- MARKET - Hub Operation Efficiency - Operation Flexibility

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2 - MARKET - Hub Operation Efficiency - Operation Flexibility

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4 World s 2nd largest int l cargo airport by tonnage (T/S rate 52%) 3 million int l passengers, 2.42 million tons of int l cargo ( 8) Average growth rate of 9% Passenger Cargo A/C Movements CAGR _8.5% unit: million unit: million unit: million CAGR CAGR _8.8% _11.%

5 4 consecutive year winner of ACI Service Excellence Award by World Best Airport (25~28) The Best Cargo Airport Worldwide by Air Cargo World Magazine (28) 27 Peter F. Drucker Innovation Award (27) The Airport of the Year 27 by Official Airline Guide (27) World s Best Airport Award by Global Traveler Magazine (26, 27) Best Asian Airport by TIME Readers Poll (26)

6 3 Runways, 1 PAX terminal, 1 concourse, 6 cargo terminals

7 Current Future

8 Journey to Greatness

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10 To be a logistics hub, 3 conditions below need to be meet ; - To be a logistics hub, an airport need to have big air cargo market - The hub should provide the most efficient business environment with best connection and low operation cost for the fast and seamless logistics service

11 1. Market Size & Growth Prospect 2. Vicinity to Key Customers & Suppliers 3. Availability of International 3PL 1. Flight Option - lead time 2. 1, Air km Transportation Rate/Warehouse Operation Cos 1, km 3. Well developed Infrastructure 4. Beneficial Tax Regime 2, km 2, km 3, km 3, km 1. Fast and easy customs clearance system 2. Easy modal conversion to Sea&Air transportation

12 Semiconductor TFT-LCD LCD / PDP TV Mobile phone Ship building Automotive 12,5 1, 7,5 5, 2,5 Purchasing Power Parties Korea Japan China World Development Indicators 27 (billions USD) United States 1, km 2, km 3, km (%) Est. Int l Air Freight Growth Rate (27~211) 1.8 China Korea World Avg IATA Freight Forecast (27)

13 The air traffic demand of A.P is expected to become 2~7 times as much as those of other regions until 228

14 The cargo traffic of Asia Pacific region is expected to reach average annual growth of 6.2% until 228, much higher than world average of 5.4% Market growth rates Asia Pacific North America Europe Middle East Latin America Russia and Central Asia Africa World GDP growth rate Traffic growth rate Cargo growth rate Fleet growth rate * According to Boeing Current Market Outlook 29~228

15 1. Market Size & Growth Prospect 2. Vicinity to Key Customers & Suppliers 3. Availability of International 3PL 1. Flight Option - lead time 2. 1, Low km Operation Cost 1, km 3. Well developed Cargo Infrastructure 4. Beneficial Tax Regime 2, km 2, km 3, km 3, km 1. Fast and easy customs clearance system 2. Easy modal conversion to Sea&Air transportation

16 No.1,3 Customers are located in Korea. - Samsung has 3% world market share of D-RAM, 4% of NAND Flash and 25% of LCD. <Top 2 CapEx Market Customers Ranking 28> Rank Company Samsung Intel Hynix Micron Technology Toshiba TSMC Nanya Powerchip Infineon ProMOS Rank Company AMD SanDisk Elpida Sony UMC STMicroelectronics Fujitsu IBM Chartered Texas Instruments Source: IC Insights 28, McClean report, 28 edition

17 1. Market Size & Growth Prospect 2. Vicinity to Key Customers & Suppliers 3. Availability of International 3PL 1. Flight Option - lead time 2. 1, Air km Transportation Rate/Warehouse Operation Co 1, km 3. Well developed Infrastructure 4. Beneficial Tax Regime 2, km 2, km 3, km 3, km 1. Fast and easy customs clearance system 2. Easy modal conversion to Sea&Air transportation

18 - Many international forwarders such as Schenker, DHL Exel Supply Chain, Pantos,KWE are successfully running their businesses in Korea. Source: Korea International forwarders Association Membership Directory

19 1. Market Size & Growth Prospect 2. Vicinity to Key Customers & Suppliers 3. Availability of International 3PL 1. Flight Option - lead time 2. 1, Air kmtransportation Rate/Warehouse Operation Cost 1, km 3. Well developed Infrastructure 4. Beneficial Tax Regime 2, km 2, km 3, km 3, km 1. Fast and easy customs clearance system 2. Easy modal conversion to Sea&Air transportation

