Country Profile(2009)

Official Name Republic of Korea Capital Seoul Area 100,140ֲ Population 48.2 million Language Korean (official) / English widely used Literacy 99.9% (between 20-40) Religion Buddhism 24%, Protestant 23%, Catholic 8%, Other 0.8%, None 44.2% Climate Continental with four seasons Time 9 hour + GMT Political System Democratic republic, presidential system Economy 15th largest economy (based on GDP), OECD member Currency South Korean won (KRW) IT, Electronics, Semiconductors, Automobiles, Shipbuilding, Steel, Competitive Industries Petrochemical Source : Korea Trade-Investment Promotion Agency (KOTRA)

Key Economic Indicators 2004 2005 2006 2007 2008 2009 GDP (USD billion) 681 791 887 1,050 928 833 Real GDP Growth (%) 4.6 4.0 5.2 5.1 2.2 0.2 GNI per capita (USD) 15,082 17,531 19,722 21,695 19,231 17,175 Exports (USD billion) 254 284 325 371 422 364 Imports (USD billion) 224 261 309 357 435 323 Current Account (USD billion) 28 15 5 6 -6 43 Unemployment Rate (%) 3.7 3.7 3.5 3.2 3.2 3.6 CPI Inflation (%) 3.6 2.8 2.2 2.5 4.7 2.8 Treasury Bond Yield (3 year, %) 4.1 4.3 4.8 5.2 5.3 4.0 Foreign Exchange Reserves (USD billion) 199 210 239 262 201 270 Exchange Rates won/USD 1,145 1,024 956 929 1,103 1,276 won/yen100 1,059 931 821 790 1,077 1,363 won/euro 1,423 1,274 1,199 1,273 1,607 1,774 Source: Bank of Korea, Korea Customs Service Korea 04 05 1-1. A vast domestic market As the world's 15th largest economy, in terms of GDP, and home to 48.2 million people, Korea offers an attractive marketplace for international investors. Korea's tech-savvy consumers interested in new and advanced technologies have been instrumental to the expansion of the domestic market over the last decade. Korean manufacturers of the mobile phones and consumer electronics well-known for their top quality products worldwide owe much to the discerning and difficult-to-please Korean consumers who continuously push the industry to raise the bar. This explains why consumer goods companies like P&G and L'Oreal, and tech firms like Microsoft, Motorola, Olympus and Siemens, are using Korea as a test market for their new products.

Economic Growth Rate

Source: Bank of Korea

1-2. A big trading nation Values of Korean imports and exports in 2008 totaled USD 435 billion and USD 422 billion respectively, equivalent to 47 percent and 45 percent vis-a-vis GDP. Korea is the world's 11th largest trader with imports and exports accounting for nearly 90 percent of the country's GDP. Currently, Korea sells to and buys from over 220 countries around the globe with China, Japan, and the U.S. as its major trading partners. Korea's trade with its Asian neighbors is particularly active, representing over half of the country's total trade volume. Korea's major export items include semiconductors, automobiles, wireless communications equipment, ships and petroleum products, while crude oil, semiconductors, natural gas, petroleum products make up major imports.

2008 Export Partners 2008 Import Partners

Source: Korea International Trade Association 1-3. Gateway to Northeast Asia Conveniently located between China and Japan, two of the world's largest markets, Korea lies within an average air travel time of three hours from over 60 cities with a population of 1 million or more. Meanwhile, the conclusion of the Korea-US FTA has set the stage for further improvements in access by Korean businesses to the world's largest consumer market. Korea signed a comprehensive FTA with ASEAN in June 2009 and an interim agreement with India in February 2009, while concluding an FTA with the EU. In addition, FTA talks are currently under way with other major markets like Canada, Mexico, GCC, Australia, New Zealand, Peru, and are due to begin with China, Japan, MERCOSUR, Turkey, and Russia shortly.

1-4. Dynamic and Competitive Market Players Korea-based firms have competitiveness on the global stage with growing popularity in international business. Korean companies have achieved top global market shares in shipbuilding, DRAM semiconductors and TFT-LCD displays, and rank among the top five in automobiles, steel, petrochemicals, textiles and consumer electronics Industrial Complexes, home to major Korean corporations, are tremendous sources of competition and cooperation. A joint venture between and Sony is a excellent example of productive industrial partnerships in the LCD sector, while the takeover of Daewoo Motors by GM and that of Samsung Motors by Renault represent success in the automotive sector.

