By Kim Sung-jin
Staff Reporter


The government will relax rules restricting the construction and expansion of manufacturing plants in satellite cities around Seoul that have stood for 10 years.

LG Group emerged as the biggest beneficiary from the loosening of restrictions, which is expected to pave way for the conglomerate’s ambition to build the world’s biggest liquid crystal display (LCD) cluster in Paju, northwest of Seoul.

The government and the ruling Uri Party yesterday reached an accord on endorsing construction and expansion of production facilities of companies engaged in eight high-tech industries in cities adjacent to Seoul.

``The government decided to accept conglomerates’ requests to endorse the construction and expansion of production facilities on outskirts of Seoul, taking into account the imperative and pressing nature of the issue,’’ said Uri Rep. Kim Han-gill, head of Uri Party’s special committee for development of the Seoul metropolitan area, at the National Assembly.

The government has restricted the construction of plants around Seoul to protect the environment. The decision to ease rules is expected to invite strong protest from various civic groups.

The eight high-tech industries that will benefit from the relaxed rules include electronic materials, parts and equipment businesses: computer devices and peripherals such as LCD monitors, electric power modules, printed circuit boards (PCBs), optical fibers, broadcasting receivers and audio video devices such as LCD TVs.

However, the government will ease the rules only temporarily, until the end of next year, to prevent undue industrial development on the Seoul periphery. The provisional approval of factory construction and expansion will also be restricted to the existing industrial complexes.

Following the restrictions repose, LG Group’s chemical and electronic appliance and parts subsidiaries are forecast to rush to execute its investment plans in the Paju display cluster.

LG Group initially planned to invest a total of 3.5 trillion won in Paju, but due to the restriction on facility construction and expansion in the region, it slashed its investment plan to 1.8 trillion won.

LG Group welcomed the government’s move.

``The decision has allowed LG Group to secure an en bloc of electronic display product from materials and parts to end-products, maximizing the synergistic effect of the Paju display cluster,’’ said an LG Group spokesman.

``LG will strive to further strengthen our international competitiveness to consolidate our position as a global leader,’’ he said.

LG Electronics originally planned 2.8 trillion won investment _ 300 billion won in LCD TV, 1.7 trillion won in plasma display panel (PDP) module and 800 billion won in organic light emitting diode (OLED) _ in the Paju cluster. LG Innotek also initially earmarked 40 billion won for an electric power module plant, and LG Chem planned 400 billion won in polarizer production facilities.

Beneficiaries from the relaxed regulation other than the four LG Group affiliates include Daeduck Electronics.

The Uri Party said it would complete revision of the related enforcement decree by end of this month.

The government expects the temporary relaxation of the rules will generate 1.8 trillion won in direct domestic investment, 6.5 trillion won worth of production inducement effect and 3.5 trillion won worth of export inducement effect.

The government legislated the related regulation in 1994 to prevent concentration and overcrowding of industrial facilities in the Seoul metropolitan area, which includes Inchon and Kyonggi Province. The government sought to resolve Korea’s unbalanced economic growth through the restriction.

However, local manufacturing industries have been complaining about the regulation saying that the rule is hampering industrial growth by restricting facility investment in the near-Seoul region, which has a relatively well-developed industrial and logistics environment.

sjkim@koreatimes.co.kr