Almost two dozen infrastructure projects pursued by Korea’s central and regional governments and state-run enterprises risk wasting taxpayers’ money due to lack of economic feasibility.
The National Assembly Budget Office’s data presented to the Strategy and Finance Committee showed that 23 ongoing infra projects carried out since 2003 fell well short of business potential measured by the standard evaluation method, or the so-called analytic hierarchy process. The data was based on studies by the Korea Development Institute, a state-run think tank of the Ministry of Strategy and Finance.
Preliminary feasibility studies of the projects indicated that their costs would outweigh social gains, or they would be unable to generate returns for the government and the public.
The 23 projects have so far been injected with state funds of some 330 billion won, of 11.2 trillion won in total, despite failing to meet the AHP assessment of above 0.5, or a benefit-cost ratio of above 1.
All infrastructure projects whose total costs exceed 50 billion won and new projects that need to receive state support of more than 30 billion won are required to be evaluated and satisfy the standard expectancy level before breaking ground for construction.
The Strategy and Finance Committee said that the governments would need to inject about 11 trillion won into the projects with no business potential should they further proceed.
For instance, a feasibility study for a highway project linking Andong City, North Gyeongsang Province and Yeongdeok County, North Gyeongsang Province, and a railway between Indeongwon in Anyang City, Gyeonngi Province and Byeongjeom in Hwaseong City, Gyeonngi Province found that each would need state funds of some 2 trillion won despite failing to meet evaluation standards.
