Local governments hasten convention center construction despite deficits

It has come to light that 10 out of 14 convention centers, constructed and managed by local governments outside Seoul, are grappling with annual deficits amounting to several billion won. Despite being funded by over 100 billion won of taxpayers' money, most centers fail to cover operational expenses, with utilization rates hovering below 60% due to insufficient demand. Instead of fulfilling their intended purpose of nurturing the MICE (Meeting, Incentive, Convention, and Exhibition) industry, they are often rented out for private events such as birthday parties, buffets, and weddings, leading to egregious wastage.

The Ulsan Exhibition and Convention Center, which was inaugurated in 2021 for 170 billion won, registered a meager operating rate of 30%, resulting in an accumulated deficit exceeding 5 billion won. Securing corporate events proved challenging, given the well-established convention centers in neighboring cities such as Busan and Gyeongju. In response, Ulsan City reportedly amended its regulations to offset the shortfall by leasing the center to a children's cafe. Similarly, the Changwon Convention Center, constructed at a cost exceeding 120 billion won, primarily serves as a venue for 70th birthday celebrations and receptions. This has drawn criticism from local businesses, who argue that it infringes on their commercial rights and represents a misuse of taxpayers' funds.

Despite this, local governments are rushing to expand or build new convention centers. Gwangju Kim Dae-jung Convention Center was planning to spend 140 billion won to build a second exhibition hall, but it has been put on hold due to increased construction costs. Jeonju City, North Jeolla Province, is spending 300 billion won, and Pohang City, North Gyeongsang Province, is spending 216.6 billion won to build a new building. Some local governments have ignored concerns about lack of demand and overlapping investment and are now demanding that they stop building elsewhere, saying they should not compete to cut corners.

Many local projects are promoted under the pretext of ‘vitalizing the local economy.’ Still, in many cases, they are to show off and accumulate achievements for local government heads. Businesses are promoted by inflating demand forecasts with rosy outlooks, but few people take responsibility for the results. When a local government succeeds, similar projects spread widely, blindly copying the project. Cable cars are in about 40 locations across the country, but more than 90% are in deficit. Suspension bridges and monorails abound here and there, and there are many cases where landmarks and structures that claim to be the first, largest, and unique have been reduced to scrap metal.

With the national debt surpassing 1,000 trillion won and tax revenues dwindling due to the low fertility rate and aging population, it is imperative that we put an end to such squandering of taxpayer funds. A robust system must be implemented to enable experts and local residents to oversee the expenditure of local government budgets. Additionally, the central government must thoroughly assess the viability of projects and facilitate coordination among local authorities to avert excessive or redundant investments. Only by staunching the hemorrhage of taxpayer money can we ensure that it is allocated where it is truly needed.