Nationwide Construction: Is There No Finance Problem?

Relocation to the Administrative City will start in 2012-

The administrative city will be built on a 22.1-million-pyong site in and around Yeongi County and Gongju, Chungnam. From 2012 to 2014, 12 ministries, two offices under the ministries and four ministries and offices under prime minister currently in Seoul and Gwacheon, Gyeonggi Province will move to the area.

The Ministry of Construction and Transportation in charge of the project is planning to confirm the areas to host the administrative city by the first half of this year, and plans to start purchasing the land from the end of the year onwards. It is not yet concluded when the construction will start. It was scheduled for the first half of 2007 at first, but political circles opposed it, citing its possible effect on the presidential election to be called in late 2007.

Choi Byung-seon, head of the committee on the follow-up measures of the new administrative capital project, said on a radio show on March 3, “Although the new administrative capital has changed to an administrative city, there is no big change in situation that will lead to the change in the schedule itself. Also, that is not an issue to politically approach,” adding, “The construction is expected to start in 2007.”

The government will pay approximately 8.5 trillion won in construction costs. The ruling and opposition camps finalized the expenses for the project while reaching a consensus on passing the bill.

However, the government seems to be actually bearing more of the burden. As the 8.5 trillion won was an estimate based on standard prices as of January 2003, the amount will increase at least as much as the inflation rate.

The overall construction cost is estimated to be 45.6 trillion won, five times as much as the government’s share of the costs.

Public institutions moves to provinces; Seoul metropolitan area to be deregulated-

As the government agencies to be moved to the administrative city are being decided, 190 related public institutions will be dispersed to 12 metropolitan cities and provinces, excluding Seoul, Incheon, and metropolitan areas like Gyeonggi Province, and Daejeon, in which the third Government Complex is situated.

The Presidential Committee on Balanced National Development will decide to which regions specific agencies will be relocated to by mid-March, and confirm the decision after deliberations by the subcommittee on balanced development of the construction and transportation committee of the National Assembly.

An average of 10 public institutions with 2,000 to 3,000 staff each are likely to be relocated to each city and province. The government is planning to make the regions to be occupied by public offices into “innovative cities,” which will serve as centers of local development.

The deregulation plan for the Seoul metropolitan area is to prevent the possible “hollowing-out of the metropolitan area” that is expected to happen amid the relocation of government agencies to the administrative city and public institutions to provincial areas. The deregulation will be two-phased. In the short term, limits on plant construction will be eased, which is a strict regulation on plant construction, especially for high-tech industries. Also, a new policy in which the government applies eased regulations on development to specific districts will be adopted.

The government will also push forward a plan to develop Seoul into an international business and finance center, Incheon into a logistics business center, and Suwon into a state-of-the-art knowledge industry center, keeping pace with the relocation project.

Jae-Seong Hwang jsonhng@donga.com