20 62 Airlines,161 Cities,5 Countries (as of March 29) Europe 24 Cities China 34 Cities Russia 15 Cities Japan 28 Cities Africa 1 Cities Middle East 4 Cities Asia 29 Cities Oceania 7 Cities

21 Best Connectivity in the Region 32 ICN HKG SIN PVG

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23 Air Network Details (As of May 29) No. Airlines PAX/CGO Nationality PAX Frequency/week CGO TOTAL 1 Finnair P Finland AIR FRANCE P/C France LUFTHANSA GERMAN AIRLINES P Germany Cargolux Airlines Int.SA C Luxemburg KLM ROYAL DUTCH AIRLINES P Netherland TURKISH AIRLINES P Turkey 4 4 Europe: Sub-total AIR CANADA P Canada United Parcel Service Company C USA Atlas Air Inc C USA U.S.A. Southern airline C USA DELTA AIR LINES P USA Frderal Express C USA Kalitta Air LLC C USA NORTHWEST AIRLINES P USA Polar Air Cargo C USA UNITED AIRLINES P USA America : Sub-total

24 Air Network Details (As of May 29) No. Airlines PAX / CGO Nationality Frequency/week PAX CGO TOTAL No. Airlines PAX / CGO Nationality PAX Frequency/week CGO TOTAL 18 AIR CHINA P China ALL NIPPON AIRWAYS P/C Japan CHINA CARGO AIRLINES C China GARUDA INDONESIAN P Indonesia CATHAY PACIFIC AIRWAYS P/C China MALAYSIA AIRLINES P Malaysia China Southern Airlines P China Cebu Pacific P Philippines Shanghai Airlines P China PHILIPPINE AIRLINES P Philippines GREAT WALL AIRLINES C China JEJU AIR P R.O.K JADE CARGO INTERNATIONAL C China KOREAN AIR P/C R.O.K Air Hong Kong C China ASIANA AIRLINES P/C R.O.K China Xia Men Airlines P China SINGAPORE AIRLINES P Singpore CHINA EASTERN AIRLINES P China Mandarin Airlines P Taiwan AIR MACAU P China Eva Airways Corp P Taiwan Shandong Airlines P China CHINA AIRLINES P Taiwan Shenzhen Airlines P China THAI AIRWAYS P Thailand JP EXPRESS C Japan MONGOLIAN AIRLINES P Mongolia JAPAN AIR LINES P/C Japan Vietnam Air P Vietnam NIPPON CARGO AIRWAY C Japan 3 3 Asia : Sub-total 1, ,968

25 Air Network Details (As of May 29) No. Airlines PAX / CGO Nationality PAX Frequency/week CGO TOTAL 51 Aeroflot-Russian Int.Airlines P Russia Aeroflot Cargo Airline C Russia VLADIVOSTOK AIRLINES P Russia AIR ASTANA P Kazakhastan Uzubekistan Airways P Uzubekistan 2 2 Russia: Sub-total IRAN AIR P Iran Emirates P UAE Qatar airways O Qatar Air Caledonie International P New Caledonia 2 2 Middle East & Oceania ,92 Flights (P: 1,624, C: 26) per week

26 Lead Time to AMR/EUR AMS FRA LAX ORD 21:5/18:4 19:2/12:2 22:/16:15 19:45/13:5 DEP/ARR 15:35 11: 12:15 1:2 Duration E U R 18:2/1:55 21:2/14:3 21:3/15:55 18:35/11:55 DEP/ARR A M R 1:35 11:1 12:25 1:2 Duration 14:35 13:35 17:2 13: Duration 23:5/5:25 5:1/9:45 21:15/5:35 23:35/4:35 DEP/ARR 15:23 22:13 13:35 Duration 12:22/16:45 No flight 12:22/23:35 12:35/16:1 DEP/ARR HKG SHA SIN ICN Destination Process Origin

