the East Sea Rim. The government seeks to change the region`s industrial structures from one centered on traditional sectors to one led by green growth sectors so that the belt could serve as a leading industrial region of the East Sea Rim. The second goal is to develop an international bridgehead toward both the ocean and the continent in an era of the East Sea Rim. The government seeks to make it the first-rate center of key industries and energy businesses of the East Sea Rim so as to better cope with an era of trans-regional and trans-border economic activity and exchanges. The government set development strategies in five areas: promoting an energy industry belt of the East Sea Rim, restructuring key industries toward high-value added and green growth sectors, developing international historical and cultural tourist attractions, industrializing marine resources and establishing international infrastructure facilities and cooperation frameworks. The East Coast will be structured in a way to make the best use of its geopolitical and geoeconomic advantages. The "East Coast Belt Green Growth DNA" will revolve around two robust and closely linked axes stretching along the long, narrow coastline and toward the Asian Highway and the Trans-Korea Railway. Key functions pertaining to the five strategies will locate in nods where the two axes and external links intersect. Diverse smaller belts of tourism, oceanic resources, energy and key industries will be formed along these supra-regional axes so that each region could pursue their specialized development. (2) Development strategies Energy industry belt of the East Sea Rim: For a stable energy supply for the Korean Peninsula, additional nuclear reactors will be built in Uljin and Gori and a DME (dimethyl ether) complex, an LNG (liquefied natural gas) terminal and an integrated gasification combined cycle will be established in Samcheok. Ulsan will host an oil hub by expanding tank terminals and port infrastructure, establishing petrol financing schemes and information networks and setting up an oil exchange. Research and industrial bases for hydrogen fuel cells, biomass and other renewable energy sources suitable for the region will be established. Pohang will have a hydrogen fuel cell cluster with companies, research institutes and test centers. A biomass complex will be established in the Donghae-Uljin area. Uljin will have oceanic science facilities to research seabed methane hydrate as future energy resources. Low-carbon, green growth model districts will be designated on Ulleung Island and in Yeongdeok (around a wind power complex) and Gangneung. Restructuring key industries toward high-value added and green growth sectors: Ulsan, Gyeongju and Pohang will be linked by a techno-belt of key industries including automobile, shipbuilding, steel and materials aimed at boosting their capabilities to create values. Key industries will be restructured and upgraded to serve as principal drivers of green growth. Industrial clusters to develop new materials based on abundant mineral resources in the region will be set up and connected to related industries such as automobile and disaster prevention. A new national industrial complex for green transport systems (green cars and wing-in-surface-effect ships) and other new growth sectors will be established by linking car and shipbuilding businesses in Ulsan and auto part businesses in Gyeongju. The high-tech basic material industry will be promoted utilizing a synchrotron radiation instrument, a proton accelerator and other cutting-edge facilities in the region. International historical and cultural tourist attractions: An international free tourism zone will be developed in phases linking areas around Mount Seorak and Mount Geumgang with the Border Region Peace and Eco Belt, in order to promote international historical, cultural and natural tourism and leisure bases of the East Sea Rim. The plan will start with the refurbishment of the Mount Seorak tourism zone. Then a special reunification-themed tourism zone will be developed and the Mount Geumgang zone and reunification tourism zone will be linked later. Historical and cultural tourism programs will be developed around those on the UNESCO World Cultural Heritage list such as Gyeongju Historic Areas and the Gangneung Dano Festival. Gyeongju, capital of the ancient kingdom of Shilla, will build a business complex linking the preservation of traditional culture and experience activities for tourists. Gangneung will be developed into a "cultural creation city" by linking the Dano Festival to regional cultural attractions. A supra-regional fusion tourism belt will connect Baekdudaegan, the East Coast and the East Sea. A cruise course will be developed linking Donghae, Sokcho, Pohang and Ulleung Island. A tourism belt of Scenic Road, Romantic Road, bicycle paths and Oxygen Road utilizing the scenic landscape and cultural heritages will be promoted. Diverse tourist programs combining the rural environment, cultural and historical experience activities and maritime sports will be developed. A high-tech medical and healthcare industrial base in Gangneung will serve as the center of medical tourism. It will be promoted through links with the clean natural environment and regional networking. Industrializing marine resources: To concentrate capabilities of research and development of marine resources and promote marine bio-science industries, a marine resource belt will be developed in Goseong, Uljin, Pohang and other areas equipped with high-quality oceanic R&D infrastructure. Uljin will become the center of research and education of oceanic science. Ulsan and Pohang will serve as the main base of exploring and utilizing undersea resources of the East Sea Rim. An industrial cluster for deep water will be developed around eight water inlet

facilities in Goseong, Samcheok, Ulleung and other areas. It will advance multi-purpose uses of deep water and push common branding. Higher value-added fisheries will be promoted through aquaculture using deep water and thermal effluents. International infrastructure facilities and cooperation frameworks: Social infrastructure should be continuously advanced if the East Sea Belt is to establish itself as the trans-border exchange hub of industries, tourism, energy and etc. in the East Sea Rim. Gangneung, Donghae and Samcheok seek designation as a free economic zone. Free trade zones are expected to be further expanded. An international cruise harbor should be built to promote tourism. Ulsan New Port and Yeongil Bay Port should be opened timely to ensure a stable energy supply and promote green industries. Donghae Port should be expanded and ports specialized in mineral resources should be developed in Samcheok, Ulsan and etc. There is a need to expand open port systems and develop hinterland areas. The Trans-Korea Railway and the Trans-Siberia Railway should be completed