1-5. Talented Human Resources Koreans have earned a global reputation for their educational fervor. According to the IMD World Competitiveness Yearbook 2008, the percentage of the Korean population aged 25-34 that has attained at least tertiary education is as high as 53 percent. This is above the corresponding figures for most OECD nations, excluding Japan and Canada. In 2007, Korean students make up the largest group of foreign students both in China and in the U.S., accounting for 36 percent and 20 percent, respectively, of all foreign students enrolled in Chinese and U.S. schools. The growth rate of labor productivity in Korea posted 4 percent and 5.4 percent in 2006 and 2007 respectively, which far exceed 1.6 percent and 1.4 percent on OECD average, and is the third highest level in the world. Korea 06 07 Information Technology Skills (2007) Patents Granted to Residents (Average 2005~2007)

* based on a ten point scale

Source: IMD World Competitiveness Yearbook 2009

1-6. World Class R&D Centers Korea’s state-of-the-art IT infrastructure, competitive IT firms and technology, and innovation- friendly consumers constitute a winning combination that has attracted global IT giants to her soil. Microsoft has opened its R&D lab for mobile technology in Korea; IBM, an R&D lab for ubiquitous computing; and Google, an engineering lab. Meanwhile, Motorola, Microsoft and Intel have chosen Korea as the test market to first release new products to technology-savvy and trend-conscious consumers whose feedback is highly prized. Motorola and eBay have selected Korea as their Asia-Pacific head-quarters from which to oversee their business interests. Kimberly-Clark opened its first R&D center outside the United States in Korea while Siemens and DuPont also operate a medical R&D center and a nano R&D lab, respectively, in Korea. L’Institut Pasteur, an eminent French biotechnology institute, has also had a research presence in Korea since 2004.

1-7. Well-developed Transportation Infrastructure Korea is located in the center of the Pacific Rim with a highly developed transportation infrastructure such as the Incheon International Airport, northeast Asia’s air hub and the Busan port, the world’s 5th largest international port. Logistically, Korea is well connected by expressways, complemented by a high-speed rail system, KTX that enables access to all major cities in Korea within 3 hours. 2-1. Trend of Energy Supply and Demand Korea is the world s 9th largest energy consumer (accounting for 2.1% of global energy consumption) and imports 97% of its total energy requirements. Therefore it is highly vulnerable to fluctuations in energy price and supplies. Given its low energy self-sufficiency, Korea is currently the world s 6th largest oil importer and the 2nd largest LNG importer. In 2008, Korea spent over USD140 billion on imports of energy, which is one-third of the total exports of about USD400 billion.

Trend of energy consumption and economic growth in Korea (1981-2009)

Source: Korea Energy Management Corporation

Demand forecast for primary energy resources (Unit : Mil. TOE) 2006 2010 2020 2030 Average Annual Growth Rate(%) 06-10 10-20 20-30 06-30 Coal 56.7 68.9 79.5 84.6 5.0 1.4 0.6 1.7 Oil 101.8 106.6 115.1 117.2 1.2 0.8 0.2 0.6 LNG 32.0 38.3 46.1 54.0 4.6 1.9 1.6 2.2

Source: Ministry of Knowledge Economy, National Energy Master Plan , Green Energy Industry in Korea 08 09 2-2. Renewable Energy in Korea

2-2-1. Solar Power Solar power systems produce electricity from sunlight using photovoltaic (PV) cells consisting of semiconductor materials. Among several types of PV (or solar) cells, silicon solar cells occupy approximately 90 percent of the market. Solar industry has rapidly grown by more than 35 percent since 2003, and its market size is expected to grow to 105 GW globally by 2030.

Global market outlook to 2030 Global market outlook to 2030 (by type)

Source: European Photovoltaic Industry Association (EPIA), Source: Korea Institute of Energy Technology Evaluation 2008 and Planning( KETEP),2009

Korea s market for solar power has been activated thanks to an increase in housing supply, FIT (Feed-in Tariff) and polices that mandate the use of renewable energy in public buildings. In particular, due to FIT the construction of solar power plants has spread rapidly. Approximately 21MWp and 45MWp plants were installed in 2006 and 2007, respectively. 270MWp was accumulated by 2008.