27 Lead Time to Singapore Airport Destination Description ICN TPE Origin PVG NRT SIN First ETD ETA 9: 14:2 14:1 18:45 14:3 19:45 11:5 18:45 SIN (Singapore) Last ETD ETA 23:35 4:35 22:3 2:55 23:55 5:1 22: 4:1 Flight Time Direct 5: Direct 4:25 Direct 5:15 Direct 7:1 Frequency (Week) PAX : 21FLTs FRT :11FLTs PAX : 36FLTS FRT :14FLTs PAX : 49FLTs FRT : 14FLTs PAX : 6FLTs FRT : 8FLTs * First flight : nearest time to 9:am in consideration of the necessary time for cargo handling * ICN and SIN operates 24/7 * All the data is drawn up based on direct flights to destinations

28 Lead Time to Tokyo Destination Description ICN TPE Origin PVG NRT SIN First ETD ETA 9:4 12:5 14:1 18:45 9:55 13:5 9:4 17:35 TYO (Tokyo) Last ETD ETA 18:5 21: 23: 3:3 17:5 2:3 23:4 7:5 Flight Time Direct 2:1 Direct 4:35 Direct 2:25 Direct 6:55 Frequency (Week) PAX : 167FLs FRT : 17FLs PAX : 96FLTs FRT : 12FLs PAX : 83FLTS FRT : 23FLTs PAX : 52FLTS FRT : 1 FLs * First flight : nearest time to 9:am in consideration of the necessary time for cargo handling * ICN and SIN operates 24/7 * All the data is drawn up based on direct flights to destinations

29 Lead Time to Shanghai Destination Description ICN(GMP) TPE Origin PVG NRT SIN First ETD ETA 9:3 1:3 14:1 18:45 9:5 11:55 1:1 15: PVG(SHA) (Shanghai) Last ETD ETA 23:2 :15 23: 3:3 19:3 21:5 17:25 22:45 Flight Time Direct 1:55 Direct 4:3 Direct 3:5 Direct 4:5 Frequency (Week) PAX : 84FLTs FRT : 36FLTs PAX : 96FLTs FRT : 12FLs PAX : 83FLTS FRT : 15FLTs PAX : 49FLTS FRT : 7 FLs * First flight : nearest time to 9:am in consideration of the necessary time for cargo handling * ICN and SIN operates 24/7 * All the data is drawn up based on direct flights to destinations

30 Lead Time to Taiwan Destination Description ICN(GMP) TPE Origin PVG NRT SIN First ETD ETA 9:3 11:5 1:5 12:2 9:4 12:1 1:25 15:1 TPE (Taiwan) Last ETD ETA 19:15 2:5 13:1 15: 21:4 :1 13:5 18:3 Flight Time Direct 2:35 Direct 1:3 Direct 3:3 Direct 4:4 Frequency (Week) PAX : 41FLTs PAX : 26FLTs PAX : 99FLTS FRT : 2FLTs PAX : 35FLTS FRT : 9 FLTs * First flight : nearest time to 9:am in consideration of the necessary time for cargo handling * ICN and SIN operates 24/7 * All the data is drawn up based on direct flights to destinations

31 1. Market Size & Growth Prospect 2. Vicinity to Key Customers & Suppliers 3. Availability of International 3PL 1. Flight Option - lead time 2. Low Operation Cost 1, km 1, km 3. Well developed Cargo Infrastructure 4. Beneficial Tax Regime 2, km 2, km 3, km 3, km 1. Fast and easy customs clearance system 2. Easy modal conversion to Sea&Air transportation

32 Ground Handling Fee(1) Airport Usage Fee (2) US D Landing Charge Parking Charge Operating Cost ICN 1% 1% 1% KIX 25% 165% 19% NRT 187% 165% 165% PVG 117% 162% 137% HKG 89% 159% 117% Asia 12% 142% 125% (1) Based on 1 full cycle processing (unload terminal processing load) of 1 tons of cargo (2) Based on 2 hour layover of B747-4 (3) Assumption that airport usage fee is equivalent to Shanghai; data unavailable for Beijing (4) Airport usage fee includes USD 1,561 for passenger terminal usage; ground handling fee includes USD 15, that is transferred to the shipper Source : Korean Air (Ground Handling Fee Estimates), Asahi newspaper

