Application submitted for Suseong Alpha City and Daegu National Industrial Complex & Geumho Waterpolis

Daegu Metropolitan City (DMC) is the first local government in Korea to apply for Opportunity & Development Zone (ODZ) status. The application was submitted in quick response to the municipal public welfare forum held on March 4, at which it was decided that it would be in DMC’s best interest to take advantage of President Yoon’s promises on the creation of a national digital innovation hub (Suseong Alpha City) in eastern Daegu and robot/mobility-based industrial reorganization in southwestern Daegu.

ODZ is an aid package (e.g. tax cuts, granting of special regulations) provided to corporations that have signed investment contracts with a local government for the purpose of expediting large-scale investment in regions/provinces outside Seoul and/or Gyeonggi-do.

According to the “Guidelines on the designation and operation of the ODZ” (Mar. 4, 2024), the central government is accepting applications from local governments on a rolling basis. After a screening of “Daegu Metropolitan City’s Plan for the Establishment of an ODZ” through a meeting of the Daegu chapter of the Committee for Decentralization and Balanced Development, DMC submitted its application on March 22 (Fri).

To improve its digital competitiveness and transition swiftly to an economic structure based on future industries amid accelerated industry-wide digital transformation, DMC applied for stage 1 ODZ status for Suseong Alpha City (digital) and Daegu National Industrial Complex (DNIC)/Geumho Waterpolis (cutting-edge manufacturing). Metropolitan governments can apply, in installments, for up to 4.96 million square meters (1.5 million pyeong). DMC’s application was for 2,734,000 square meters (830,000 pyeong) and an investment of approximately KRW 4 trillion.

Firstly, Suseong Alpha City is the largest ICT/software corporate complex outside of Seoul/Gyeonggi-do, with a presence of 243 ICT/software companies, 4,525 permanent employees, and 13 corporate support infrastructures. Having been designated in 2023 as a “provincial digital innovation hub,” Suseong Alpha City is currently being reconstructed.

There are six corporate investors, including SK REIT, which will be constructing an AI data center, and SK C&C, that are investing a total of approximately KRW 1.396 trillion.

Suseong Alpha City’s location enables collaboration with the nearby Daegu-Gyeongbuk Medical Cluster, National Information Society Agency, and other local industrial complexes. Having been designated as a free economic zone in 2008, efforts are underway for Suseong Alpha City to be also designated as a “research and development special zone,” both of which are expected to create a significant synergy after it becomes an ODZ.

DNIC is the largest industry-academia-research complex outside Seoul/Gyeonggi-do, with the presence of 200 cutting-edge manufacturers (e.g. Hyundai Robotics, Daedong Mobility), Korea Automotive Technology Institute, Korea Intelligent Automotive Parts Promotion Institute, DGIST, Keimyung University, and Kyungpook National University.

<Map of ODZ>

In addition to being designated in 2023 as a materials/parts/equipment-specialized complex, DNIC is located close to several related facilities such as National Robot Test Field and Secondary Battery Recirculation Park. This is expected to make it easy for the DNIC to serve as an outpost for future industry expansion once ODZ designation is completed.

DMC applied for ODZ status for DNIC’s second phase area, which is currently actively being invested in. The first phase area will be set aside for six robotics companies and/or participating companies of the materials/parts/equipment complex that are slated for new investments, including L&F, an up-and-coming secondary battery materials manufacturer, and Koa Automotive, which will be joining the materials/parts/equipment complex. The total investment is approximately KRW 2.8617 trillion.

※ Tax benefits to be provided if a company moves to Seoul/Gyeonggi-do or builds a new plant/expands an existing production facility or a startup is launched between application submission date and designation as ODZ (reduced acquisition/property/corporate tax: For further information, please see the attachment)

Geumho Waterpolis, which bridges the southwestern end’s manufacturing complex and the eastern end’s digital complex, is an urban facility that is necessary to complete Daegu’s manufacturing-digital “belt.”

Investments are being made primarily in electric car/robot parts and secondary battery modules. These are expected to not only create a synergy with DNIC once ODZ status is confirmed but also contribute to balanced inter-regional industrial development.

According to an analysis by Daegu Policy Institute, ODZ-prompted corporate investment is expected to employ 4,355 people, with DMC’s budget employing 2,454 people. It was also anticipated that bringing in digital/manufacturing anchor companies will revitalize a digital technology-friendly environment in Daegu in addition to establishing a virtuous cycle of corporate investment, job creation, and an influx of skilled workers.

Jeong Jang-su, DMC’s vice mayor of economic affairs, said, “Our opportunity & development zone application, the first ever submitted, represents DMC’s commitment to filling our economic territory, which will soon expand significantly with the construction of Daegu-Gyeongbuk New Integrated Airport, with cutting-edge industries and corporations. We will be doing our best to build more special zones, such as a second national industrial complex and Gunwi New Integrated Airport industrial complex, for the future of Daegu’s local industries and link them with urban resources and educational/cultural special zones to create a corporate-friendly environment.”