Korea’s Photovoltaic Industry Sales (million USD) Exports (million USD) Production (ton, MW) 2008 2009 2010 2008 2009 2010 2008 2009 2010 Polysilicon 436.6 787.0 1,342.6 370.4 648.1 1,023.1 6,000 16,500 36,200 1,020 1,600 Ingot/Wafer 250.6 377.9 805.6 115.6 263.7 517.9 150 /535 /1570 Cell 69.1 54.0 533.3 23.0 80.7 402.7 150 695 1,310 Module 380.7 425.6 1,905.4 167.9 262.9 1,446.3 350 920 1,845 Total 1,136.9 1,744.4 4,586.9 676.8 1,255.5 3,390.0 ------

Source: Korea Photovoltaic Industry Association - KOPIA (2011.1), Invest Korea

* RPS : Renewable Portfolio Stadard Participation of Korean companies into solar industries is rapidly expanding. OCI began Korea’s first polysilicon production system in 2008 and has secured a long-term contract with SunPower. LG Electronics finished construction of a solar cell production line in 2010 and it will invest USD925 million (by 2015) to boost production capacity in solar energy to almost 1 GW by 2012. LG will enter the polysilicon market by constructing a 5,000- to 10,000-tonne plant. Samsung Fine Chemicals is also focused on the polysilicon market and formed a joint venture with US-based MEMC to construct a polysilicon plant (10,000-tonnes annually) by 2013. Hyundai Heavy Industries’ 600MW solar cell and solar module factory will be complemented by Hyundai-Avancis, a joint-venture with France-based Saint-Gobain. The companies will construct a $353 million facility to produce thin-film solar cells to begin production by mid-2012 and contribute to Hyundai’s target of being in world top 5 in CIGS solar module manufacturers by 2015.

Current status of vertically integrated solar companies in Korea Polysilicon Ingot, Wafer Cell Module Power System

Samsung Fine Samsung Corning Samsung Samsung Samsung , Samsung Chemical Precision Materials Electronics Electronics SamsungC&T (in progress) (in planning) Corporation

Hyundai KAMM Hyundai Heavy Hyundai Heavy Hyundai Heavy Hyundai Heavy Heavy Industries (KCC+Hyundai) Industries Industries Industries Industries LG Chem LGCNS, LG LG Siltron LG Electronics LG Electronics (in progress) Solar Energy

Hanwha Solar Source: Korea InstituteHanwha for Industrial EconomicsHanwha Solar& Trade, One InvestOne Korea (China), Hanwha Solar Hanwha Solar Hanwha Chemical (China) Hanwha Solar One (China) Energy America (USA)

Woongjin Woongjin SunPower SunPower Energy, Woongjin Woongjin Energy Polysilicon (USA) (USA) Sun Power (USA) Korea Silicon Shinsung Solar Shinsung -- Shinsung CS Shinsung ENG (20% ownership) Energy STX -- -- STX Solar STX Solar -- Millinet -- Millinet Silicon Millinet Solar Millinet Millinet OCI OCI Nexolon, Elpion ------Source: Korea Photovoltaic Industry Association - KOPIA (2011.1), Invest Korea

2-2-2. Wind Power The Global wind power industry is rapidly growing at an average annual growth rate of 12% By 2020, cumulative installation are expected to reach 3,484GW with a market size of USD 1,120 billion. Green Energy Industry in Korea 10 11 Korea’s wind power equipments and components suppliers have benefitted greatly. In particular, Dongkuk S&C provided 759 towers in 2009, and was ranked first in the tower sector with 6% global market share and 14% U.S. market share. Hyundai Heavy Industries established a wind power generator that manufactures 1.65MW and is now focusing on the development of a 5.5MW wind turbine to be finished by the end of the year. This 5MW turbine is part of a joint project with American-based American Superconductor Corporation (AMSC). Hyundai also established a strategic alliance with AMSC in 2010 to jointly

2-2-3. Fuel Cell The domestic market was approximately USD80 billion won in 2008 and expected to expand to USD2.6 billion by 2020. The global market is expected to be USD140 billion by 2020.