33 Hub operation should be most economical with the highest service quality Currency: USD Category Description (Including) ICN FTZ Operation Unit Cost (Monthly) SIN SHA HKG NRT Space Cost per sqm Rental + Maintenance Fee USD 6.9 USD 19.4 USD 8.76 USD 2.55 USD Manpower Cost per person Contract Manpower with minimum specification : 9 ~ 18 (Mon~Fri) USD 1, USD 1,573. USD 495. USD 1,65. USD 2, Landing Fee Based on 2 hour lay over of B747 USD 2,64.7 USD 2,63.46 USD 4,348. USD 3, USD 8, * Exchange Rate (1 April Foreign Exchange) : 1USD = KRW 1,326. SGD 1.54 CNY 6.84 HKD 7.75 JPY ICN SIN SHA HKG NRT ICN SIN SHA HKG NRT ICN SIN SHA HKG NRT Space Cost/m 2 - Manpower Cost/P- - Landing Fee

34 Operating Costs in Logistics Park Ground Rental Fee for Transfer Cargo ICN PVG SIN HKG Costs in case of 5,m 2, 3, tons during slack season for a year Ground Rental Cost (/sqm/year) USD 6.6 USD 1.81 USD N/A * Assumption that ICN s air tansport charge is USD 3 for 1 kg. Distance to Airport Inside the airport 28km to PVG Inside the airport N/A (thousand USD) : Air Transport Charge : Ground Rental Fee Process High Low High High Efficiency * Exchange rate as of 21 March 29 13, 11, 112,52 Air Transport Charge (Direct Flight to LA) 9, 9, Estimated 97,2+@ ICN PVG SIN HKG Slack Season N/A 18 High-demand season N/A * The above is relative numbers assuming INC as 1 in 27. * No direct flight from SIN to LA. ICN PVG SIN HKG

35 Microsoft Excel 워크시트

36 1. Market Size & Growth Prospect 2. Vicinity to Key Customers & Suppliers 3. Availability of International 3PL 1. Flight Option - lead time 2. Low Operation Cost 1, km 3. Well 1, kmdeveloped Cargo Infrastructure 4. Beneficial Tax Regime 2, km 2, km 3, km 3, km 1. Fast and easy customs clearance system 2. Easy modal conversion to Sea&Air transportation

37 ICN s Cargo Capacity Expansion in correspondence to Expanding Cargo Cargo Capacities of Major Asian Airports Current Future

38 Incheon Airport Free Trade Zone is comprised of the Cargo Terminal Area and the airport Logispark

39 Development Method : BOT Free land rental period is decided investment amount 2 million m2 5 cargo terminals 36 Cargo aprons Company Size (m 2 ) Capacity (ton) Korean Air 81,9 1,2, Asiana 5,4 1,1, Foreign Ailines 5,4 52, International Post 33,8 35, American Army Post 2, 2, DHL 2, 22, Polar 17, 2, Air cargo Warehouse 16,18 2, Total 288,8 3,81,

40 Lot No. Size (m 2 ) Company G4 G5 G6 G7 F1 F2 D1 D2 D4 D3 A2, A2-1 25,33 Pantos A3 38,347 Korean Duty-Free Association G3 G2 G1 F3 F4 D5 (16,368) D6 (9,64) B1 79,83 Incheon Int l Logistics Center Public Facilities A2 B1 A2-1 A1 E2 (16,743) E3 (19,246) E1 (16,64) C7 (16,322) C8 C5 (6,685) C6 (13,799) C4 (6,986) C1 (5,363) C2 (6,711) C3 (9,545) B2 8,892 Samsung Logitec B3 9,52 K.W.E. Korea C1 5,363 Britestone C2 6,711 World Dream Fish C4 6,986 Hyundai Logistics D1~D6 52,695 Neo Semitech F1~F4 65,76 AMB Property B3 B2 G1, G7 21,68 Daewoo Logistics G2 6,973 Haewoo Logistics A3 Leased out To be leased G3 1, Schenker Korea G4 6,531 Hanaro T.N.S. G5 9,58 Incheon Air Cargo Center G6 9,464 Baekma Cargo Total 355,583 (Occupancy ratio: 76%)

