The Ministry of Land, Infrastructure, and Transport (MOLIT) announced on Aug. 29 that it will initiate an inspection of the Social Overhead Capital (SOC) projects being undertaken in the Saemangeum region of Jeollabuk-do, or North Jeolla Province. The ministry intends to examine the necessity, feasibility, and effectiveness of nearly all SOC projects, including airports, railways, and roads, with a focus on their contribution to balanced regional development policies.
On the same day, the MOLIT established a “Saemangeum SOC Project Inspection Task Force” led by the director general of the urban policy department. The task force is set to assess the appropriateness of SOC projects through collaborations with external expert research agencies and consultations with relevant experts in the future.
Depending on the results of this inspection, there is the possibility of significant downsizing or withdrawal of related projects, including the Saemangeum International Airport. Choi Im-rak, the director general for Urban Policy of MOLIT, stated, “We will objectively assess the overall projects, including airports, railways, and other initiatives, which have been pursued according to individual initiatives under the pretext of improving the Saemangeum infrastructure environment, in order to address public suspicions regarding these projects.”
In addition to the MOLIT’s reassessment of the Saemangeum SOC projects, there is also a reassessment of the Saemangeum National Industrial Complex land use plan underway. According to the Public Procurement Service on Aug. 29, the Korea Rural Community Corporation (KRC) recently issued a contract for the “Reassessment of the Land Use Plan for the Saemangeum National Industrial Complex.”
As per the KRC, the Saemangeum National Industrial Complex Integrated Development Plan Review Committee conditionally approved the Saemangeum National Industrial Complex Integrated Development Plan at the beginning of the year. It proposed adjustments to the ratio of industrial land to accommodate increased demand from businesses and included conditions such as converting residential land due to the construction of the new airport.
Under the current government, Saemangeum has attracted investments from 31 companies totaling 6.6 trillion won (US$4.98 billion). Recently, LS Group also revealed plans to invest 1.84 trillion won in the region.
However, the problem lies in the uncertainty introduced by the controversy surrounding the Jamboree fiasco, which has increased variables in projects related to the Saemangeum area. The most significant variable is considered to be the ongoing Saemangeum International Airport project.
The Saemangeum International Airport project aims to build a small-sized airport with a 2.5-kilometer runway on the reclaimed land in Saemangeum. The total project cost is estimated at 807.7 billion won. The proposed site for the Saemangeum Airport is just 1.3 kilometers away from Gunsan Airport in North Jeolla Province, which is currently used for civilian and military purposes. While there are plans for Saemangeum International Airport to take on the role of civilian aviation previously handled by Gunsan Airport, there have been ongoing debates and controversies regarding its economic viability.
In a preliminary feasibility study conducted by the MOLIT, the Saemangeum Airport received a low benefit-cost ratio of 0.479, significantly falling short of the economic viability criterion of “1.” In fact, Gunsan Airport, located right next to the planned location, has been struggling with low passenger numbers and annual losses of approximately 3 billion won. If it had not been exempted from a preliminary feasibility study in January 2019 under the pretext of “National Balanced Development” during the Moon Jae-in administration’s tenure, the project would not have been able to proceed.
Currently, both the Board of Audit and Inspection of Korea (BAI) and many in the political arena view the Saemangeum Airport as a project that could benefit from the new “Jamboree” initiative and have announced plans for a detailed audit. The BAI recently began a specific audit of the entire Saemangeum SOC project. The audit period is set to continue until the end of September.
In the National Assembly, there are plans to scrutinize the budgets related to the Saemangeum Airport and other SOC projects through parliamentary audits and settlements. Song Eon-seok, the ruling party’s floor leader and a member of the National Assembly’s Budget and Settlement Special Committee, mentioned the budget related to the Saemangeum International Airport during a party strategy meeting on the 11th, stating, “North Jeolla Province has focused on eating up the Saemangeum SOC budget under the pretext of the Jamboree project.” He also added, “We will conduct a thorough investigation to hold those responsible accountable, starting from the budget settlement process.”
As MOLIT, which oversees SOC projects, has initiated a comprehensive review, there is a possibility of significant adjustments to existing project plans. In some quarters, there are observations that Saemangeum Airport may be repeating the error of Gimje Airport.
Starting from the mid-1990s, North Jeolla Province initiated an airport construction project in the town of Baeksan in Gimje City. By 2005, MOLIT had acquired 156 hectares of land and selected construction contractors. Out of the total project cost of 147.4 billion won, 48 billion won had been invested by that time. However, the Gimje Airport construction project was halted due to audit findings that pointed to inflated numbers about aviation demand. Subsequently, MOLIT officially canceled the project in 2008, stating that Gimje Airport was unnecessary due to low aviation demand.