Japan fund to invest $1.9b in S Korea trade zone

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SEOUL, Mar 4 (AFP): A Japanese private equity fund will invest almost two billion dollars in a free trade zone on South Korea's west coast, a state trade agency said today.

The Vana World fund, after talks with the Korea Trade and Investment Promotion Agency, will sign a letter of intent in Seoul Thursday to invest in the New Songdo City zone, the agency said.

"The investment, to be made in Korean currency, will total three trillion won (1.9 billion dollars)," a KOTRA official handling the issue told AFP, refusing to elaborate.

Work started in 2005 on the zone on reclaimed land at Incheon west of Seoul. The ambitious 10-year project aims to create a commercial hub, mainly to take advantage of the Chinese market, but local media say foreign investment so far has been lower than expected.

Korea Economic Daily newspaper said Vana World's planned spending would be the single biggest Japanese investment in South Korea.

It said the Japanese fund was considering constructing a complex of commercial buildings, hospitals and schools and more Japanese investors could follow suit.

Renewed interest was due to the won's sharp fall against the yen, it said.