41 IIAC Warehouse Space: 8,97sqm Height: 14.5m Located at Terminal Area A M B A M B AMB : Global top 3 Investment and Leasing Company Space: 36,sqm Height: 12.4m K W E K W E Kintetsu World Express Space : 8,877 sqm (F1~F2) Schenker Schenker : Global top 2 Air Logistics Company Space: 19,946 sqm (B1~4FL) Height: over 1m Pantos Pantos : Korea s Top Air Logistics Company Space: 7,162sqm Height: 15m

42 Project Management Method Contract Period Build-Own-Operate-Transfer 3 years Companies to build, own and operate the facilities before handing them over to IIAC Extendable twice for 1-yr period under mutual agreement Qualification Foreign-invested companies, engaged in manufacturing Engage in wholesale, import and export Need to comply with Article 1 of the Act on Designation and Management of Free Trade Zone & Article 1 of MOCT Announcement No Land Rental Fee KRW 22,98 / m 2 / year 5% discount for manufactured goods, transshipment cargo within FTZ Discounts based on foreign direct investment

43 Cargo Performance Index Activity Goal Result ( 7) Landside Truck Waiting Time (in 3 min) 97% 98.7% Cargo Reception (in 15 min) 95% 98% Cargo Breakdown-ATA standard Passenger Aircraft (in 3.5 hrs) 95% 97% Freighter Aircraft (medium, in 5 hrs) 97% 1% Freighter Aircraft (large, in 8hrs) 97% 1% Express Cargo (in 2 hrs) 97% 1% Perishable Cargo 97% 1% Inbound Cargo Assortment (in 1hr) 97% 96.5% Mishandling Rate.15% % INC Cargo handling performance Index (Source : IIAC)

44 1. Market Size & Growth Prospect 2. Vicinity to Key Customers & Suppliers 3. Availability of International 3PL 1. Flight Option - lead time 2. Low Operation Cost 3. Well developed Cargo Infrastructure 1, km 1, km 4. Beneficial Tax Regime 2, km 2, km 3, km 3, km 1. Fast and easy customs clearance system 2. Easy modal conversion to Sea&Air transportation

45 Land Lease Incentives Investment Amount (USD) Incentives $5,, ~ $9,999,999 Discount 5% of land rental fee 5 years $1,, ~ $14,999,999 Exempt land rental fee for 5 years $15,, ~ $29,999,999 Exempt land rental fee for 7 years $3,, ~ $49,999,999 Exempt land rental fee for 1 years $5,, and above Exempt land rental fee for 15 years Tax Incentives Tax/Excise Type Corporate Tax National Tax Income Tax Acquisition Tax Local Tax Registration Tax Property Tax Incentives Exempt for the first 3 years and discount 5% for the following 2 years Exempt for 15 years Exempt for 15 years Exempt for 1 years and discount 5% for the following 3 years

46 Corporate Income Tax Rate Lowered Corporate income tax rate will be reduced to 2% until 21 starting with 3% discount this year. (* scheduled to pass in the upcoming regular session of the National Assembly) ~ % (over 1 million won) 13% (below 1 million won) 22% (29~ ) (over 2 million won) 11% (28~ ) (below 2 million won) 2% 1% Improvement on Permanent Establishment Issue 3PL which performs simple warehousing, delivery and repackaging activities for overseas shipper is not regarded as Permanent Establishment of overseas company. Overseas manufacturers and logistic companies are able to establish Asia/Global Hub at Incheon Airport without tax hurdles.

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48 1. Market Size & Growth Prospect 2. Vicinity to Key Customers & Suppliers 3. Availability of International 3PL 1. Flight Option - lead time 2. Low Operation Cost 1, km 3. Well developed Cargo Infrastructure 1, km 4. Beneficial Tax Regime 2, km 2, km 3, km 3, km 1. Fast and easy customs clearance system 2. Easy modal conversion to Sea&Air transportation

49 Ubiquitous Customs System (UNI-PASS) 1% Paperless Clearance Simple clearance w/o any paper submission available through EDI(Electronic Data Exchange) system or Internet Fastest among the 169 WCO(World Customs Organization) member countries Around-the-clock & On-Site Clearance Provides 24/7 real-time services Complete clearance before entry available through Pre-declaration System Offers on-site clearance at warehouses without visiting customs office Before UNI-PASS After UNI-PASS More than 1 day Export Clearance Within 2 min More than 2 days Import Clearance Within 2.5 hrs Successful Establishment of e-clearance Procedure Based on Internet/EDI Network More than 2 days More than 4 hrs Customs Drawbacks Tax Payment Within 5.2 hrs Within 1 min

