Port Logistics

Port Logistics Busan Port o Current status and overview of geographical conditions Situated at the southeastern tip of the Korean peninsula, Busan Port (north latitude 35° 04' 42", east longitude 129° 01' 01"), serves as a major gateway connecting the Pacific Ocean and Eurasian continents. It is the primary port in Korea and the world's 5th largest container port (as of through Busan Port steadily increases each year, the city is 2013). Busan Port benefits from optimal conditions that now working on a project to build Busan New Port, make it a world-class port, such as the shelter provided by capable of berthing a total of 45 vessels (40 container surrounding mountains and islets, its relatively narrow tidal berths and 5 multi-purpose berths) simultaneously and an range and its ideal location adjacent to 3 major arterial sea annual handling capacity of 23million TEU. The city plans routes. to complete the Busan New Port by 2020. Busan New Port now has a total of 22 berths. o Port facilities: capacity & development progress Busan New Port Construction Project Busan Port was opened in 1407 as Busan-po. Since the initial construction of a wharf in 1906, the port has gone - Location: Around Gadeokdo Island, Gangseo-gu, through continuous development. It has now been Busan Metropolitan City / Yongwon-dong & Angol- transformed into a modern port with an international dong, Jinhae City / Woongdong-man / Jaedeok-man passenger ferry terminal and 9 container terminals at 4 area locations: Buk-hang (the North Port), Nam-hang (the - Project: 40-berth container terminal South Port), Gamcheon-hang (Gamcheon Port) and - Project period: 1995 - 2020 Dadaepo-hang (Dadaepo Port) - Project expenses: 16.7055 trillion won Busan Port currently has 30.7 kilometers of quay walls which can accommodate up to 201 vessels, and loading and unloading capacity for over 300 million tons of cargo each year. As the volume of the cargo containers passing 1 o Bird's-eye view of Busan New Port o Current Status of Container Piers in Busan Jaseongdae Shinseondae Gamman Shin-Gamman Uam dock Total space (1,000m2) 624 1,168 727 294 182 CY space (1,000m2) 462 672 336 153 156 Quay wall length (m) 1,447 1,500 1,400 826 500 Berthing capacity 50,000 ton 4 50,000 ton 5 50,000 ton 4 50,000 ton 2 20,000 ton 1 10,000 ton 1 5,000 ton 1 5,000 ton 2 Cargo-working capacity (1,000TEU) 1,500 1,600 1,560 610 260 Front Depth of Water (m) 15 15~16 15 15 11 Year Opened 1978.9 1991.6 1998.4 2002.4 1996.9 Managing company Korea Huchson KBCT BICT, BGCT Dongbu Busan Uam Terminal Terminal Co., Ltd. Co., Ltd. Co., Ltd. Busan New Port Busan New Port Busan New Port Busan New Port (Phase 1) (Phase 2-1) (Phase 2-2) (Phase 2-3) Total space (1,000m2) 1,286 688 553 785 CY space (1,000m2) 384 346 213 145 Quay wall length (m) 3,200 1,100 1,150 1,400 Berthing capacity 50,000 ton 9 50,000 ton 2 50,000 ton 2 50,000 ton 4 20,000 ton 2 20,000 ton 2 Cargo-working capacity (1,000TEU) 3,6000 1,140 1,140 1,920 Front Depth of Water (m) 16 16 17 17 Year Opened 2006.1 2009.2 2010.2 2012.1 Managing company PNIT, PNC Hanjin Shipping Hyundai Merchant BNCT Inc. Co., Ltd. Marine Co., Ltd. 2 o Busan port container throughput statistics (1,000TEU) Section 2007 2008 2009 2010 2011 2012 2013 Import 3,753 3,853 3,267 3,913 4,403 4,381 4,424 Export 3,690 3,785 3,302 3,922 4,305 4,426 4,509 Transshipment 5,811 5,808 5,372 6,266 7,353 8,148 8,748 Coastal 7 7 39 82 124 90 4 Total 13,261 13,453 11,980 14,183 16,185 17,023 17,868 Increase rate 10.2% 1.4% 10.9% 18.4% 14.1% 5.2% 3.8% Transshipment rate 43.8% 43.2% 44.8% 44.2% 45.4% 47.7% 49.4% o Container Throughput of Other Major World Ports (1,000TEU) Rank Port Name In 2013 In 2012 % increase from 2012 1 Shanghai 33,617 32,529 3.3 2 Singapore 32,579 31,649 2.9 3 Shenzhen 23,278 22,941 1.5 4 Hong Kong 22,288 23,117 3.6 5 Busan 17,686 17,046 3.8 6 Ningbo 17,327 16,830 7.1 7 Qingdao 15,520 14,500 7.0 8 Guangzhou 15,309 14,744 3.8 9 Tianjin 13,641 12,300 2.7 10 Kaohsiung 13,000 9,781 5.7 3 Offshore Industries Offshore Industrial Environment Busan City can provide a new market, advanced technology acquisition, production/logistics cost reductions, and an advanced qualify of life to companies investing in Busan * Global Industrial Logistics Complex(Area: 33km2, Project Cost: Approx 10 billion USD. Project Period: 2009~2020) 4 Busan, the optimal offshore supply base for the Arctic and the Far East o Accessibility to the Arctic Region Access to Natual Resource Fields The Arctic Area & Busan Main Oil Fields: 58.1% of the Arctic's Natural resources are buried in Siberia Path to the Site: Busan can play a leading role as a bridgehead to the Arctic Area. o Accessibility to Russia's 25 Oil/Gas Fields at Sakhalin and Kamchatka Benefits Industrial Capability: Highly-educated labor force and leading global offshore