Domestic and global hydrogen market status & outlook (unit: USD1 billion) Year 2004 2007 2012 2020 Domestic 0.08 0.12 0.3 2.6 Global 30 40 80 140 Source: Korea Gas Corporation, 2004

If fuel cells are installed in all new vehicles released in 2030, the fuel cell market is estimated to be about USD 150 billion (71% for automobile, 18% for residential and 11% for portable applications). This is a conservative outlook and only factors the replacement of the existing products such as secondary battery, boilers, engines etc. The total demand for hydrogen production, storage, transportation, and fuel cell replacement could reach up to USD1 trillion per year.

Forecast of fuel cell market Market size Assumption basis - Automobile100 Bill- Annual Automobile Market: 53 mil. cars (2002) 0.1 Bill.(2030) Automobile USD 100 bill. - Average price will be USD10 thousand, Engine price will be 10% of total automobile price - Fuel cell for housing will replace boiler market Housing USD 25 bill. - USD1000/Ea 25 mil./year

- Portable electronics : Cellular phone, Notebook, Tablet etc Portable USD 15 bill. - Present market size of secondary battery : USD6 bill./year

Source : Samsung Economics Research Institute, 2004

Through active participation of Korea’s large companies and introduction of RPS in 2012, R&D of fuel cells for power generation is underway and relatively close to the early stage of commercialization. Major companies in Korea’s fuel cell supply chain Phase Purpose Major companies Samsung Electro-mechanics, Battery materials Portable 500 W Samsung SDI, LG Chem Home/ commercial GS Fuel Cell, Fuel Cell Power,Hankook Tire, Parts 3kW LG Electronics,Korea Gas Corporation Fuel cell system Transportation 75kW Hyundai Motor Company, LG Chem Korea Electric Power Corporation, POSCO Power, Power plant Installation/operation Doosan Heavy Industries & Construction, over 250kW Hyosung, Samsung C&T

Source: Fuel cell center at Korea Institute of Science and Technology (KIST)

2-2-4. Secondary Battery The secondary battery market is comprised of NiMH batteries and Lithium-ion batteries. Demand for electronic products is expected to grow the secondary battery market by 11% until 2014. By application mobile phones and notebook PC represent the largest market for secondary batteries, currently occupying USD28 billion and USD28 billion dollars respectively.

Global market forecast of secondary batteries (IT-related products)

Source: World Secondary Battery Technology Trend and Market Forecast Report, Solar&Energy, 2009 Green Energy Industry in Korea 12 13 Korea’s secondary battery companies have made substantial inroads into the automotive secondary market securing supply contracts with a who’s who of the world’s top automakers: Daimler, Renault, Ford, Volvo, Hyundai Motor Group, BMW and GM. The goal of Korea’s battery makers is to secure 40% of the global market.

LG Chem completed construction of a lithium-ion battery plant in Ochang, in 2010. LG Chem plans to increase production of batteries for 350,000 EVs or 5.5 million hybrid vehicles by 2013. Samsung SDI formed a joint venture, SB LiMotive, with Bosch in 2008 to produce lithium-ion batteries. In November 2010, the company opened its factory in Ulsan and will be supply EV batteries for up to 180,000 EV vehicles by 2015. SKInnovation is part of a consortium developing EV batteries with Usabc (along with LG Chem). In 2012 SK will complete its production facility capable of supplying batteries for 500,000 hybrid vehicles. GS Caltex established a joint-venture with Japan-based Nippon Oil Corp. to form Power Carbon Technology. In March 2010, the company opened a facility in Gumi, Gyeongbuk for manufacturing carbon materials used to make electric double-layer capacitors (EDLC). The factory currently can manufacture 300 tons of carbon materials annually and will expand manufacturing capacity to 900 tons per year by 2015.

Global secondary battery market share in 2009(by Company)

Source: World Secondary Battery Technology Trend and Market Forecast Report, Solar&Energy 2-3. Government Policy In 2009, the government established the Presidential Committee on Green Growth and enacted the Framework Act on Low Carbon, Green Growth. Through this Framework the central government will promote a variety of projects including a carbon trading system, increased support policies for green energy industry, enacted fuel efficiency standards and development of green human resources.