and the Asian Highway functions should be expanded to promote exchanges with North Korea and Eurasia. East-west transport networks should be enhanced to improve accessibility between the East Sea Belt and inland areas. Existing international exchange channels such as the Association of Northeast Asia Regional Governments and the Conference of East Sea Rim Mayors and Governors should be enhanced. Cooperation and exchanges with other East Sea Rim countries in economy, education, culture, science, technology, maritime and fisheries should be strengthened for the mutual development of the East Sea Rim economic zone. Development plan for South Coast Gold Belt (1) Vision The vision of the South Coast Gold Belt is the development of "the megalo-belt of knowledge conversion that leads West Sea Rim economic zone." The status of the South Coast Belt should be redefined as the center of the global network is moving from the United States and Europe to Northeast Asia and the West Sea Rim economic zone is increasing in scale and level of cooperation. Korea`s economic development, which centered on southeastern and Gyeongsang regions for the past half century, will be led by West Sea regions in the future. <**3> As a green growth base combining knowledge and technology, the West Sea Belt has a strong potential to lead Korea`s future growth. It should lead a mutually complementary development of the West Sea Rim economic zone which connects with China`s eastern coastal areas and Japan`s Kyushu region. It should give priority to combining Korea`s quality technology, human resources and capital with China`s vast production capabilities and market as well as Japan`s cutting-edge technology and capital. (2) Development strategies First-rate cutting-edge industrial belt: - A renewable energy belt will be developed to lead the era of green growth. Major cities of the region will be transformed into a "plus energy city" in which energy production exceeds energy consumption and the whole area will become zero-carbon, eco-friendly green cities in the long term. - A global hub of the display industry will be developed. R&D capabilities for cutting-edge materials and parts for the display industry will be enhanced. Specialized science and technology complexes will be built and living conditions will be improved to attract quality Korean and foreign talents. - Existing core industries, agriculture and fisheries and rundown industrial complexes will be structurally upgraded to enhance their global competitiveness. Existing industries will be linked to information technology so as to develop intelligent vehicles and green cars, airplane maintenance, repair and operation facilities, ships and leisure yachts and IT-converged cutting-edge agricultural machines. The sixth industrial sector of integrated production, processing and marketing of agricultural and fisheries goods will be promoted and food industry clusters will be developed. Aging industrial complexes will be regenerated to enhance the location basis of new industries. - Trans-border cooperation should be enhanced to develop the West Coast Belt as a global industrial base, giving priority to exchanges of different industrial sectors and business-academia-research connections, cooperation networks with other supra-regional industrial clusters in the West Sea Rim and collaboration with national R&D bases. Preservation of natural environment and establishment of international marine and cultural tourism belts: - Marine resources, including rich mud flats in the West Coast should be systemically preserved and managed. Programs for experiencing and studying the region`s unique historical and cultural resources, natural environment, landscapes and eco-systems should be developed. Unique historical and cultural features and attractiveness should be explored and developed into tourist resources to contribute to regional development. - Domestically and internationally differentiated global tourist bases should be developed and networked with each other. They include an international tourism city of Taean, a cultural, a tourism and leisure city of Incheon and Ganghwa, a maritime leisure resort around Sihwa and Hwaseong lakes and a recreation and leisure city of Saemangeum. International business and logistics hub of West Sea Rim: - Core international business belts combining industries, conventions and logistics should be developed. BTMICE (business travel, meeting, incentives, convention and exhibition) complexes and international business belts should be developed. Co-hosting of conventions with China and Japan should be pushed and tourism programs linked to those events should be jointly developed. - Global bases to enhance international business functions should be expanded. Efforts to attract multinational firms and their regional headquarters should be enhanced. The supply system of quality workers in business, recreation, tourism, service

and green and high-tech industries for the West Sea Rim should be established. - Integrated spatial functions and logistics networks of the West Coast Belt should be strengthened. Links between the West Coast Belt and megaregional economic zones and metropolitan areas should be enhanced. Cooperation networks between major ports of the West Coast and northern China should be enhanced. - Inter-Korean cooperation and mutual prosperity should be promoted. Areas of Ganghwa, Paju and Gimpo should be developed as inter-Korean cooperation districts and related businesses should be pushed. - Supportive systems for the establishment of future-oriented international maritime logistics complex and business belts should be developed. To attract foreign investment into free economic zones, there is a need for early deregulations, tax and other forms of incentives, one-stop administrative services and attractive living conditions for foreigners. Mutual development axes through internal and external networking: - Environment-friendly transport systems should be completed. National arterial transport networks of highways, railways, seaports and airports should be expanded timely. Traffic should be curtailed in high congestion areas for low-carbon, green growth. Besides auto roads, inter-modal transport systems of railways, shipping and airports should be established to reduce greenhouse gas emissions. West Sea Rim high-speed transport systems including smart highways and train ferries should be established for transborder inter-connected development. - Links between major bases in the West Coast Belt and inland cities should be enhanced. North-south and east-west arterial transport facilities of the West Coast Belt should be effectively networked for a linked development with inland areas. New transport systems in the Capital Region including the Gyeongin waterway and circular railways should be considered. Conclusion The East Coast Blue Belt plan envisions a supra-regional development