Nowadays, the free trade zone in Korea has been operated as a place to free trade from free export by the change in the environment of international trade, and the identity and operating system of it need to be reviewed basically. Especially, the MFTZ(Masan Free Trade Zone) had gotten its competitiveness in the worldmarket during the time of mass production system in the past 1970s and 1908s. It, however, has many difficulties in keeping its competitiveness due to the dramatic change of economic environment as the global trend of integration in the regional economy and the conclusion of the FTA among various countries. Therefore, inorder to maintain and expand its competitiveness and vitalize attracting foreign investment, there is an urgent need for preparing the various incentives and support policies.
This purpose of this study is to identify and suggest problems and solutions about the operation and material management by the FTA based the survey and analysis on the present situation and operation of the MFTZ. To achieve this, this study examined the FTZ and the FTA through the precedent researches. And then, it introduced some approach to solve the problems about the operation and the material management system through "the survey on the material management system of the MFTZ by the FTA" and interviews with the association of firms in the MFTZ.
As the result, five problems about that are exhibited, (1) the lack of incentive to attract positively foreign investments, (2) the insufficiency of spaces for the MFTZ and the system to operate and manage effectively the spaces, (3) the difficulty caused by the change on the function and system of that, (4) the unstable labor-management relations, and (5) the weakening of comparative advantage caused by the reservation of customs duty according to FTA.
In order to solve these problems, first of all we have to attract actively foreign investments. There are some approaches as the tax exemption benefit or lent reduction which are insufficient as compared to other countries. In addition, these incentives to attract foreign investments should be strengthen by giving preferential treatment to long-term tenanted firms and offering the best follow-up service. Also, this study proposes the policy to include and enlarge its neighborhood to the MFTZ in order to resolve the insufficiency of the site. What is more, in terms of tenanted firms in the MFTZ, the acknowledgement of the work out of the area should be expanded to get their competitiveness in the several sectors like manufacturing; the computerization of the approval system for domestic materials is required to simplify the public process. Besides, they must understand adequately the code of origin by because that code is an important criterion not to be applied illegally in other countries except both parties of the FTA.
Moreover, in order to stabilize the labor-management relation which is one of the important factors the foreigners usually consider when to invest directly, the interest of the community is needed and the institutional strategies should be provided earlier. For example, they have to revise and coordinate the rules and regulations about labor market, or form a consultative group able to make chances of the understanding and participating about the issues between labor and management. Finally, this study supposed the plan to make the MFTZ to be converted into the high-tech industries oriented innovation cluster and to develop the new business model relevant to the FTA. There are excellent R&D manpower, skilled laborers, high technical parts and components firms in Masan and Changwon. It will be possible to be a major industry cluster in Korea if three functions of R&D for high value-added, highly skilled know-how, and high quality parts and components in these places are linked effectively and adequately.
In conclusion, this study is one of the try to introduce an approach to improve the operation and material management system empirically through the field survey and interviews. The result of this study, henceforward, can be utilized as more useful data to bring up the MFTZ's competitiveness.