I Just Toured the World's Largest Construction Site
By Tom Dyson
As I stood at the top of a 25-story skyscraper and surveyed the land around me, all I could see was construction.
I toured Korea's new free trade zone near Seoul. The authorities in charge of this site claim it's the largest real estate development project in mankind's history. It's called the Incheon Free Economic Zone (IFEZ for short).
A free trade zone is an area with special tax and land privileges. Governments create free trade zones to stimulate business activity. Last week, I told you about China's first free trade zone: Shenzhen.
Twenty years ago, Shenzhen was just a fishing village. Today it's one of China's most powerful manufacturing cities.---------- Advertisement ----------
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These days, many Asian countries are following China's lead... They're using free trade zones to create wealth.
"The hospital will be there," said the guide, pointing to a piece of barren land. "That's an international school. Those bulldozers are building the Jack Nicklaus golf course. Over here we're building a technology park. And over there we'll have one of the world's largest container ports..."
The guide also showed me a scale model of the development. It's one of those models with buttons in the front. When you push a button, one area rises above all the others and a light shines on it. Then a recording plays. It tells you about the buildings that'll go up, what niche industry they'll serve, and what year the project will be finished.
The scale model was as long as a bowling lane. It must have cost several hundred thousand dollars to make.
IFEZ construction started six years ago. The convention center, the international school, two universities, the world's second busiest cargo airport, and the 11th busiest passenger airport have already been built. And the seven-mile bridge connecting the airport with IFEZ's business area is almost finished. (The airport is on an island.)
Over the next 12 years, Korea will build apartment buildings for 250,000 people in IFEZ. It'll construct the world's second-tallest skyscraper. Car companies GM and Daewoo are building a major research center and test track. Korea wants to lead the world in robotics. It's making "robot land" in one corner of IFEZ.
IFEZ will be a "business utopia" for international companies. The government will give you free land and major tax breaks if you locate your business there. IFEZ is at the center of Asia. China's industrial East Coast is just 200 miles away. Business centers in Hong Kong, Taiwan, and Japan are close, too. And English is the official language.
I haven't found any direct ways to invest in IFEZ. The companies involved so far are all huge multinational corporations. I wouldn't buy residential property in IFEZ either. I saw one basic three-bedroom apartment there. It was on the fourth floor. My host said it would sell for $600,000. That's more expensive than an equivalent apartment in downtown Seoul. He also told me the Koreans are rushing to buy apartments that haven't been built yet... another mark of an expensive property market.
IFEZ is an ambitious project. To pull it off, Korea will need the world's biggest companies to invest billions of dollars. Money is tight right now... especially in the United States, though I think the U.S. will still commit in the long run.
But that's not the point here... This project tells me Korea wants to dominate the business world. It's aggressive, almost militant capitalism. And that makes me want to invest in Korean stocks.
Good investing,
Tom
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