combining tourism-leisure, green energy and high-tech industries centered on the clean ocean. The West Coast Gold Belt plan pursues first-rate cutting-edge industries, international oceanic and cultural tourism and core international business belts. As supra-regional development zones, they seek to establish cooperation networks with neighboring areas and build trans-border, open infrastructure. If the two regions are to lead the East Sea Rim and the West Sea Rim as their geopolitical centers and to fully serve as important open axes of the national territory, there is a need for practical capabilities to develop and push their regional specialty businesses based on such supra-regional strategies and for mutual complementation and cooperation with neighboring zones. At the same time, the regional governments` dedicated efforts and residents` cooperation as well as the central government`s active support and interest are essential. Suh Tae-sung Suh Tae-sung is director of the Planning and Management Division at the Korea Research Institute for Human Settlements. He served as a project manager of the Revision of the Four National Comprehensive Territorial Plan and the Site Selection and Evaluation for the New Administrative Capital. He majored in national and regional planning. He received his master`s degree at regional economics at Yonsei University. [Territorial Policy in Korea ( 22 )] From war`s vestige to peace, ecology belt The Demilitarized Zone was created under the armistice treaty that halted the Korean War in 1953. The SouthNorth Border Region around the DMZ has been heavily fortified and the vast adjacent areas were designated as the Military Installation Protection Area. For the past 60 years, civilians` access and economic activity have been tightly restricted in the Border Region. Such regulations have stunted the region`s development, depressed its economy perennially and left living conditions lagging far behind the rest of the nation. The past decade has witnessed a remarkable thawing in ties between the two Koreas. Cross-border rails were reconnected. South Koreans have been allowed to tour the North`s Mount Geumgang resort, though these tours are now suspended. The South`s capital and the North`s labor have created a vibrant industrial complex in the North`s border town of Gaeseong. However, scant efforts were made to develop the Border Region. Fundamental measures should be set up and carried out in order to revitalize the region and help fulfill its long-term potential as the geographical center of the Korean Peninsula. There is an urgent need for systemic, concrete studies and policy support to boost the region`s economy and improve dwelling conditions. Inter-Korean cooperation projects should be pushed both to propel regional development and, more broadly, to enable an effective use of the central area of the territory in preparation for a reunification of the two Koreas. History and spatial characteristics The Border Region consists of the DMZ, the Civilian Control Zone and its adjacent cities and counties. The Military Demarcation Line is the horizontal extension of the real ceasefire line between the United Nations and North Korean militaries, spanning 248 kilometers on land from Goseong to Ganghwa and an additional 200 kilometers on the sea to Baekryeong Island on the West Sea. Under the Military Armistice Treaty signed on July 27, 1953, the two sides moved their troops back 2 kilometers from ceasefire line, creating the 4-kilometer-wide strip of buffer zone. The southern part of the DMZ is controlled by the U.N. Military Armistice Commission. The areas within 10 kilometers from the MDL have been designated as CCZ, into which civilians` entry is restricted. The Military Installation Protection Area is within 25 kilometers from the MDL and is divided into the Control Protection Area and Limitation Protection Area. In terms of the administrative jurisdiction, the Bother Region comprises 15 cities and counties in

Incheon, Gyeonggi Province and Gangwon Province. Similarly, North Korea is known to restrict civilians` travel in areas within about 20 kilometers from the border with the South. Six national roads serve as main transport routes connecting the South and the North in the Border Region. Additionally, there are six provincial roads and four railways. Two railways of Gyeongui Line and Donghae Line and some national roads have been connected but the others remain severed around the southern end of the CCZ. As the frontier areas between the two states which are still technically at war, the Border Region shows some distinctive spatial features. First, it is characterized by persisting hostility and possibility of conflict between the two sides standing face to face with immense military power. Second, despite this, it is the best place for inter-Korean exchanges and cooperation. The two countries set out limited cooperative projects such as the Geumgang tours and the Gaeseong complex in the border areas of North Korea. Third, the region is abundant in undeveloped land as a result of decades of restrictions on civilian access and economic activity. Its well-preserved nature also provides for superb biodiversity. The UNESCO is considering designating it as a Biosphere Reserve. Fourth, it boasts of plenty of historical and cultural assets. Historically, states vied for control of the strategically crucial region, which allowed them dominate the whole peninsula. So, the DMZ and adjacent areas are dotted with heritages covering almost all periods from the Paleolithic Age to modern times. It also has rich water resources, vast plains, hills and fields and favorable conditions for outward advancement. Fifth, it is a politically, internationally and artificially formed sphere. A vestige of the Cold War, the DMZ was borne out of the truce signed by the United Nations, North Korea and China. It is a place of confrontation between two different state systems and attracts high international attention. Development strategies Dividing the peninsula in half, the Border Region could and should be developed into the center of inter-Korean exchanges and cooperation. Serving as the military buffer zone, it should be used as the locum of inter-Korean drive to build mutual trust in political and military terms and eventually a permanent peace system. Regional development should be expedited to raise the quality of life and the level of income. Cross-border exchanges on the region will also play a leading role in boosting economic cooperation in Northeast Asia, which is greatly affected by the geopolitical situation of the peninsula. As part of its supra-regional territorial policy, the government established a basic plan to develop the Border Region Peace and Eco Belt in 2009. The plan set three major goals: 1) maximizing the value of clean ecological resources, 2) establishing a base of inter-Korean exchanges and 3) international peace and promoting a sustainable regional development. The plan also presented five strategic tasks to achieve the objectives, which are 1) building a DMZ eco-tourism belt, 2) establishing facilities symbolic of world peace, 3) forging inter-Korean exchange and cooperation, 4) expanding transport infrastructure and 5) developing new growth engines for a unified Korean Peninsula. A comprehensive development plan is being formulated. 