Resumption of Delayed Approval Reviews Due to COVID-19, Accelerating Large-Scale Development Projects Including the Former Miworld Site

- Busan Chamber of Commerce and Industry and Busan City Hold Emergency Meeting... Listening to Construction Industry's Difficulties Related to Permits and Regulations
- TI Busan Co., Ltd., Developer of the 'Old Miworld' Site Ahead of This Month's Landscape Review, "If Administrative Procedures Proceed Quickly, Time and Costs Can Be Saved, Accelerating Economic Effects Such as Job Creation"

Aerial view of the former Mi World site in Millak-dong, Suyeong-gu, Busan

In the Busan region, there are ongoing calls from the construction industry and local economic sectors for local governments, including Busan City, to swiftly proceed with the building permit reviews delayed due to the COVID-19 pandemic, abolish regulations in the construction sector, and actively support various development projects to revitalize the regional economy.

On the 5th, the Busan Chamber of Commerce and Industry (Chairman Heo Yong-do) and Busan City held an emergency meeting to listen to the difficulties faced by the local construction industry, which is in crisis due to the severe downturn in the construction market, and to seek ways to overcome them. This was the second meeting following an emergency breakfast meeting held at the end of April between local business leaders and Acting Mayor Byun Sung-wan of Busan.

At the first meeting, businesspeople from the local construction industry requested the abolition of regulations in the construction sector, promotion of private capital investment, and simplification of the permit process. At this meeting as well, they cited cases where construction companies complied with permit-related laws but faced difficulties in project implementation due to delayed administrative processing, urging the relevant authorities for prompt administrative action.

Additionally, they proposed to Busan City active support for private park and amusement area development projects, revitalization of SOC private investment projects, active promotion of private rental housing projects, minimization of negotiation periods for projects subject to prior negotiations, and early execution of facility construction and finances.

In response, Acting Mayor Byun Sung-wan said, “We will strive to accommodate the industry's requests as much as possible,” adding, “Since the construction industry is a pillar of the local economy, we will immediately reflect the voices raised today in city administration and actively support the revitalization of the construction market.”

The response from Acting Mayor Byun was welcomed by the local construction industry and developers.

A representative of TI Busan Co., Ltd., the developer pushing forward the project on the former Miworld site in Minrak-dong, Suyeong-gu, Busan, said, “As the developer selected for a project that had been stalled for over ten years, we were eager to start work, but the landscape review schedule was delayed by three months due to COVID-19,” adding, “We expect not only this month’s scheduled landscape review but also upcoming building permit reviews and other permit schedules to proceed as quickly as possible.”

In fact, the former Miworld site development project had a landscape review scheduled for early March to obtain permits such as urban planning facility implementation plan approval after Busan City newly designated the project developer in February this year. However, due to the impact of COVID-19, the review committee meetings, which require experts to gather in one place, were delayed.

As permit schedules are delayed, project financing (PF)?a financial technique where loans are granted based on project feasibility without collateral and raised by recruiting investors (lenders) during the permit process?is also delayed, increasing the burden on developers. PF loans, which require large upfront capital such as construction costs, are the biggest hurdle to successful real estate development, and the gate to PF loans from financial institutions has become even narrower.

A TI Busan representative said, “If administrative procedures such as permit reviews proceed quickly, the developer can save time and costs accordingly, and the local community can realize economic effects such as job creation sooner,” adding, “Complaints from nearby residents and merchants about the project site being left in a derelict state and the surrounding area becoming a slum will also be resolved more quickly.”

Heo Yong-do, chairman of the Busan Chamber of Commerce and Industry, which hosted the meeting, also said, “In the current situation where difficulties are increasing due to strengthened construction regulations, if the city provides active administrative support, construction projects can serve as a catalyst for early revitalization of the local economy.”

The voices calling for public and private sectors to come together and cooperate on construction development projects, which will serve as stepping stones to overcome the stagnant economy, are growing louder day by day.