Target for renewable energy supply

Source: Ministry of Knowledge Economy, National Energy Master Plan 2008

2011 New & Renewable Energy Budget (Unit: million won) Category2010 2011 Difference Percentage 749 181 24.1 Total 929 (812) (117) New & Renewable Energy R&D 234 248 14 5.9 - Tech Development 226 239 13 5.7 - Human Development 8 9 1 11.1 New & Renewable Energy Subsidies 270 289 19 6.8 - Installation Subsidies 79 83 4 5.3 - Green Home Projects 89 82 -7 -7.5 - New & Renewable Energy Complexes 17 16 -1 -5.6 - Proliferation Subsidies 85 104 19 22.4 - Saemangeum Wind Power Complex 1 4 3 3000 Financing addition costs, compared to thermal 244 122 49.8 366 power generation (306) (60) Construction of Infrastructure 0 27 27 (net increase) - Building of Test-beds 0 19 19 (net increase) - Supporting Overseas Entry 0 8 8 (net increase) Figures in parenthesis mean funding changed due to crude oil movements Source: Ministry of Knowledge Economy, NewsWorld Korea Daegu-Gyeongbuk at a glance 14 15 Region Profile (2009)

Official Name Daegu Metropolitan City (Daegu), Gyeongsangbuk-do Province (Gyeongbuk) Location Korea s southeast region (E127 48 131 52 N35 34 -37 33 ) Population 5,222,266 (Daegu 2,512,604 and Gyeongbuk 2,709,662) Area 19,909 (Daegu 884 & Gyeongbuk 19,025 ) Major industries Electronics, mobile, mechatronics, metals, automotive parts, textiles

Source: Daegu Metropolitan City Government, Gyeongsangbuk-do Provincial Government

3-1. Global Industrial Cluster Daegu-Gyeongbuk is home to global clusters specialized in IT, Auto and New Materials. Leading companies include: , LG Electronics, LG Display, POSCO, Samsung Corning, ExxonMobil, NipponOil Corporation, Toray Advanced Materials and Asahi Glass.

3-2. Excellent Human Capital 51 universities and colleges graduate 70,000 students annually (17,000 graduates in the IT, NT, BT and intelligent automotives). Daegu-Gyeongbuk also boasts low employee turnover (2.04%) and was awarded the president’s trophy for the best labor-management. Moreover, Daegu International School opened in August 2010.

3-3. R&D Hub of Korea Daegu-Gyeongbuk offers superior and specialized R&D facilities such as Electronics & Telecommunications Research Institute (ETRI), Korea Institute of Industrial Technology (KITECH), Pohang Accelerator Laboratory (PAL), Pohang Institute of Intelligent Robotics (PIRO), POSTECH and Daegu Gyeongbuk Institute of Science & Technology (DGIST). 3-4. Major Cultural Region Daegu-Gyeongbuk is recognized globally with its selections to host numerous international sporting, cultural and business events. The 13th IAAF World Championship in Athletics 2011 and the World Energy Congress 2013 are scheduled to take place in Daegu. Daegu-Gyeongbuk maintains its cultural significance by hosting an International Musical Festival and an International Opera Festival. One can explore World Heritage Sites (UNESCO) such as Bulguksa, Sukgulam and the Gyeongju Historic Areas, as well as visit the birthplace of Korean Confucianism at Andong’s Hahoe Traditional Folk Village.

3-5. Convenient Transportation Infrastructure Daegu-Gyeongbuk connects to Seoul by KTX in approximately 90 minutes. Daegu International Airport has direct flights to such destinations as Beijing, Shanghai, Manila and Bangkok. Gimhae International Airport also provides international access with 17 flight routes to destinations as Tokyo, and Hong Kong, among others. Additionally, expressways connect Daegu-Gyeongbuk to 5 international ports, which are located less than an hour away.

3-6. Comfortable Living Environment Daegu-Gyeongbuk provides an eco-friendly living environment with energy efficient commercial, residential buildings and convenient amenities including shopping, sporting, and medical facilities in Daegu-Gyeongbuk. Green Energy Industry of Daegu-Gyeongbuk 16 17 4-1. Green Energy Companies in Daegu-Gyeongbuk Daegu-Gyeongbuk has excellent infrastructure in connection with the green energy industry. It has agglomerations of forward industries (shipbuilding, automotive and mobile) and backward industries (steel, advanced materials and petrochemical) supporting energy production and utilization. In total Daegu-Gyeongbuk houses 16.64% of companies relating to renewable energy. The excellent industry environment has attracted investments from ExxonMobil, New Nippon Oil, Hyundai IHL, and POSCO Power since 2008.