1) DMZ eco-tourism belt: The DMZ, the world`s sole place with both historical and ecological resources, should be systemically managed and developed into the center of inter-Korean peace and reconciliation. It also has a high potential to grow into a world-class tourist attraction through links with various resources around the area. The government is pushing projects to build global ecopeace parks, a coastal cruise complex and a bike travel path. Parks will be built in five areas to preserve the ecosystem, symbolize peace and develop tourism. The cruise terminal project aims to develop a high value-added international tourism product utilizing areas around the DMZ and the Northern Limit Line. A bicycle path will be built connecting key tourist sites in the region, as a section of a nationwide network of bike-only roads under construction. 2) Symbol of global peace: The region needs to overcome its fixed image as a war vestige and transform itself into a place symbolic of global peace and cooperation. The government is drawing up a plan to establish a U.N.-sponsored hospital complex to cure and rehabilitate landmine victims. It also seeks to host international organizations, including a U.N.-mandated peace-themed university, to arouse international awareness of peace in the region and the world. 3) Inter-Korean cooperation: Areas adjacent to the DMZ and the Han River estuary will be designated as inter-Korean exchange and cooperation districts. Given the need for ecological protection and the military circumstances, those districts should be easily accessible from both Koreas, equipped with sufficient infrastructure facilities and capable of serving as regional centers. In the supra-regional development plan, the government has chosen Paju (linked with North Korea`s Gaeseong) Cheorwon (with Pyeonggang), Goseong (with a North Korean city with the same name) as fitting for such districts. Considering their resources, conditions and surrounding environment, the government considers focusing Paju on industrial cooperation, Cheorwon on a tourism and Goseong on logistics. 4) Transport infrastructure: To deliver the potential of regional and national development in the future of a unified Korea, there is a need to improve the poor social overhead capital of the geographical center of the Korean Peninsula. To that end, the government seeks to build a 250-kilometer, east-west road from Ganghwa to Goseong, which would serve as a key logistics network for the regional economy. A large South-North bridge on the West Sea will be built for a transport link from Yeongjong Island and Ganghwa to Yeonan and Gaepung. The government is also considering a project to build

an overland transport system for natural gas to be introduced from Russia for stable energy supply. Transport links between the South and the North will be restored to help enhance regional and national competitiveness in an era of a unified peninsula. 5) New growth engines: Restrictions on access and development for security and environmental protection have hindered the region`s economic growth. But the region has a high potential to make a growth center of a unified peninsula, thanks to its location at the center of the territory and unique geographical conditions. The government plans to build to two MICE (meeting, incentive, convention and exhibition) complexes, which will create high economic values without harming the environment. Seeking to lay groundwork for the green energy industry utilizing the region`s topography and climate, the government seeks to establish cutting-edge industrial complexes specializing in visual device parts, new materials and parts and renewable energies. A Peace Village project will be pushed in harmony with historical and ecological resources in order to improve roads, housing and other living conditions, especially of villages of the CCZ. Conclusion The natural environment is diverse from west to east in the Border Region. A vast plain in the lower Imjin River basin stretches to the western coast. Cheorwon Plain occupies the central part. Beautiful mountains and coastline adorn the center-east section. Cross-border exchanges and cooperation in the region will greatly contribute to the improvement of inter-Korean relations, thus laying the groundwork for reunification that is harmonious and not chaotic. So far, in promoting economic cooperation, Pyongyang has aimed at economic benefits and Seoul intends to promote peaceful co-existence and lay the foundation for reunification. In the future, private sector-led economic cooperation will play an important role in easing tension and opening up North Korea. The government is formulating a comprehensive plan for the Border Region`s development and inter-Korean cooperation. For the plan to be implemented more effectively, a coordination mechanism should be established involving central government branches, provincial governments and private experts. Related laws and institutional systems to support the development should be in place. The Border Region Support Act should be revised in line with the government`s new supra-regional border belt development plan. Continuous and stable funding is essential to the long-term plan that braces for future of reunification. It could be covered by the general account budget or a special funding scheme. To attract private capital, project financing like a built-transfer-lease program, tax incentives and subsidies should be considered. Besides, there are plentiful tasks to facilitate exchanges and economic collaboration between the divided Koreas including forging a consensus among countries involved in the armistice treaty to redress the current status of a ceasefire and reinforcing inter-Korean exchange treaty systems. [Territorial policy in Korea (23)] How to utilize forestlands for green growth The green growth policy envisions harmony between the economy and the environment, promoting economic growth without harming nature. A key challenge for Korea is to pursue a sustainable development while at the same time preserving the territorial environment. If its past territorial policy focused on economic growth and development, the future one should be based on the harmony between the environment and development. It should make the best use of the natural characteristics of territory abundant with mountains and rivers to lay the stepping stone for green growth. The government is pushing a major project to revive and renovate the four major