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Report: 3-City Merger to Produce $660 Mln in Benefits

Posted October. 08, 2009 07:37,   


The cities of Asan and Cheonan in South Chungcheong Province have two stadiums within 14.5 kilometers of each other. A drive of about 25 minutes is all that separates both facilities, which were built by two separate administrative units.

Cheonan built its 26,000-seat stadium in 2001 while Asan finished its 20,000-seat facility last year. The total construction costs of both stadiums were 197.1 billion won (168 million U.S. dollars), an amount that exceeds the annual budgets of the two cities by 10 percent. Both cities now have huge deficits due to lack of maintenance and management costs.

A government analysis released yesterday said mergers of provincial cities and administrative units promise huge economic benefits, including budget savings, by removing overlapping investments. The report focused on cumulative incentives and benefits in areas to possibly see mergers of administrative units.

Rep. Lee Bum-rae of the ruling Grand National Party acquired the report from the Public Administration and Security Ministry and released it yesterday at the parliamentary committee on public administration and security.

This is the first time for ministry statistics on the economic benefits and financial gains expected from administrative unit mergers to be made public.

The report said the proposal to merge the cities of Masan, Changwon and Jinhae in South Gyeongsang Province could generate 772.2 billion won (660 million dollars) in economic benefits over the next 10 years. This is the largest benefit expected from the potential mergers surveyed.

The three-city merger is expected to improve resident services to the tune of 416.6 billion won (356 million dollars) through higher welfare allowances and cuts in user fees. Financial incentives worth 236.9 billion won (202 million dollars) are expected from the central government, as well as cuts in expenses worth 118.7 billion won (101 million dollars).

Under a bill on helping self-initiated mergers of administrative units, the central government will offer financial benefits for areas that voluntarily merge, including part of its tax income for a 10-year period.

A proposed merger among the cities of Yeosu, Suncheon and Gwangyang in South Jeolla Province is expected to generate 613.3 billion won (524 million dollars) in economic benefits. Another involving Seongnam, Hanam and Gwangju in Gyeonggi Province could net gains worth 586.5 billion won (501 million dollars).

A union between Jeonju and Wanju in North Jeolla Province is expected to generate 479.8 billion won (410 million dollars) in benefits; Cheongju and Cheongwon County in North Chungcheong Province 448 billion won (383 million dollars); Mokpo and the counties of Muan and Shinan in South Jeolla Province 429.1 billion won (367 million dollars); and Uijeongbu, Dongducheon and Yangju in Gyeonggi Province 374 billion won (320 million dollars).

A merger between the Jung and Dong wards of Busan had the smallest benefit projection at 52.2 billion won (45 million dollars).

If the 21 administrative units discussing mergers are eventually consolidated into 10, 4.17 trillion won (3.6 billion dollars) in economic gains is expected, the report said.

Rep. Lee said, “Since the Public Administration and Security Ministry announced its plan to extend financial incentives to regions that merge with each other, the (central) government must faithfully implement the plan after mergers occur.”

“The (central) government must keep in mind that if financial assistance is not provided seamlessly as promised, this could serve as a new cause for regional confrontation.”