Distributions of green energy industry (incl. multiple count)

Areas Korea Total Daegu Gyeongbuk Daegu-Gyeongbuk Solar 2,122(100%) 223(10.51%) 185(8.72%) 408(19.23%) Hydrogen 60(100%) - 4(6.67%) 4(6.67%) Fuel cell 75(100%) 2(2.7%) 5(6.67%) 7(9.37%) Wind 295(100%) 35(11.86%) 25(8.47%) 60(20.33%) Bio 124(100%) 5(4.03%) 4(3.23%) 9(7.26%) Geothermal 612(100%) 42(6.86%) 39(6.37%) 81(6.37%) Ocean 55(100%) 3(3.86%) - 3(3.86%) Etc. 185(100%) 3(1.62%) 12(6.49%) 15(8.11%)

Source: Daegu-Gyeongbuk Development Institute, 2008

4-2. Green Energy Industries in Daegu-Gyeongbuk

4-2-1. Solar Energy The solar power industry is developing rapidly within Daegu-Gyeongbuk as several conglomerates are advancing into the industry. STX is establishing a production facility for solar cells/modules and combined heat and power (CHP). Woongjin Polysilicon established a USD1.6 billion facility to produce high purity silicon. LG Electronics is expanding its solar production line to 1GW, while Millinet Solar plans to expand its production from 90MW to 500MW. Jura Solar, a JV between J.V.G. Thoma GmbH (Germany) and Dongkuk ENC, is slated to establish a BIPV (Building Integrated Photovoltaic) module production plant. Meanwhile, Regional Innovation Center for Solar Cell/Module(nationally funded), and the Institute of Solar Energy in Yeungnam University provide assistance to local companies. The center also secured investment from ISET, an American corporation that will establish a USD50 million facility to mass-produce printable CIGS. A test-bed project for solar PV is also underway in Gumi (under Daegu & Gyeongbuk governments). Other companies including LG Innotek, Torray Advanced Materials, Bexel, and Delkor (Johnson Controls) are also making advances in the renewable energy sector.

Network of Solar Energy Industry in Daegu-Gyeongbuk

Source: Daegu-Gyeongbuk Development Institute

4-2-2. Wind power Yeongduk operates the biggest wind power complex in Korea, (24 stations with 1,650kW capacity) and Yeongyang has a large scale wind power complex. POSTECH runs a graduate school of wind power in cooperation with Pohang Wind Energy Research Center, Hyundai Heavy Industries, Korea Institute of Machinery and Materials, and Korea Electrotechnology Research Institute. Dongkuk S&C (ranked first in the world tower sector) In 2008, Korean shipbuilding companies, (34.4% world market share) entered the wind power industry. Seohan ENP is a representative enterprise investing in main shaft and tower flange for wind power generation in Daegu-Gyeongbuk. Also, NTN (Japan) invested USD1.5 billion to construct a bearing factory for wind power generators in a joint venture with Seohan group in 2010. Green Energy Industry of Daegu-Gyeongbuk 18 19 Companies related to wind power generator Category Companies Seohan ENP(parts industry, Gyeongju), Dongkuk SNC(wind tower, Pohang), Wind power Yeongdeok wind power complex (39.6MW), Acciona (Spain) (USD1 bill. Youngyang 150MW planned), Pohang (120MW planned), Gimcheon (200MW planned)

Source: Daegu-Gyeongbuk Development Institute, 2008

4-2-3. Fuel cell (incl. secondary battery) TonenGeneral (ExxonMobil) is constructing a factory for Li-ion battery parts in Gumi city, and pushing ahead with a joint venture for R&D and manufacturing battery membranes with Toray Advanced Materials. In March 2010, GS Caltex and New Nippon Oil completed a factory for producing carbon materials, with a capacity of 300 tons/year. SG Tech (Daegu), is mass-producing MCFC parts and exports them to the United States. POSCO Power developed a fuel cell manufacturing complex, as well as a fuel cell R&D center in Pohang in 2009. POSCO Power signed a MOU to create a fuel-cell model town in DGFEZ by 2014. There will be a test-bed for SOFC in Pohang beginning in 2014.

