Retirement Village Project Hanging in the Wind

Citing that the senior complex project would need massive initial investment and incur a large amount of operating deficit every year, at a meeting of 33 executive on August 5, Korea Agriculture and Rural Infrastructure Corporation (KARICO) reached a tentative conclusion that it will be difficult to push the project forward without the nation’s financial support.

KARICO decided to review reducing the pilot project sites from the original four areas to one and hold a board of directors meeting on August 25 to make a final decision on whether to proceed with the project.

Developments-

KARICO signed an MOU on the senior complex establishment project with Seocheon-gun of South Chungcheong Province, Sunchang-gun and Gokseong-gun of South Jeolla Province December last year. Yeongwol-gun of Gangwon Province was later added to the list.

The Ministry of Health and Welfare selected four districts- Seocheon, Gokseong, Jinan-gun of North Jeolla Province and Yeongwol – as the sites for the agricultural and fishery areas’ senior welfare complex establishment project in May this year.

The only difference in the plans of KARICO and the health ministry is whether Sunchang or Jinan is included and are, in fact, identical in other contents.

The presidential committee for agricultural and fishery industries and areas included the health ministry’s plan in the agricultural and fishery areas’ living space establishment plan and reported it to the president on July 14.

Project Contents-

One hundred and fifty households of retired couples over 60 will live in each complex of the senior welfare complex.

Each complex will cost 28 billion won including land purchasing costs and housing construction costs. Of this amount, 3.5 billion won will be supported by the government under the name of welfare home construction, and local governments will attract investment from KARICO for the rest.

KARICO has drawn up measures of receiving 230 million won for deposit (to be returned when moving out) and 900,000 won a month for management expenses (including food expenses) for every household (two persons), or 240 million in investment (expires in 20 years) and 200,000 won for management expenses and have conducted feasibility studies.

Reason for Abandonment of Plan and Future Prospects-

It is analyzed that unlike western nations such as the U.S., few Koreans will invest a huge amount of money to apply for rental housing in rural areas as they have a strong possessiveness for real estate.

Furthermore, KARICO reached the conclusion that as welfare costs and management costs for the elderly are expected to gradually increase, it will be difficult to pursue the project without financial support from the nation.

KARICO has pursued this project so far for the public good such as the vitalization of rural areas and a secure retirement life for the elderly, but it is unclear if other government investment institutions or private companies will take on the project regardless of the fact that they may incur losses.

Regarding the issue, government official Song In-su of the senior citizen support division at the Ministry of Health and Welfare said, “As far as I know, KARICO will invest in the project. If it does not, we will attract the National Pension Fund or private companies as investors.”

However, Kang Shin-hwa, chief of the social welfare division for Seocheon-gun, said “If KARICO gives up on the plan, the project may be in jeopardy.”

Dong-Woo Chung forum@donga.com