[Editorial] Company Town Projects

With large companies showing little interest in company town projects, the Ministry of Construction and Transportation is working hard to make them take part in a current initiative.

The ministry is holding a meeting with experts tomorrow. But it is not clear if the meeting will bring an answer. Until now, there is no application, except Hyundai Engineering and Construction which picked up Taean, Chungnam Province. Such a sluggish reaction is a result of the government’s policy direction that puts more weight on balanced local development and fairness than economical efficiency.

In Wonju, Gangwon Province, after its designation as company town, the price of apartments went up to 7.7 million won per pyeong, two times more than the three million won it cost in 2002. If the price continues to increase at this rate, the future of company town projects is very dark because there are few companies that can afford to purchase such high-priced sites. This is a reason why company town projects have made little progress so far.

In “The Company Town is Overestimated,” a report published by the Hyundai Research Institute, experts concluded that “it is not even clear that the company town project can go as planned.” They also pointed out that the government failed to draw attention from private companies because it selected underdeveloped cities without considering market demand. In fact, except Wonju, five other cities are experiencing population decreases.

In addition to this, some worry that tourist resorts, industrial complexes, and free economic zones located near designated company towns may be affected also.

Aware of such pressure, the Ministry of Construction and Transportation announced February that any one who passes a qualification test can take part in company town projects. If this trend continues, private companies will be the losers. The Hyundai Research Institute also predicted that when a new government comes to office, the project will be killed. Undoubtedly, project failure will make participating companies suffer significant losses in business performance.

Without analyzing the economic effects on company towns, Japan also pushed ahead with a similar project for political reasons. The result was a private company and local economic fiasco. Only when company towns are created by the need of companies are they likely to score successes. This is not a thing that is artificially organized by governments. The best examples of this can be found in successful company towns, such as the LCD complexes in Ulsan and Paju, and the Toyota motor complex in Japan.