Network of fuel cell industry in Daegu-Gyeongbuk

Stack P&M

Source: Daegu-Gyeongbuk Development Institute 4-3. Human Resources In June, 2009, Korean government established a plan to promote one or two leading industries for each regional economic bloc. Daegu-Gyeongbuk was selected to promote green energy and IT convergence.

Project details for new growth leading business Industry

Leading business Projects Contents Reinforcement of global - Polysilicon, Ingot, Wafer, Solar Cell, Module, CIGS thin film competition of materials solar cell, DSSC and parts of solar cell & - Outdoor lighting system with solar power Green Energy modules Construction of global - Home production of catalysis, Separation Membrane, Stack, hub for hydrogen fuel cell EBOP, MBOP

Source: Daegu-Gyeongbuk Development Institute

The Korean government is investing USD20 million for five years in Yeungnam University and Kumoh National Institute of Technology to train the students in the field of green energy parts and materials, for solar cells and hydrogen fuel cells. A consortium of POSCO power, GS Fuel Cell, Hyosung, and Samsung Advanced Institute of Technology and Korea Institute of Energy Research and Korea Electric Power Research Institute., is contributing to the R&D and education focusing on 4 major fuel cell applications : power generation, transportation, household and mobile.

4-4. Specialized R&D institutes Daegu-Gyeongbuk has abundant R&D and industrialization capability including 51 universities; Research Institute of Industrial Science & Technology (RIST), Pohang Accelerator Laboratory (PAL), National Center for Nanomaterials Technology (NCNT), Pohang Steel Industrial Park, Gumi IT complex. Gyeongju, which has a nuclear waste dumpsite, is emerging as a new national high-tech and energy cluster with the construction of a proton accelerator construction. Korea Gas Corporation, Korea Hydro & Nuclear Power (KHNP), Korea Power Engineering Company (KOPEC), and other energy relevant core organizations and companies will be located in this area. Green Energy Industry of Daegu-Gyeongbuk 20 21 4-5. Strategies of Daegu-Gyeongbuk In 2000, Daegu declared itself a Solar City and has been promoting new and renewable energy including solar thermal heat and solar power generation. In 2013, Daegu will host the World Energy Congress (WEC). Daegu has begun work to construct a new and renewable energy test bed residing within Daegu Technopolis. Gyeongbuk Province will combine nuclear power plants located on the east coast with energy-related national projects such as a of headquarters of Korea Hydro & Nuclear Power (KHNP) and a Proton accelerator. The action plans include; developing core infrastructure including Comprehensive Energy Support Center and Energy Companies Park, R&D Centers and human resource projects. DGFEZ Profile

Official Name Daegu-Gyeongbuk Free Economic Zone

Location Southeast region of Korea Cities : Daegu, Gumi, Gyeongsan, Yeongcheon, Pohang Area 34.09 IT Convergence, High-tech Transportation Components, Green Energy, Major Industries Knowledge-based Service

District Area Target Businesses Gumi Digital 6.24 solar PV, secondary battery, next generation display Daegu Technopolis 7.29 solar cells, intelligent automotives parts, special R&D hub International Culture Industry 0.07 software development, broadcasting(IPTV) foreign hospital & medical school, medical tourism, Suseong Medical 1.79 medical devices International Fashion Design 1.18 fashion school, commercial facilities medical equipment, new medicine development, Daegu Innovation 4.22 medical R&D graduate schools, R&D related to RFID, LED and medical Gyeongsan R&BD 6.49 equipment automotive parts & materials, Yeongcheon Industry 1.67 intelligent ship components, high-end bicycle parts mechatronics parts & materials, Yeongcheon High-Tech Park 5.40 intelligent automotive part & materials, global logistics Pohang Fusion Tech 3.76 fuel cells, wind power, new materials DGFEZ Overview 22 23 5-1. Daegu Technopolis

Location : Dalseong-gun, Daegu. Area : 7.27 Development period : 2006~2013 Land available now Targets : Solar cell, Fuel cell, Futuristic automotives

Overview Daegu Technopolis is designed to become a research & business development hub. Various national institutes and university branches specialized in cutting-edge technology and science are in the process of locating here. The Korea central government designated Daegu Technopolis as a Special R&D Zone (Jan. 2011), enabling tenant companies greater opportunities to participate in national projects and receive increased incentives. The district received another boost when Hyundai IHL announced that it will construct a USD 100 million manufacturing and R&D facility for automotive LED lamps in April 2011.