50 Ubiquitous Customs System (UNI-PASS) 1% Paperless Clearance Simple clearance w/o any paper submission available through EDI(Electronic Data Exchange) system or Internet Fastest among the 169 WCO(World Customs Organization) member countries Around-the-clock & On-Site Clearance Provides 24/7 real-time services Complete clearance before entry available through Pre-declaration System Offers on-site clearance at warehouses without visiting customs office Before UNI-PASS After UNI-PASS More than 1 day Export Clearance Within 2 min More than 2 day Import Clearance Within 2.5 min More than 3 day Customs Drawbacks Within 5.2 hrs More than 4 day Tax Payment Within 1 hrs

51 Single Window Service UNI-PASS offers single window system, linking 22 related services of 12 Agencies at one site, such as Korea Food & Drug Administration and Plant Quarantine Service. Real-Time Cargo Information Service through CLIS Client-oriented Logistics Information System (CLIS) provides real-time cargo processing information from arrival to out-bound. No Limit on Inventory Period in Airport LogisPark There are no limits on inventory period of cargoes stored at ALP. With these institutional changes, we hope to further promote international trade, bringing more London Metal Exchange (LME) and Bonded Warehouse Transaction (BWT) cargoes. No Need to Appoint Customs Proxy by 3PL 3PL itself can hire certified customs attorney and perform customs-related activities. There are no legal binding for shipper overseas to contract with customs proxy company.

52 Simplified Re-Export Customs Procedures Repetitive Bill of Lading (B/L) split & mergence for re-export, especially required for Bonded Warehouse Transaction, are unnecessary by virtue of recent declaration unit change, Bill of Lading (B/L) to each product. Inventory PCS Unit Repackaging Time Taken Use/Consumption Declaration (similar to import CC except no duty & tax payment) a b A B C Order (a, A, B) a B/L A B Re-export Declaration (paperless) + Load & Ship 3 min ( process 5~1, cases simultaneously) Compliance Program (CP) for Companies Overseas Simplified procedures can be adopted to companies overseas, if Korea branch with CP takes responsibilities and management of exporting such items. As - Was Usually took no less than 5 days respectively As - Is Blanket permission allows post-declaration (* half-yearly report submission required)

53 1. Market Size & Growth Prospect 2. Vicinity to Key Customers & Suppliers 3. Availability of International 3PL 1. Flight Option - lead time 2. Low Operation Cost 1, km 3. Well developed Cargo Infrastructure 1, km 4. Beneficial Tax Regime 2, km 2, km 3, km 3, km 1. Fast and easy customs clearance system 2. Modal conversion flexibility to Sea&Air

54 Integrated transportation system combining truck transportation, car ferry, and air Provides reduced freight damage ratio, transportation time and reasonable price compared to via BJS, PVG and Air & Air.

55 You can prevent damages and additional transportation time during trucking to the major Chinese airports with 6~65% of the price. * Sea&Air Record (Unit : ton) 1/4QTR 2/4QTR 3/4QTR 4/4QTR Total 28 11,53 13,737 17,337 18,42 61,6 27 7,42 1,519 14,645 13,884 46,45 Growth rate 155.8% 13.6% 118.4% 139.6% 131.3% Sea&Air (VIA ICN) Air&Air (VIA ICN, NRT) Road&Air (VIA BJS, PVG) Price 6~65% 8% 1% Lead Time 36hrs. 18hrs. 32hrs. Damage Very low Very low sometimes * QINGTAO to NEWYORK * 時間と運送時間は28 年 1 月調査 Total Car ferry : 26 ships / Container : 17 ships per week

56 . 29hrs. 15hrs 16hrs 3hrs Global companies such as SONY, SAMSUNG, LG, FOXCONN have optimized their SCM from their manufacturing bases in China using Sea&Air Transportation via Incheon

57 Sea & Air TFT consists with Incheon Int l Airport Corporation, Incheon Port Authoruty, Customs House, airlines and Shipping companies to make a convenient business environment for the companies using Sea & Air service. Process Improvement for air serviced part Process Improvement for sea serviced part Improvement of customs regulation related to Sea&Air and Transit cargo Secure regular space for companies using sea&air service

