Both types are similar in that they are designated to boost foreign investment. Companies can receive dual benefits and support by choosing the kinds of benefits that best suit their needs, which is more advantageous to the company.
FEZs are a special administrative area designated to support foreign-invested companies by accommodating not only the facilities of logistics, manufacturing and service industries but also housing, schools and hospitals for foreign investors. It provides exemption from taxes, rents, customs duty and VAT to improve the living conditions of foreigners.
FTZs are in turn a special industrial area, especially designated to allow the smooth flow of international logistics, promote trade and attract foreign investment by exempting not only rent and taxes, but also customs duty and VAT.
| Free Trade Zones | Free Economic Zones | |
| Relevant Act | – Act on Designation and Management of Free Trade Zones | – Act on Designation and Management of Free Economic Zones |
| Purpose | – Promotion of foreign investment, trade and international logistics | – Improvement of business environment & living conditions of foreign investors |
| Competent Authorities | – Industrial complex: Ministry of Commerce, Industry and Energy (MOCIE) – Port and hinterland: Ministry of Maritime Affairs & Fisheries (MOMAF) – Airport and hinterland: Ministry of Construction & Transportation (MOCT) | – Free Economic Zone Authorities in Cities and Provinces |
| Criteria | – Regular shipping routes that can handle more than 10 million containers a year – A port for container ships larger than 30,000 tons – More than 500,000 m2 of port area and hinterland | – Regular shipping routes for container ships – A capacity to process more than 10 million tons of cargo – A port for container ships larger than 20,000 tons |
| Eligible Industries | – Logistics & manufacturing businesses | – Logistics & manufacturing businesses, foreign schools, and hospitals exclusively for foreigners |
| Tax Benefits | – No customs – 0% VAT | – Limited exemption from customs duty on capital goods for three years – Payment of VAT |
| Rent of national or public land | – Basic rate: as notified – Period of rent: max. 50 years | – Basic rate: Asset value X 10/1000 – Period of rent: max. 50 years |
