Background
Background of UFEZ Designation
Revitalizing Economic and Social Conditions
- Re-boosting economic and social conditions
- As the annual growth rate of Ulsan Metropolitan has been remaining around 1.4% for a long time, it should take a breakthrough to overcome the current situation and to get improved.
- The unemployment rate (4.6% as of 2018) needs to lower close to the level of 2014(2.7%).
- Having experienced sharp decline of exports in 2014 and has been on the same level up to now, Ulsan needs to overcome this situation.
· The annual average rate of the export decline was 6.7% from 2014 to 2018. - The sales index decrement of large retail stores from 2014 to 2018 caused weakening consumption in the overall economy and it needs something to revitalize the local economy.
- Since reaching its peak on the total population(1,173,534) in 2015, the total number of city population has started decreasing. The population balance between over 50s and under 50s has turned upside down.
Securing the Competitiveness of Major Industries in Ulsan
- As the hub of the manufacturing industry worldwide, Ulsan has been grown based on the three major industries; automobile, shipbuilding, and petrochemical.
- As of 2017, the rate of added value of the manufacturing industry reached 63.2%.
- The rate of the three major industries on manufacturing industry in Ulsan : 82.6% of added value, 74.4% of employment, and 50.3% of the total number of businesses.
- Due to the weakened competitiveness of the three major industries in Ulsan, it needs to find a new growth engine to overcome the limit that is currently the huddle of its economic growth.
- As the portion of added value of of the major industries in Ulsan also has decreased in the same category nationwide, it is necessary to resolve thes issues.
- As the solution for these issues, Ulsan aims to foster the energy industry as a new growth engine.
- The energy industry could be a solution for extending Ulsan's top industries and linking them to other industries continuously.
Utilizing the Free Economic Zone System is necessary to Foster the Energy Industry
- With its excellent infrastructure for the existing industries, Ulsan has a superb environment for the energy industry
- Due to the lack of core technologies and the restriction to new industries, there remains a limitation on fostering the growth.
- Dependence on core technologies such as hydrogen-producing catalysts or production technology to foreign companies is quite high.
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- It is also difficult to activate the energy industry due to a lack of standards and strong regulations.
- City Hall aims to overcome such limitations and foster the energy industry by utilizing the specificity of the Free Economic Zone.
- It plans to promote the localization of core technologies by attracting foreign companies and research institutes.
- In addition, it will ease various regulations and establish business standards to promote the energy industry by utilizing related special laws.
Necessity of Designation of Ulsan Free Economic Zone
National Level: The Korean government is required to occupy the energy industry in advance at the national level by utilizing the energy market.
- The government needs to strengthen its policy support for building the foundation of successfully growing Ulsan as an energy hub.
- In order to prepare for the rapidly changing global energy market, it should make efforts to transform the Korean economy into a hydrogen economy and foster the outpost for cooperation with the Northern Economy.
Regional Level: Ulsan needs to be selected as a hydrogen energy hub for new growth.
- The city should designate the Free Economic Zone and create an energy-hydrogen hub for the northeast asian market, based on its infrastructure in the energy-integrated industry.
- As the city is the center of Korean industries such as transportation and logistics, it is necessary to transform the old economic structure by coming up with a solution to help major industries, which are in crisis, and attracting small but strong companies.
Provincial Level: An institutional basis is needed to revitalize the industry and economy in the Yeongnam province.
- An institutional framework is needed to prevent industrial and economic declines in the province due to industrial concentration in the Seoul metropolitan area.
- It is necessary to strengthen the role of the east coast and the south coast around the southeastern region in the energy industry, based on Ulsan.
Analysis of Development Potential and Condition
Ulsan has its excellent geographical location and industrial infrastructure such as ports.
- The city has convergence conditions between the existing main industry and the energy sector, such as corporate, technology and infrastructure, etc.
Ulsan is the largest hydrogen production area in Korea and has a good foundation for its related front back industries.
| S-O Strategy | S-T Strategy |
|---|---|
| - Finding ways to connect existing industrial infrastructure and ports - Seeking ways to diversify cooperation in energy economy exchange with northern countries. - Fostering a new energy industry through excellent industrial infrastructure and energy specialist training institutions. |
- stering energy-related industries centered in the hydrogen industry - Establishing an energy hub by utilizing the port with the best liquid cargo handling capacity in Korea |
| - Activating exchanges with the Northern Economy - Building a new energy industry |
- Diversifying and advancing major industries |
Direction of Development of Ulsan Free Economic Zone
New Free Economic Zone Model Suggestion
- City Hall aims to establish an energy-based economic system by attracting capital, technology and professional manpower in its energy-based sectors to the Ulsan Free Economic Zone that will serve as a new energy hub in the Northeast Asian region.
- UFEZ will strive for the development of new industries and high value-added service industries along with the advancement of the previous manufacturing industry.
City Hall plans to push for a link between the employment project based on corporate investment and the UFEZ development project led by businesses.
- City Hall will continue to attract related businesses to the UFEZ through intensive attraction of new investment from anchor companies such as Hyundai Mobis, win-win cooperation between large companies and middle and small businesses, and large-scale projects.
- Ulsan has a certain area necessary for demonstrating new technologies and mitigating regulations and can easily supply high-quality human resources and establish an industry-academic network. It also can utilize old cities and industrial complexes. Therefore, it is easy to expand production facilities in conjunction with existing special zones, enabling UFEZ to achieve performance in the early stage.
UFEZ will integrate energy-related industries and create a synergy effect to front back industries.
- This will integrate the industries related to production, storage, transport, and utilization according to the energy industry ecosystem development stage.
UFEZ plans to foster the largest energy logistics hub in Northeast Asia by utilizing its excellent port infrastructure.
- It will develop into a new type of free economic zone model beyond just a simple role in logistics, storage, and transportation.
- It will emerge as a global energy-oriented port with the expansion of the Ru-San market and energy-based industries in the Northern Economy.
UFEZ will transform Ulsan into a hydrogen city by activating the energy industry test-bed.
- It plans to become a role model for Zero Emission City by strengthening the demonstration of the hydrogen industry and spread it throughout Korea.