58 problem Action Result CUT OFF TIME of Tianjin port was too early (until 2pm of the day before departure) S&A TFT negotiated with Tianjin Port Corporation and Tianjin City government to extend the cargo CUT OFF TIME CUT OFF TIME :8am of the day of departure(12 hours extended) It takes too much time to pick out sea&air containers from ferry at Incheon Port. Samsung wanted to secure enough space. S&A TFT negotiated with shipping companies to load sea&air containers near the ferry door. S&A TFT negotiated with Airlines to secure enough space for SAMSUNG Lead time from Incheon Port to ICN : shortened to 2 hours from 5 hours(3hours shortened) SAMSUNG secured regular space

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60 ASML - Summary world s third largest manufacturer in semiconductor manufacturing equipment Leading provider of lithography systems (headquarter in Netherlands) Demand : Asia 7%(Korea 3, Taiwan 3), America/EU 3% Currently, ASML s spare part warehouses are situated in Singapore & Taiwan. ASML planned to consolidate both warehouses, trying to find The optimal Place in Asia since early 27 - Candidates : Korea, Singapore, Hong Kong, Taiwan & China

61 Requirements we did meet Regular Demand existed Korea) Has well-developed IT industry with companies such as Samsung. LG, Hynix and etc. Well-developed air networks to connect consumer countries ICN) Has one of the most massive air networks in Asia Easy to work with global 3PLs at a competitive price Korea) Schenker, K.W.E., K&N, AMB and many more are operating at ICN Requirements we did not meet (As of Early 7) Simple Customs & Export Procedures Business-Friendly Tax System

62 Global Warehouse of World s 3 rd Biggest Semi-Conductor Equipment Manufactu Hub Operation System Delivery Route International ICN Free Trade Zone International & Domestic Amsterdam (AMS) Factory in HQ Country Warehousing Order Ship Customers Overseas Incheon (INC) Beijing (PEK) New Hub Parts Suppliers in Third Country Testing, Cleaning, Barcoding, Kitting, Labeling, Repackaging Customers in Korea Shanghai (PVG) Tokyo (TYO) Effects on Semi-Conductor Manufacturer in Korea Singapore (SIN) : Demand : Supply Taipei (TPE) As - Was Order Ship(AMS) Korea (Suwon) : 38 hrs Order Ship (SIN) Korea (Suwon) : 32 hrs As - Is - Global Warehouse at ICN - Korean Customers Receive Parts within 3 hrs - Maximize Supply Chain Efficiency

63 Global Warehouse of World s 3 rd Biggest Semi-Conductor Equipment Manufactu Product Transport Route (Global Hub) Global Headquarters : Europe 7, 6,198 6, 5,784 Amsterdam (AMS) 3% Beijing (PEK) 5% Incheon (INC) 3% Los Angeles (LAX) 1% 5, 4, 3, 2, 1, - 3,421 3,521 3,41 3,422 3,691 4,178 3,759 4,38 IC N P V G T P E H K G S IN Arithm etic Average Transportw e ig h te d A vera g e Shanghai (PVG) 1% Tokyo (TYO) 1% Global Headquarters : US Taipei (TPE) 3% 12, 1, 1,971 Kuala Lumpur (KUL) 5% 8, 6, 4, 5,825 6,15 3,41 3,422 3,691 6,476 4,38 7,367 5,784 A rith m e tic A verage Transportw e ig h te d A vera g e : Demand : Supply Note : Assumption that 7% of product is supplied within Asia 2, - IC N P V G T P E H K G S IN

64 ICN as the coordinator Bridge between Government and Industry to solve critical issues - 3 major issues : Customs, Export and Corporate Income Tax Positive Marketing to global companies (including ASML) Government Side Industry Side + + KOTRA(Korea Trade Investment Promotion Agency)

65 Simplified Compliance Program(CP) Foreign companies couldn t receive a bulk license as CP which follows simple procedure of export for strategic goods - Foreign companies received export permit respectively - Usually took 5 to 1 days Improved Through cooperation with MKE Now, Simplified procedures can be applied to companies overseas, if Korea branch with CP takes responsibility and management of exporting such items - Blanket permission allows post-declaration - Submission of half-yearly report required