plant companies like Hyundai Heavy Industries. Ice-Free Port: Ice-free 365 days a year, Busan is the nearest ice-free port in the Far East. World's 5th Largest Port: Massive cargo and heavy equipment handling capacity. * West and East Siberia Basins; Source: U.S Geological Survey, IEA Report Competitiveness of the Korea Institute of Marine Plant Technology The Korea Institute of Marine Plant Technology, to be completed in 2017, will offer the best environment for integrated technological innovation Korea Institute of Marine Plant Technology. Engineering Center Will support development of offshore plant equipment technology - Design, convey, install, etc. Will support technology transfers from leading companies - Technological innovation by adoptiong BM of global companies. Test Bed Will support performance evaluation of offshore plant equipment - Deep water high pressure chamber, process equipment test base, etc. Will supprot equipment certification - Field testing using artificial oil wells, etc. R&D Center Will support offshore plant equipment research innovation - Fundamental technology, concept design, etc. 5 Will support technology from leading companies - Technological innovation by adopting BM of global companies. Education Center Will provide education programs for fundamentral technology development - Concentrated on exploration, design, production, installation, operation/management. - Additional training for employees; advanced education programs. Introduction of Business Model: Supply of offshore plant equipment Busan is optimized for the adoption of a new Business Model, manufacturing core equipment for offshore plants and supplying it to leading global and Korean companies o Conceptual Map of Business Model o Description of BM and Value Proposition Description ore Center for Manufacture and Delivery of High-tech Offshore Plant Equipment to Leading Global and Korean Companies *London Metal Exchange **Korea's High Speed Train network Production and delivery of offshore equipment to Korean and other shipbuilding companies - Production of high-tech equipment utilizing Korean technology in the shipbuilding and precision machinery fields - Quick delivery to leading global and Korean shipbuilding companies Value Proposition Market & Tech: Working with HHI, SHI and DSME / Utilization of competitive machinery companies Costs: Many industrial complexes just 1 hour away / High-quality diverse labor force / LME*, ensuring rapid supply of resources Logistics: Busan Port, ranked globally as Top 5 Port / Gimhae Airport, the 3rd largest in Korea / Rapid KTX** rail connections to Seoul Quality of Life: Myeongji City, a ready-made residential area for foreigners / Top-notch education/healthcare services 6 Offshore Industrial Belt in Busan Incentives Busan Investment Amount - USD180 million Attraction Fund Target - Major conglomerates, foreign investment corporations, and large- scale investments use - Long-term and price leases - Cash grants and low-interest loans Cash Grants Employee Training Grants - Amount: up to KRW500,000 per month for each employee when hiring 20 or more new - Limit: KRW200 million in total - Period: up to 6 months Subsidies for Consulting - Amount: up to 30% of consulting fees (accounting, legal, etc.) - Limit: KRW20 million in total - Period: up to 6 months Subsidies for Land Purchase Purchase - Subsidies of up to 30% of the purchase price and/or Rental Fees Exemption from Rental Fees - High-tech businesses investing USD 1 million or more: 100% - Businesses located in the FLZ: 100% - Manufacturing businesses investing USD 5 million or more: 50-70% Subsidies - Rent subsidies are available and awarded based on the positive economic impact of the foreign investment Tax Exemption/Reduction Corporate Tax/Income Tax - First 3 years: 100%, Next 2 Years: 50% Local Tax(Acquisition Tax, - Acquisition/Registration Tax: 100% Registration Tax, Property Tax) - Property Tax: First 7 years: 100%, next 3 years: 50% Tariffs - FTZ: Tax-free - FTZ: 3 years exemption for capital goods 7 Busan’s Key Growth Industries During the 1990's, Busan's economy had experienced a downturn, following slumps in the exporting of manufactured products such as shoes and textiles. However, since 1999, Busan has targeted ten strategic industries with great potential for growth that have led an economic turnaround. The City has also made continuous efforts to expand pre-existing industrial facilities to keep companies in Busan. Focusing on changes in technology and the business environment worldwide, Busan's strategic focus on its core growth industries has been reorganized twice in 2004 and 2009, with the fourth reorganization to be finalized in 2014 when the City plans to narrow its focus to concentrate on five key industries.

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