The city of Incheon is considering offering GM Daewoo Auto & Technology Co. more than 40 hectares of rent-free land to pursuade the nation’s No. 3 carmaker to build research and development facilities there, city officials told the Korea Herald on Sunday.

The city government reportedly has a plan to purchase the land from two public corporations – Korea Land Corp. and Korea Agricultural & Rural Infrastructure Corp. – for 49.4 billion won, the officials said. The municipal government has sent the plan to the city council for final endorsement.

GM Daewoo, the local affiliate of General Motors Corp., in June said it plans to build a proving ground and research and development center in Korea. Industry watchers believe the project will be worth more than 100 billion won and GM Daewoo is examining potential sites for the facilities.

“Since the research centre project will be funded by the parent General Motors, we think it is a great opportunity to attract huge foreign direct investment. We are ready to offer good incentives to win the facility deal,” an Incheon official told the newspaper.

“The free-land offer has yet to be approved by Incheon City Council. We will be able to consider the offer only after it is fully confirmed by the city,” a high-positioned GM Daewoo official told the Korea Herald.

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Incheon officials reportedly said the auto industry accounts for 11% of the city’s employment and nearly 20% of its exports. The city government has plans to nurture the auto-parts industry as a major growth engine for the city.

“GM’s new investment here is sure to benefit all the car-related businesses here. Our land offer plan is being pursued in accordance with relevant laws. It is not an unwise deal,” the Incheon official told the paper.

The Korea Herald said Incheon is eyeing land in the Cheongna area in the western part of the city. The land sits across from Yongjong Island, where Incheon International Airport is located. It is only 25 minutes away by car from GM Daewoo’s flagship plant in the city.

The city officials reportedly said if GM Daewoo and its US parent company accept the offer, the government could sign an investment agreement with the affiliate by the end of the year.

According to the paper, General Motors said it plans to develop GM Daewoo as a “valuable R&D source” in its Asia-Pacific operations. Many experts say the project is a part of GM’s plan to develop a prime engineering base here to bolster its regional flagship Chinese operations.

“Korea still has superiority over China in production engineering and technology. GM Daewoo’s place in the group’s Asia-Pacific business will likely be an R&D hub to assist its new regional centre in China,” Kang Sang-min, auto analyst at TongYang Investment Bank in Seoul, told the Korea Herald.