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Enterprise Cities Are “Irresponsible Cities”

Posted June. 23, 2007 04:33,   


Taean Enterprise City, which will be constructed starting in September, is considered a successful model among six enterprise cites across the nation, thanks to rapid development progress. However, Hyundai Construction, which is in charge of the construction, is now in trouble as the city could remain a “remote inland” even after the construction is completed because it has no roads connecting it to other regions. So far, construction companies naturally think that the government will build infrastructure for roads or water supply and drainage, as reflected in the act of regional balanced development.

Yet, the government is sitting on the sidelines as the work is about to begin. The ministry in charge of the budget said that, “It is not right to benefit certain companies.” Such discord between government ministries is a stumbling block to the construction of enterprise cities which the current government touts one of its key achievements for balanced regional development. Even, now there is skepticism among businesses that “enterprise cities could stymie enterprises.”

Without transport infrastructure, enterprise cities will be useless. However, it is not economically viable for companies to shoulder the entire cost. A representative of a construction company responsible for the project harshly criticized the government, saying, “The government promised to invest in building infrastructure for new towns in the Seoul Metropolitan area, which have no clear effect as alternative cities for Kangnam, the richest region in Seoul.” The government chose underdeveloped regions as enterprise cities in the name of balanced regional development, but the whole burden is laid on companies.”

As complaints from construction companies increase, the government has promised to decide how much the government, local governments, and enterprises will pay, and have created a taskforce under the Office of the Prime Minister. Yet, the construction industry views the promises as just a way to avoid immediate trouble. The industry also complained that some local governments are making absurd demands that construction companies agree to build their pet business projects such as special zones, in exchange for their cooperation.

Securing sites is also a problem. According to a representative from GNP lawmaker Kim Jae-kyeong, official land prices of the six cities and counties rose 13 -14% last year from 2005 when the candidates were selected. However, real prices exceed the level. A real estate agency in Ansung, Jellabukdo, which was picked as an enterprise city in 2005, said that, “Before the decision, this region’s farmland was traded for between 50,000 and 100,000 won, but now the price has doubled to 150,000-200,000 won. Also, transfer taxes, which have taken effect this year, add to the burden of companies.”

That is because landowners are not selling their land because of the tax burden. Moreover, problems related to schools and hospitals, which are necessary for creating cities, are not addressed. While enterprises insist that allowing profit-making companies to do business in enterprise cities is essential to attract corporations and the population of the Seoul metropolitan area, and to create an environment similar to the level of the area, the government is not being cooperative.

Wonju Enterprise City in Kangwon is in relatively good condition as it is closer to Seoul and is not under the direct regulations of the area, but the future is not that bright regardless. That is because other cities plan to create high-tech medical complexes, which were the purpose of the city. For example, Songdo new town, Osong new town and the multifunctional administrative city also intend to build similar complexes, and Chungju Enterprise City, which is 30 minutes away from Wonju by car, also plans to set up a cutting-edge research complex.

A representative of the Wonju Enterprise City complained that, “Careful choices and focused investment is needed to create enterprise cities, but the government acts the opposite way. They designated enterprise cites here and there. That could increase competition among enterprise cities.” As for Mooan Enterprise City, approval for development was made as late as April due to delayed agreements among governmental ministries, and companies are having trouble coming up with concrete business plans as a result.

An official said that, “While time passes and budget money is being spent, companies face difficulty in deciding on blueprints because projects such as high-tech industry complexes and health complexes presented by the government are not clear.” Jung Bong-ho from the Federation of Korean Industries said that, “I do not believe that all six model cities will be successful because of several limitations in locations, budget, and ideas. So, the next government needs to review the whole project.”