rivers -- Han, Geum, Nakdong and Yeongsan. By enhancing the rivers` functions to secure stable water supply as well as promoting a more effective use of waterfront, the project is expected to serve as a key driving force for green growth. The government plans to inject 22.2 trillion won in the project by 2012. However, when it comes to mountains, the government`s policy has focused on enhancing forestland resources through forestation with the task of an effective use and development of forestlands sidelined. To respond to climate change and green growth, there is a need to deliver the potential value of mountains and forests by implementing a more active and environmentally-friendly use of them. History of forestland management The 1950-53 Korean War devastated forests across the country. In the 1960s, with economic development the top priority, the nation paid little attention to the environment. Korea`s forest management policy began in earnest in 1973 with the first 10-year National Forest Plan (implemented in 1973-78). The second National Forest Plan (1979-87), the third National Forestland Resources Enhancement Plans (1988-97) and the fourth Basic Forest Plan (1998-2007) laid the groundwork for forestation and developing forest resources and the fifth Basic Forest Plan (2008-2017) is underway. As a result, the growing stock volume per hectare, a measure of the quality of forests, increased 17.5 folds from 5.6 square meters in 1952 to 97.8 square meters in 2007. As reckless development of forestlands damaged the natural landscapes and caused natural disasters in the late 1990s, the government established the Forestland Management Act in 2002, separating it from the 1980 Forest Act. The new act stipulated that forestland management should be conducted in a way that raises the productivity of forestry and promotes public functions of forests including preventing disasters, protecting water resources and preserving the ecosystem.

Forestlands are currently divided into forest conservation zones and semi-forest conservation zones. Forest conservation zones are managed for forestry, disaster prevention, protection of water resources and preservation of the ecosystem. So, development is restricted inside them except housing for forestry workers, forestry production facilities, arboretums, recreational forest lodges and other public facilities. Developing housing sites, industrial location, tourism complexes, etc. is regulated by related laws such as the Act on the Planning and Use of the Territory, the Act on Urban Development, the Act on Housing Site Development Promotion and the Act on Industrial Location and Development. Developing forestlands for purposes other than forestry production and pubic interest is subject to special regulations regarding conversion of forestlands. Such deforestation requires approval from the chief of the Korea Forest Service. The KFS reviews applications and is supposed to permit them if they meet certain criteria defined by the Forestland Management Act, including the effect on management of adjacent forests, the impact on the ecosystem, water quality and disasters, and whether development areas include high-quality forests. Yet for forest management, research, and disaster prevention facilities, the developers have only to report to the authorities. In October 2008, the Presidential Council on National Competitiveness pointed out the need for changes to too much extensive forest conservation zones and the present regulation-centered forest protection policy in order to meet growing demands for developing urban and industrial sites. Accordingly, the government has been working to improve the system to promote a more active utilization of forestlands. Inappropriate forest conservation zones have been changed to semi-forest conservation zones. Unnecessary land use regulations in forest conservation zones have been relaxed. The government abolished a rule in which releasing an area from forestry promotion zones required designating a corresponding size of other land as such. The authority to permit conversion of forest to other purposes in urban areas and special planning and management districts has been delegated to local governments. Models of nature-friendly forestland development A nature-friendly forestland development means using and developing forestlands for housing, industry, culture and recreation while maintaining their natural characteristics. Forests should be utilized while maintaining their natural landscapes by preserving their topography and woods. In facilities construction, the size of forest conversion should be minimized and the slope should not be damaged. 1) Forestland development in line with natural landscapes and topography: Forestland development should be allowed on condition that damage to the ecosystem is minimized and development harmonizes with natural landscapes. Facilities construction should consider the height of trees not to damage surrounding landscapes, and the size of forest conversion should be minimized. A good example is a resort town in Jecheon, North Chungcheong Province (Picture 1). 2) Construction considering natural vegetation: Buildings should be constructed while preserving surrounding vegetation so that they could harmonize with natural features. A good example can be found in the resort town in Jecheon. As shown in the photograph, a hole was made on the roof to protect trees. (Picture 2) 3) Forestland development linked to surrounding natural environment: Forests should be developed in links with their surrounding natural environment of rivers, lakes and the sea. Many high value added tourism resources can be created by utilizing the natural characteristics of Korea, which has many rivers and is surrounded by the sea on three sides. Good examples can be found in Tongyeong, South Gyeongsang Province (Picture 3), and Luzern in Switzerland. Policy directions For a nature-friendly utilization of forestlands, the policy paradigm should be shifted from passive and regulation-centered to positive and utilization-centered. First, there is a need to establish a comprehensive plan to manage forestlands in the light of territorial management. The focus of policies has moved from planned forestation in the 1970s, the forest resources enhancement in the 1980s and a sustainable forest management in the 2000s. But they had been limited to forest management and failed to promote proper utilization of forestlands. Therefore, the government plans to a basic forestland management plan by 2012 for rational preservation and active utilization of forestlands across the country. Second, a nature-friendly development requires a new way of classification of forestlands. Under the current classification system, centered on growing trees, it is difficult to meet diverse demands of forestland development. In addition to preservation-related factors such as the natural environment, the