City Development Plans Raise Questions on Efficiency

Many worry that local city development projects championed by the government in the name of national balanced development might spawn serious side effects, like speculation and duplicated investment, due to their large scale and simultaneous timing.

Experts warn that without supplementary measures, like the coordination of priority in projects and a unified development plan among ministries, the projects might be jeopardized.

Projects targeting the development of local cities are in their heyday. There are three themes in this developmental trend: the revolutionary city, the industrial city, and the knowledge-based city.

The revolutionary city will be established by moving public organizations, currently located in capital, to local cities that will provide the center of that area.

Except Chungnam, to which the administrative capital will be moved, and Daejeon, in which the third Central Government Complex is located, 11 cities will be appointed as revolutionary cities. In August, the exact sites will be decided and, starting next year, construction will begin in three locations.

Industrial cities that aim to attract investment from enterprises will be established with reliance on the leadership of private enterprise as a starting point. Any location, except metropolitan cities and the capital area, deserves the right to be industrial city, and next month, two to four model cities will be decided on. Construction on them will start next year.

A knowledge-based city, which is a self-sufficient residential city that aims to activate a cluster of six industrial complexes built in Changwon, Gumi, Gunsan, Ulsan, Gwangju, and Wonju, and which is a project that was begun this year with support of the government, will be located around these six complexes.

The participation of enterprises will play a crucial role in these projects. In all three, the number of companies that participate may determine the fate of this initiative.

While the number of people residing in revolutionary city is estimated by the government to be around 50,000-100,000, the actual number moving into the city spurred by the relocation of public organizations is just 3,000. Therefore, the government is planning the establishment of new enterprises that will create job opportunities, thereby attracting population from adjacent areas.

An industrial city is one that enterprises voluntarily purchase land from, and which they design development plans and carry out construction on.

Even though, for knowledge-based cities, the government plans to establish cites with around 500,000-2,000,000 pyung, the implementation of the project cannot be assured without the demand of private companies.

In addition, the number of construction companies that can assume such big projects numbers only three or four, like Samsung and LG. When it comes to the industrial city, in order to secure 2,000,000-3,000,000 pyung sites, project costs are estimated to be about seven to eight trillion won. Adding up the costs of the revolutionary city by figuring a cost of four to eight trillion won for 11 cities, it becomes clear that the project cost will be enormous.

“Considering the capacity of domestic companies, I am wondering if the project designed by the government can be realized, Unifying the project with coordination among ministries is imperative,” said one from a state-run institute.

The most serious concern stimulated by the local city development project is that speculation seems to be raising its ugly head again.

In fact, the price of land in Yeongam, Muan, and Naju in Jeonnam, which are to be developed as industrial cities for leisure, have increased by 10 percent on average since the end of last year.

With Jeonju, Iksan, and Gunsan in Jeonbuk mentioned as candidates for industrial city development, there is little land changing hands in those markets, and the asking price of land there has increased by 10 percent compared to the end of last year

Jae-Seong Hwang jsonhng@donga.com legman@donga.com