66 Improvement on Permanent Establishment(PE) Issue When a company overseas consign operation of a warehouse to domestic 3PL, the warehouse was considered as an permanent establishment of the company Brought conversional interpretation on the Corporate Income Tax Law through cooperation with MSF and PO 3PL which performs simple warehousing, delivery and repackaging activities for overseas shipper is not regarded as Permanent Establishment of overseas company - Overseas manufacturers and logistics companies are able to establish Asia/Global Hub at ICN without tax hurdles

67 A letter from ASML ( 8.6.2) I would like to thank you and the whole team for your great help and support that you have given us during the last few months. You really did a great job and if next week our steering committee will decide on Korea as the location for our hub, it will be thanks to the efforts of your team. Again, thank you very much. Final Decision Letter ( 8.7.1) I would like to inform you that based on the findings and recommendations of the team, the Steering Committee decided to choose for Korea as preferred location. To be more specific, the Free Trade Zone at Incheon Airport. - Eric Vennekens, Director of International Trade & Customs

68 Sony turned their cargo distributed via HKG to via ICN using Sea & Air from 28 Sea & Air Factory in Yentai Moved to Factory in SHENZHEN 26ton/day air transportation (6,5ton/year) 13ton/Week ferry Transportation HKG APO Japanese/Korean FWDR 3ton/week 27ton/week USA Hub (Dallas) Europe Hub (NE,ES,CZ) 日系 FWDR 1ton/week Sony SCM Controls Japan Hub

69 SAMSUNG has their Cell phone factory in Tianjin and Shanghai, China 7% of the cargo from Tianjin factory distributed by Sea&Air, 2 % by Air&Air via Incheon. Cargo from Shanghai factory is moved to Qingdao by truck, and then distributed to the world by Sea&Air via Incheon. Saving $15 million s logistics cost per year Tianjin Factory KERRY FREIGHT 4ton/week by ferry Sea & Air 67ton/day Air Transportation EUR Shanghai Factory 15ton/week air transportation AMR Korea Factory Air & Air Trucking 12ton/week, trucking ICN D.C AP SAMSUNG LOGITECH SAMSUNG LOGITECH

70 LG has its cell phone factory in Yantai and Qingdao, the best location for using Sea&air in China. It cut its logistics cost drastically by using Sea&Air service via ICN YNT,TAO factory 45ton/week by ferry Sea & Air 14ton/day air transportation SHA factory ICN Hub America Hub (Chicago) Korea factory 42 ton/week trucking Inventory for 15 days Chinese logistics player Korean logistics player American Logistics player

71 FOXCONN made A/S logistics center in ICN FTZ to meet customers demand quickly and to optimize SCM using item base customs clearance system. Send A/S items to ICN by air transportation integrated management of A/S tiems sending according to the orders from FOXCONN factory YNT factory Customers throughout the world ICN D.C Korean Logistics Player Send A/S items by sea or air transportation SHENZHEN factory FOXCONN

72 Opened in April, 29 (Land Size: 17,m2) 2 years concession period for the building Airside terminal along with Polar Air Terminal FDI $ 4 million : 7 years free land rental incentive

73 Opened in April, 28 (Land Size: 65,m2) 3 years concession period for the building FDI $ 12 million : 5 years free land rental incentive

74 Korea Logistics Center Started operations in Oct. 26 Local distribution (45 min. from Seoul) GDC & RDC operation in FTZ Warehouse Management link with customs Vendor Management Spare Parts Logistics Surplus Equipment Logistics Reverse Logistics Value Added Logistics Kitting, Repair and more Major Clients ASML Samsung Electronics LG Electronics GE Schenker Korea Ltd.,

75 The Most Exciting Business Opportunities at the center of the fastest growing Northeast Asia Incheon International airport is the world s 2nd largest international cargo airport in terms of cargo throughput and the home-base of Korean Air, the biggest cargo airline in the world. ICN is the biggest gateway located at the center of the fastest growing Northeast Asian market currently generating 2% of world GDP and 27% of the world logistics volume. ICN is the gateway of Korea whose GDP is currently 12th largest in the world(oecd), handling 81% of air cargo and 25% of the total trade amount of Korea.

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