eco-system and the standing tree stock. the criteria should encompass topographic features such as mountain ranges and water flows, and land development-related features. With these factors taken into account, forestlands could be reclassified as follows; a conservation and management type which must be absolutely preserved, a forest resource utilization type reserved for forestation and tree production, and a multiple use type responding to diverse demands of development. This classification will contribute to raising the potential values of forestlands. Third, new zoning policy should be introduced to encourage nature-friendly utilization of forestlands. For example, the government can designate a special zone in which rules on conversion of forestland can flexibly apply in a nature-friendly way in case there is no concern about harming the ecosystem, the landscape and anti-disaster efforts. Changing the currently uniform criteria in a way to reflect topographical features properly will help resolve many of problems of forestland utilization caused by small-scale, dispersed development. Fourth, after-management of forestland

utilization should be enhanced. When forestlands are conversed to other uses, they get excluded from forest management. While expanding chances for forestland development, the government needs to enhance aftermanagement of conversed forestlands to prevent reckless development and degradation. Green growth territorial policy To reduce greenhouse gases, there is a growing need to preserve forests, the only carbon-absorbing resources recognized by the United Nations Framework Convention on Climate Change. In the other hand, the demands for forestland utilization for expanding metropolises to outskirts, tourism and recreation also continue to grow. Therefore, a nature-friendly use of forestlands is integral to reasonably harmonizing the environmental value of protection of forest resources and the economic value of utilization of them. To cope with climate change and green growth in the future, the natural features of Korea`s territory with many rivers and mountains should be effectively used. So, linking a nature-friendly forestland utilization and the four-river revival project as the two main pillars of the territorial development will raise the quality of the territory and make it better fit for green growth to match the nation`s heightened international standing as a member of Group of 20. [Territorial policy in Korea (24)] Korea upgrades industrial location policy Industrial complexes have played a central role in Korea`s spectacular economic growth over the past half a century. Spatial agglomeration of industrial capabilities has enhanced national competitiveness. Their scattered presence across the country at the same time has contributed to the goal of regionally balanced development. Factory parks account for 67.5 percent of production, 54.3 percent of exports and 43.9 percent of the total number of businesses. Though advanced economies are still struggling in the wake of the global financial crisis, companies at home and abroad are continuously investing in building and expanding factories to improve facilities, introduce cutting-edge equipment and increase production capacities. A key consideration in this investment decision is the acquisition of industrial land that is cheap and has sound infrastructure. In this globalized economy, companies are moving across borders to locate where they can get a better business environment. Supplying low-cost industrial sites and making factory establishment easier are of vital importance for the nation to strengthen its global competitiveness and to attract more foreign direct investment. With this in mind, the government`s industrial location policy aims to provide factory land cheaply, swiftly and in places that meet corporations` location needs. History of industrial location policy Korea`s modern industrial location policy dates back to 1962 when the government designated its first industrial complex in Ulsan, South Gyeongsang Province, as part of its burgeoning export promotion drive aimed at laying the foundation of a self-reliant economy. It was followed by the construction of six export-oriented industrial parks in Seoul (Guro) and nearby Incheon (Juan and Bupyeong) beginning in 1965. In the 1970s, the nation began to shift the focus of its industrial policy to heavy and chemical industries. Under the Act on Developing and Promoting Industrial Bases in 1973, the government set up a plan for self-powered growth through heavy and chemical sectors and established staterun industrial complexes in Ulsan, Yeosu, Changwon, Gunsan, Banwol, Yangsan and Onsan. In the 1980s, under a balanced development strategy, plenty of small- and medium-sized industrial complexes were built across the country including Busan (Shinpyeong and Jangrim), Gwangju (Hanam), Gyeonggi Province (Hyangnam) North Chungcheong Province (Buyong), South Chungcheong Province (Jochiwon) and South Gyeongsang Province (Jinhae and Macheon). In the 1990s, the government went on to establish agricultural-industrial complexes in rural communities. They brought in the manufacturing and service industries, thus creating new income sources for the populace who had been dependent entirely on agriculture and fisheries. In addition to these balanced development efforts, the government began to forge high-tech, high-value industries, establishing cutting-edge science industrial centers in large cities including Daejeon, Cheongju, Jeonju, Gwangju, Busan, Daegu, Gangneung and Chuncheon. With the advent of a knowledge-based economy in the 2000s, the government began to build specialized agglomeration districts to cope with the new industrial trends, including seven cultural industrial parks, high-tech urban industrial complexes in Cheongju and Jeonju, and an array of national industrial estates for lease. Thus far, a total of 809 industrial complexes have been designated, covering 1,349 square kilometers of landmass and accommodating 52,250 companies. Key policy directions The government is taking measures to provide industrial land in a timely manner, appropriate places and at affordable prices. First, the licensing and authorization procedures have been streamlined to enable the timely supply of industrial sites. It had taken two to four years to complete the legal processes necessary to develop industrial complexes because of multi-level, complicated administrative procedures. This has been reduced to six months with the enactment of the Special Act on Simplifying Licensing and Authorization Processes of Industrial Complexes in 2008. Previously there were two separate stages of approval for new industrial complexes, each regarding development plans and implementation plans. The special act merged them into one, allowing developers to begin construction as soon as they get approval. The time and

