Go to contents

[Editorial] Reckless Public Projects Imposing a Heavier Burden on the People

[Editorial] Reckless Public Projects Imposing a Heavier Burden on the People

Posted November. 15, 2005 03:08,   


About half of investments worth more than 10 billion won planned by the Korean government, local governments, and government-owned companies failed to pass the preliminary feasibility test. According to the Ministry of Planning and Budget, since this test was introduced in 1999, 101 investment plans worth 63 trillion won out of 234 plans totaling 129 trillion won, which accounts for 49 percent of the total, have failed to get approval in the test. This implies that many reckless public investment projects have been planned, setting “timed bombs” across the nation to deal a heavy blow to the national budget.

The failure rate has been lowered from 60 percent before 2002 to 20 percent. However, this does not mean that the project operators have been better at studying the feasibility of their work prior to the test. Rather, the failure rate could be lowered due to more lenient grading. Previously, the evaluation focused on the project’s economic feasibility, but now it focuses on policy feasibility. If the previous grading criteria had been applied to the 79 projects, which passed the test after 2003, about half of them would have been judged inefficient.

In addition, the Roh administration changed the weight of each feasibility evaluation criteria to give 40~50 percent weight on economic feasibility, 25~35 percent on policy feasibility, and 15~25 percent on balanced regional development feasibility. This means inefficient pork-barreling regional projects can pass the test easily. The ambiguous political code of balanced regional development has made it more difficult to pick gems out of stones.

A number of irregularities and expedients were in play as well. For instance, some operators ignored the test and went ahead to put in money to start their projects and others underreported the scale of their projects as below 50 billion won to be exempted from the test, after which they doubled the project cost. Even among 735 large-scale national projects, 36 more than doubled their cost through a number of plan changes. The Ministry of Planning and Budget estimates additional 28 trillion won was spent on projects through such a trick. That is, the central government, local governments, and public companies competed among themselves to cunningly use the people’s precious tax money.

If the aim of the preliminary feasibility test is to prevent budget waste, the cost and benefit of each project must be evaluated more closely. Incapacitation of the monitoring system and reckless expansion of public projects might bring about a showy ground-breaking ceremony, but the public will have to shoulder a greater tax burden to bear the cost.