NEW YORK, N.Y. The bustling South Korea port of Busan is already one of the top five Far East ports in volume, but industry groups are intent on redeveloping the port as a centerpiece of the country's future economic development in the face of stiffening global competition, particularly from China.
At the Busan North American Investment Forum here Tuesday (June 14), several speakers said the port, located on the southeast coast of South Korea, would be enlarged as part of an ambitious plan to make the Busan region a key global shipping and economic hub serving northeast Asia as well as Europe and North America.
Busan handled 11.5 million TEU (total equivalent units) of containers in 2004, according to June-Suk Choo, president of Busan Port Authority (Busan, South Korea), a group formed last year to operate and develop the port and surrounding region. That placed the port fifth behind Hong Kong, Singapore, Shanghai, and Shenzhen, China.
The port expansion plan calls for construction of 30 new shipping berths between 2005 and 2011, to be located in a new port 25 kilometers away from the current port. The current port would be redeveloped into a multi-purpose facility housing a logistics and commerce center, exhibition and cultural center, leisure park, and international passenger terminal, with development to take place over a ten-year period until 2015.
Busan also houses a free economic zone for foreign investors seeking high-tech manufacturing and research and development, according to Wang-Suk Woo, director of the Busan-Jinhae Free Economic Zone Authority. Woo said that Samsung and Renault are investing $600 million to build a new engine plant there, and the Busan Science and Industrial complex is expected to be completed by the end of this year.
Busan Port Authority and other South Korean industry groups plan to leverage Busan's strategic location to strengthen the Korean economy.
Boo-wan Kang, marketing director of Busan Port Authority, told EE Times in an interview that growing a number of manufacturers have set up shop in the vicinity of Busan. Among electronics companies, LG Electronics is 30 to 40 minutes away while chipmaker and electronics giant Samsung is no more than 2 hours away.
Kang also noted the port's location on a main trunk route between China and Japan as well as a favorable port cost structure, aided by relatively low leasing costs and tax incentives.
The activity in Busan parallels other efforts in South Korea to bolster the country's economic engine. Seoul, the largest city, has also formed a series of free economic zones while embarking on a massive commercial real-estate and economic project called New Songdo City.
South Korea's economic growth has slowed in recent years, with GDP (gross domestic product) per capita rising 4.6 percent in 2004 and expected to slow to 4 percent this year, said Scott McDonald, senior managing director of Aladdin Capital Management LLC. By contrast, Korea's average GDP growth rates soared above 9 percent from 1965 to 1990, he noted.
Though exports of products such as electronics and automobiles remain strong, South Korea has also lost much of its low manufacturing cost advantage to China and several Southeast Asia nations as the country's standard of living has increased, according to McDonald.