cost for reviewing development plans have also been drastically reduced. According to the act, the Committee to Deliberate Industrial Complex Plans conducts an integrated review of the plans in aspects of industrial location, urban planning, transportation, disaster prevention, energy use, forestland conversion and the like. Second, the government seeks to provide industrial sites at competitive prices. To do so, it has established Land Bank, which secures land plots in advance when they are cheap and provides them to businesses. The government also plans to develop industrial facilities for lease on state-owned estates that are sizable enough and located to meet industrial needs. Third, the government is expanding the availability of industrial sites for long-term lease. The government has been providing long-term, low-rate leases for industrial complexes since the 2000s to help relieve the corporate burden from rising land prices as well as to boost investment and promote balanced development. By 2017, the government plans to provide 33 square kilometers of industrial sites leases of up to 50-years with annual fees amounting to 1-5 percent of development costs. The complexes will be developed first in provincial areas that are in need of spacious and low-cost industrial sites. Fourth, more industrial sites will be provided in the capital region by easing regulations. While maintaining the basic frame of the capital region policy, the government ameliorated some elements in the policy which had excessively restricted corporate activity. Regulations on industrial facilities in the congestion restriction zones and growth management zones were relaxed. As a result, building, expanding and the relocating of factories in government-developed industrial complexes are now allowed regardless of scope and sector. In the growth management zones, high-tech businesses can expand factories without limit in industrial districts and by up to 200 percent of existing facilities outside industrial districts, while other businesses can expand factories within existing estates. In the concentration restriction zones, high-tech businesses are allowed to expand factories within 200 percent of existing facilities in industrial districts and within 100 percent outside industrial districts. Fifth, the government seeks to increase supply of industrial locations in the inner city areas by renovating existing industrial complexes. Manufacturing complexes older than 30 years will be transformed to host cutting-edge knowledge, information and communications businesses. By fixing aging infrastructure and building new infrastructure, the government plans to renew them into high-tech convergence complexes. Model renewal projects are underway in four aging industrial complexes in Daejeon, Jeonju, Daegu and Busan. Model structural upgrade programs are also being carried out in four national industrial complexes in Incheon (Namdong), Shihwa-Banwol, Gumi and Iksan. To promote green growth and sustainable development, the government is expanding supply of environment-friendly facilities including eco-industrial parks where companies save resources and cut pollutants systemically by recycling side-products and maximizing energy efficiency. Conclusion Vibrant corporate activity is key to enhancing national competitiveness. Therefore, countries all over the world are making their best efforts to provide low-cost industrial sites with well-laid infrastructure. Korea is taking various measures to prevent domestic companies from relocating abroad and attract more foreign companies. To do so, the government is seeking to offer industrial sites in a timely manner by streamlining the authorization process, lower prices through Land Bank operations, and supply land where they are demanded. [Territorial policy in Korea (25) ] Korea carves out global `soft territory` When the Industrial Revolution of Britain in the mid-18th century began to spill over to the rest of Europe and America, the world took the first step toward building a single global market. The ensuing development of transportation made the world smaller and closer. The exponential growth of computer-based information and communications technology and the advent of the internet and mobile phones in the late-20th century shaped a global village and further accelerated the market integration. Also behind the movement toward a single global market was a freer movement of international financial capital across national borders. Riding on these changes, Korea has made a great transformation into an economic powerhouse and one of the most wired societies. Its high population density and relatively small territory, often cited as its major shortcomings, turned into the sources of its competitive strength in an era of information and knowledge-base economy; the small size enabled Korea to lay ICT infrastructure nationwide easily and the rich pool of human resources produced huge numbers of creative talents to lead future industries. Changing concept of space These changes have led to a major evolution in the perception of space, as clearly demonstrated by regional policies of European countries. Their integration and development policies are framed on a global scope, not limited to national or regional boundaries, and focus on "soft" rather than "hard" aspects of space. Professor Andreas Faludi of Delft University of Technology in the Netherlands says that the world is encountering new realities which cannot be explained by the traditional fixed concept of hard territoriality. Rather, European regional policies focus on "soft space" that centers on humans` natural activities, according to the prominent regional development expert. As such, a single nation-state is diminishing in significance as the stage for competition of cities and their competition and activities are

increasingly conducted on a global scope. Keeping up with the current, Korea faces a challenge of venturing out to the world and carving out its own soft space. Exploring soft space The government is pushing the Global Korea strategy as a key national task. The nation will step up its efforts to expand the space of Koreans` global activity, or soft space, especially taking advantage of a Group of 20 Summit to be held in Seoul from Nov. 11-12. In this endeavor, it is important to forge success models of overseas advancement in each sector, by spurring accumulated capital and technologies of local businesses and well-educated and trained human resources to go abroad, thus helping create jobs abroad as well as forging the nation`s global soft space early. Through such success models, Korea will be able to set the world standard of territorial projects in such fields as the climate change response, green growth and free trade. In doing so, the country will also be able to spread models and projects tinged with Korean values all over the world. Seoul became the 24th member of