Heavy Opposition Likely to Halt Roh’s Balanced Development Project

The Roh administration released its classification of localities on September 19 as part of its balanced nationwide development project. The plan classifies the localities involved into four preference groups based on the level of each local government’s economic development.

Roh, however, has backtracked on his original aim and will overhaul the plan in response to local government allegations of regional discrimination.

A senior Commerce Ministry official confirmed yesterday that, “We plan to submit a bill to the National Assembly to amend the Balanced Nationwide Development Act. Prior to that, we will review the classification process and its criteria with other agencies.” Currently in dispute is the issue of which local governments will get corporate tax deductions and how much they will be.

Roh Administration to Overhaul the Classifications–

Roh’s second-phase plan divides 234 cities, counties, and districts around the country into four categories: underdeveloped (first preference group), stagnant, developing, and developed (last preference group). Different corporate tax rates apply to corporate entities in different cities.

The plan allegedly discriminates corporations in the Seoul metropolitan area and some other big cities. The affected local governments strongly oppose the bill, and some Roh administration officials are not optimistic about passing the bill in the National Assembly.

If Roh fails to get the bill through Congress, it will be scrapped because the next congressional term will be convened under a new administration.

The Roh administration plans to introduce the bill to the congressional Commerce Committee later this week. It will face strong opposition from representatives from affected districts and is likely to be debated over for a long time.

If modified, the plan will probably increase the benefits for developing and developed localities, and upgrade some areas in these two categories to “stagnant.”

Either way, the size of the tax deductions will increase, and will gnaw at Korea’s budget healthiness. In addition, the benefits for the upper two categories are unlikely to be reduced, since heavy criticism and opposition would be almost certain to follow.

A senior official confessed, “Many people don’t understand the plan. This is very disturbing to us. We will keep explaining our plan to the lawmakers and local governments.”

Localities in Two Lower Preference Groups Promise to Halt Passage of Bill–

The strongest opposition comes from the local governments in the lower two preference groups.

The Gyeonggi Provincial Government confirmed yesterday that it would organize a 50-member emergency body consisting of local politicians, business leaders, and civil rights groups. It said the group would visit central government agencies to protest against the plan.

Numerous city and county governments in the province brand the plan as a plan aimed at killing their local economies.

Opposing voices are also heard from the regions lying outside the Seoul metropolitan area.

Officials from Umsung County in North Chungcheong Province voiced its dissatisfaction with the plan, saying that it would tip the economic balance in favor of neighboring areas.

A county senior official explained, “The plan was discriminatory and we appealed to the central government. We demanded that they disclose the basis of our classification. But it has not responded yet.”

The Busan Chamber of Commerce and Industry railed against the plan, saying, “We have 15 districts, and each of them has a different economic reality. But they are putting them all in the developing area category. It’s not the central government, but the local government that should take charge of classification. We, not they, know how things operate in this region.”

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