For years, the annual evaluation of Korea’s special investment hubs involved a familiar ritual. Officials would spend weeks preparing elaborate presentations and staging meticulous on-site inspections for visiting evaluators. However, this flurry of activity often felt disconnected from the core mission: attracting foreign capital and fostering innovation. The Korean government is now moving to end this administrative theater. Therefore, it is overhauling the entire performance review system for its Korea Free Economic Zones (FEZs).
The previous system was criticized for encouraging what Koreans call gajjail (가짜일), or “fake work.” This refers to tasks that create an appearance of productivity without delivering real results. Zone authorities were buried in preparing descriptive, narrative-heavy reports. Furthermore, they spent valuable time on formal site visits that were more about presentation than substance. For investors, this meant that the agencies designed to support them were often distracted by internal bureaucracy. The process lacked transparency. As a result, it was difficult to gauge which zones were truly effective versus which were simply good at paperwork.
A New Focus for Korean FEZs: Data, Not Drama
The new framework, announced by the Ministry of Trade, Industry and Energy (MOTIE), shifts the focus squarely from subjective narratives to objective data. MOTIE is the government body responsible for economic policy and overseeing these zones. Consequently, quantitative, numbers-based evaluations will now carry significantly more weight. The evaluation is broken down into three core areas: ‘Management’ (30 points), ‘Business Performance’ (45 points), and ‘Future-Oriented Ecosystem Building’ (25 points).
In addition, the government is actively cutting down on the administrative burden. Formal on-site evaluations will now be conducted flexibly and only when necessary, rather than being a mandatory annual event. Standardized reporting templates will also be provided. This change is designed to free up local authorities from the cycle of “fake work.” Instead, they can concentrate on tangible outcomes like attracting investment and building a robust innovation ecosystem. A vague metric for ‘agency head leadership’ has been scrapped. In its place, a new ‘risk management’ category has been added, pushing zones to prepare for global economic uncertainties. Performance will now be measured in numbers, not narratives.
Rewarding Real Results
Perhaps the most compelling change is the direct financial consequence of the new evaluations. The portion of the government’s support budget allocated based on these performance scores will increase substantially, from 33% to 50%. This creates a powerful incentive for the nine FEZ authorities to compete on actual results. High-performing zones will receive a larger share of the KRW 3.1 billion budget for investment attraction support. They will also gain other benefits like ministerial awards and overseas training for staff.
This stronger link between performance and funding is critical for foreign companies. For instance, it means that the best-run special economic zones in Korea will be better resourced. They can offer superior infrastructure, more effective support programs, and a more dynamic business environment. Investors can therefore use these annual evaluation results as a clear guide to identify which zones are on an upward trajectory. Good performance will now be directly rewarded with tangible resources.
Ultimately, this reform signals a clear intention from Seoul to make its economic zones more competitive and genuinely responsive to the needs of international business. By prioritizing real outcomes over performative tasks, the government aims to ensure that the Korea Free Economic Zones are not just designated areas on a map, but true engines of growth and innovation. The success of this shift will depend on rigorous execution. Nevertheless, it represents a welcome move toward a more transparent and results-driven future for foreign investment in the country.