the Development Assistance Committee under the Organization for Economic Cooperation and Development on Nov. 25, 2009 and began the activity as its member on Jan. 1. Korea is the sole country that has transformed itself from an aid recipient to a member of the major international donors` club. It can play a differentiated role as a bridge between donors and recipients of development aid, thereby promoting Korean values in the international community. International aid is the most effective and powerful means to explore a nation`s global territory and expand its soft space. Joining the DAC, Korea pledged to augment its official development assistance to 0.25 percent of its gross national income by 2015. By boosting its contribution to the international community, Korea will be able to expand its soft space as well as elevate its national prestige and brand values. Strategy for expanding global soft space In exploring global soft space, Korea should push strategies customized to the needs and conditions of partner countries. Developing countries will hope to learn from Korea`s experience in its condensed growth and territorial development and receive its technical and capital support fitting their own developmental stage. There are seven major types of overseas spatial projects for exploring global territory; 1) consulting for territorial planning (territorial development grand designs, government consulting), 2) urban and rural construction (new city development, urban renewal), 3) land development (high-tech industrial complexes, free economic zones), 4) the development of underground and undersea natural resources, 5) the development of water resources (dam construction, river renovation and development), 6) the construction of transport infrastructure (roads, railways, seaports, airports) and 7) territorial information and education (territorial development experience, geographic information system technologies). Let me introduce some of important overseas advancement strategies. 1) Support for spatial planning system Vigorous discussions have been underway in the international community on how to improve aid policies for developing countries. While overseas aid has been in a large measure of humanitarian and unilateral nature, a new paradigm stresses mutually beneficial relationship between providers and recipients based on reciprocal partnership and knowledge sharing. Indeed, developing countries eagerly request that Korea deliver its expertise in spatial planning and territorial development. The Korea Research Institute for Human Settlements conducted a survey in 2009 in what fields of spatial planning developing countries want to enhance their capabilities with the support from Korea. They were statistic databases and GIS (24 percent), legal and institutional systems (19 percent), education (18 percent), and fiscal policies (13 percent). Korea has tired hard to help developing countries with its industrialization model. But there is still much room for improvement, especially in meeting those countries` needs. In helping developing countries establish their spatial planning system, Korea should (1) strengthen global partnerships in line with the changing paradigm for international development cooperation, (2) establish cooperative systems based on comparative advantages to effectively realize its national interests through development aid, and (3) prepare practical strategies for responding to demands to ensure its assistance works more effectively. 2) Korean-style new city development The United Nations` "Urban and Rural Areas 2007" report forecast that the world will need 500 new cities each with a 300,000 population by 2010 and 5,500 by 2030. Especially, China would need more than 1,500 cities of the same size within 20 years to accommodate its population forecast to increase by between 400 million and 500 million, according to the report. With the world population increasing and urbanization accelerating, demands for new cities will grow fast especially in Third World and developing countries. The current boom in urban construction in the Commonwealth of Independent States, the Middle East, Africa, etc., in which social infrastructure is fragile, is expected to continue for quite a long time. Through its fast urbanization for the past 40 years, Korea has accumulated rich experience and effective know-how for city development. Many developing countries are eager to benchmark Korea`s urban policy and learn its development techniques. The nation has been participating in urban projects in Asia and the Middle East since 1989. In the Middle East alone, Korea is involving in more than 2,000 projects, estimated to be worth $1.3 trillion, from 2007-12. Overseas urban development projects conducted by Korea Land and Housing Corporation can be divided into construction process management, comprehensive planning, industrial complex development, and aid projects including technical consulting. The state-run

corporation is currently taking part in projects in Azerbaijan, Turkmenistan, Iraq, Algeria, Tanzania, Senegal, Nigeria, Ghana, etc. Korea`s private builders are also developing cities in Vietnam, Kazakhstan, Algeria, Cambodia, etc. Exports of Korean-style city development to Asia and Africa are fast growing as those countries highly recognize Korea`s expertise and favor Korean companies. 3) Projects linked to resources development Korea relies on imports almost entirely for six major strategic natural resources -- bituminous coal, uranium, iron, coal, zinc and nickel. Stable resources supply is crucial to the national interests in terms of both development and security. To succeed in an ever-intense international competition over resources, Korea needs to link resources development to construction, plant exports and ICT business projects in which Korea has a remarkable competitive edge. According research done in 2009 by the KRIHS, the most promising markets for such linkages were, in the following order, Congo, Nigeria, Iraq, Mongolia, Uzbekistan, Algeria, Libya and Vietnam. 4) Global Training Center Topping the wish list of developing countries for Korea was education and training of its development experience and policies for the past half a century. To meet the demand, the government decided during a meeting of external and economic ministers on Jan. 15 to establish the Global Training Center at the KRIHS. The center plans to run training programs for officials from developing countries in the fields of territorial planning, new city construction, industrial complex development, water resources development, infrastructure construction, land and housing policy, and GIS. The center will also select base countries in Asia, Africa and Latin America for strategic linkages of territorial planning support, investment-oriented development projects and aid activity, so as to boost the effectiveness of the nation`s development assistance.