Government Split Over Gangnam Housing

The plans to provide housing in Gangnam, Seoul are expected to spur conflicts. Oh Se-hun, the mayor-elect, claimed during the campaign period, “If the Seoul city government carries out reconstruction step by step, it would secure additional 100,000 units of housing in Gangnam without constructing new towns.” There is a huge gap between the mayor-elect and the central government, which said in its recent briefing that demand for housing in the area will be met by the current reconstruction projects and the Songpa and Pangyo new towns, so there is no need for additional provision of housing in Gangnam.

In particular, if Oh follows the incumbent mayor Lee Myeong-bak to oppose the Songpa new town plan in which 46,000 units of housing will be constructed from 2009, the plan can be delayed. Under the current land development laws, the developer needs the cooperation of the city government in order to carry out joint basic research, and public and local government hearings to start the process of removing green belt control.

Another bone of contention is reconstruction regulation. The central and local governments will be largely divided over the regulations related to reconstruction. The central government revised the city and residential environment maintenance law as part of the March 30 Real Estate Measure after some ward offices hinted at a possible move to deregulate the number of stories and floor area ratio of reconstructed apartments, causing hikes in real estate prices. Under the revised law, when drawing up a basic plan for reconstruction, local autonomous entities are required to consult with the Minister of Construction and Transportation beforehand. And on the results of safety assessment for reconstruction, the ministry can ask the relevant entities for review.

As Oh has stressed the expansion of supply through reconstruction, the Seoul city government is likely to oppose any government intervention which can cause the reconstruction market to shrink.

The conflict between local and central governments over the jurisdiction of the free economic zones (FEZs) is also expected to run deep. The government and the ruling party are pursuing a plan to turn the Incheon Free Economic Zone Authority into a special local autonomous entity temporarily.

The ruling Uri Party submitted to the National Assembly a revision bill for that matter last month. The government is now reviewing the plan to make Busan, Gwangyang (in South Jeolla Province) and Jinhae (in South Gyeongsang Province) special local autonomous districts.

Ahn Sang-su, the mayor-elect of Incheon, opposed the government plan, saying, “If turned into special autonomous districts, the areas would fall into the jurisdiction of the central government, degenerating local autonomy. Lee Wan-gu, the governor-elect of South Chungcheong Province, pledged to develop Cheonan and its vicinity into an FEZ. North Jeolla Province has also longed to make Gunsan a FEZ.

However, the Ministry of Finance and Economy has made it clear that additional designations of FEZs are not likely until the current three FEZs, including one in Incheon, are fully operational. In addition, the government is expected to outlay huge amounts of money on Busan’s Development Plan of the South Coast Tourism Belt, Gwangju and South Jeolla Province’s Development Plan of Tour and Leisure Cities.

The central government has made it clear it has no plan to provide additional assistance because these projects are overlapped with other local development projects, intensifying the conflict between the central and local governments. Meanwhile, some people have suggested establishing institutional devices to resolve such conflicts smoothly.

Kim Seon-bin, chief researcher at Samsung Economic Research Institute, said, “The central government must expand the responsibilities of the Central Conflict Mediation Commission, which is designed to mediate the conflicts among local autonomous governments, to cover the ones between the central and local governments.