Land usage plan

Industrial and Commercial Residential and Public facilities Total R&D facilities facilities support facilities (incl. Green area) Area( ) 7,265,599 2,910,546 122,042 1,504,832 2,728,179 Total 100,00 40.05 1.68 20.72 37.55 5-2. Yeongcheon Industry District

Location : Yeongcheon City, Gyeongbuk. Area : 1.67 Development period : 2008~2012 Land available now Targets : Automotive Parts and materials, Intelligent ship components, Aerospace

Overview Yeongcheon Industry District is being developed as a supply base for components used in vehicle, shipbuilding and wind power. Yeongcheon is located in the middle of the auto valley which links the automotive, shipbuilding and wind power supply chains and thus plays a pivotal role in the production and supply of mechatronics parts. Relying on its attractive location just 50 minutes from Daegu and Busan, Yeongcheon Industry District offers inexpensive land (approx. KRW 120,000/ ) and convenient access by ground (500m from Yeongcheon IC), sea (50min. to Busan and Pohang Port), air (50min. to Daegu and Gimhae Int’l Airports) and rail (10min. from train station).

Land usage plan

Industrial and Commercial Residential and Public facilities Total R&D facilities facilities support facilities (incl. Green area) Area( ) 1,668,614 1,088,757 42,564 3,924 533,369 Total 100,00 65.25 2.55 0.24 31.96 DGFEZ Overview 24 25 5-3. Gumi Digital District

Location : Gumi City, Gyeongbuk. Area : 6.24 Development period : 2008~2020 Land available : 2011 Targets : Solar cell, Secondary battery

Overview Gumi Digital District offers an exclusive complex and R&D facilities for solar PV and secondary battery companies. This complex lies in close proximity to a large cluster of IT and green energy companies featuring some of the world's biggest conglomerates. Gumi has proven to be a highly profitable for high-tech companies such as Samsung, LG, STX as well as foreign multinational including New Nipponoil, ExxonMobil, Toray Advanced Materials and Asahi Glass.

Land usage plan

Industrial and Commercial Tourism Residential and Public facilities Total R&D facilities facilities facilities support facilities (incl. Green area) Area( ) 6,240,786 1,805,660 341,470 57,447 737,620 3,298,589 Total 100,00 28.93 5.47 0.92 11.82 52.86 Tax benefits Eligibility - Manufacturers, tourist hotels, general facilities and seminar halls : Over USD 10 million of FDI - Logistics and medical facilities : Over USD 5 million of FDI -R&D facilities : Over 1 million of FDI Financial Assistance - Tariff on capital goods : 5 years exemption - Acquisition and property taxes : Exemption 100% for 15 years - Income and corporate taxes : Exemption 100% for 3 years and 50% for 2 years

Manufacturers : Over USD 30 million of FDI Tourists : Over USD 20 million of FDI Income and corporate taxes : Logistics : Over USD 10 million of FDI Exemption 100% for 5 years and 50% for 2 years R&D facilities : Over USD 2 million of FDI

Tax benefits for foreign workers : Uniform 15% tax rate applied

Financial support Building lots supported and distributed at low price for foreign enterprises. Construction costs of foreigner’s convenient facilities supported. National and public property : Rental fee reduced, private contract Financial support for the construction of main infrastructure like road.

Labor environment Provisions of labor standards act not Details applicable to DGFEZ No obligation to fill quotas for special classes of workers [elderly Employment quotas workers, veterans and workers with disabilities] Employers will have greater freedom to hire temporary workers for Restriction on labor longer periods Employers are not required to offer paid leave to employees or paid Mandatory paid leave special monthly leave for women [but must offer unpaid leave]

Better living conditions for foreign residents Measures to improve living conditions Details Education Establishment of Daegu International School (K-12) Establishment of additional foreign language radio station Broadcasting Increased foreign language television channels Incentives 26 27