Institute Criticizes Ministry Waste

The Korea Development Institute (KDI) strongly criticized government ministries for wasting money by pushing for similar projects for local development without thorough review.

The government-funded research organization also said that the incumbent government tends to pursue short-term results, obsessed with the cause for “balanced development.”

These remarks were included in the report the KDI issued on June 28, entitled “How to Promote Local Strategic Industries.”

The report mainly analyzed the problems of the strategic industry promotion project pushed for by the Ministry of Commerce, Industry, and Energy.

Sixteen Similar Local Projects-

The project is categorized into three major areas: support for local strategic industries in Daegu, Busan, Gwangju, and South Gyeongsang Province, support for local strategic industries in nine areas including Daejeon, Ulsan, and Gangwon Province, and support for new industries. By 2008, a total of 1.807 trillion won will be poured into the project.

The problem is that this project is similar to 16 other projects being promoted by other ministries including the Ministry of Information and Communication and the Ministry of Maritime Affairs and Fisheries, such as establishing locally specialized clusters and building a technology transfer center.

“Government ministries do not coordinate their projects, and local governments are applying for same projects to several relevant ministries in an effort to secure budget,” said Go Young-sun, director of KDI’s budget evaluation department.

Some of the local industry promotion projects were redirected in the middle of the course because of a lack of preparation.

Jeonnam Biotechnology Industrialization Center was established initially to promote the agricultural sector, but now it focuses on the pharmaceutical and medicine sector. Jeju High-tech Industry Development Institute also changed its main support area from the bio industry to cosmetics.

The KDI report also pointed out as problematic that the government alters strategic industries when the administration changes.

North Gyeongsang Province’s strategic industries were electronics and information devices, digital electronics, bio, and health products in 2002, and advanced materials, steel, electronics and information devices, and electronics in 2004.

Indiscriminate Promotion and Government Intervention-

MOCIE’s project has four strategic industries in every area.

“Considering that each area has different strengths, it is questionable that every area has the same number of strategic industries,” said the report.

“As the service sector has recently increased its job creation and production capacity significantly, the project is faulty in that it focused on manufacturing industries.”

Working level officials of the local development project complained about government intervention.

A survey conducted by KDI on employees of local development center showed that 80.7 percent responded that antiquated laws and regulations added more than their fair share of burden.

The report also said that the local evaluation systems lack consistency. An evaluation organization emphasizes self-reliance, and others promote public interests.

“It’s questionable whether the current evaluation system is suitable for the policy goals of the local development project,” said Go.

No More Support-

If the project’s economic value is meager, the investment turns into a loss. In this case, it is logical not to invest additionally.

“Since local residents may resist and the confidence on the government can be damaged, additional investment should be refrained once the projects are completed,” said the report. In other words, once-started projects should be finished even though money is expected to be wasted.

Experts said the current administration gives out aid without fruitful results as it is obsessed with balanced development in a short period of time.

“Relevant budgets should be consolidated to promote similar projects jointly,” said Park Jung-soo, professor in the Finance Department of Ewha Womans University.

legman@donga.com