Will a Public Audit Be Conducted on the Sale Conversion of Foreign Tenant Apartments in Songdo, Incheon?

Incheon Peace Welfare Solidarity "Incheon City's Investigation of Favoritism Allegations Inadequate, Request for Public Audit"

Panoramic view of Songdo International City, Incheon [Photo by Incheon Free Economic Zone Authority]

[Asia Economy Reporter Park Hyesook] Attention is focused on whether the controversy surrounding the conversion of foreigner rental apartments in Songdo, Incheon, into general sales will expand from the Incheon City special audit to a public audit by the Board of Audit and Inspection.

The civic group Incheon Peace Welfare Solidarity announced on the 18th, "We have filed a public audit request with the Board of Audit and Inspection, dissatisfied with the investigation results by Incheon City regarding the Incheon Free Economic Zone Authority's approval of converting Songdo foreigner rental apartments into general sales."

Incheon Peace Welfare Solidarity stated, "We requested a special audit from Incheon City last July, but recently received a reply stating, 'No particular issues were found upon review.' Such a judgment by the city can only be understood as siding with large corporations following the preferential treatment administration by the Incheon Free Economic Zone Authority."

The group has raised suspicions that the Incheon Free Economic Zone Authority converted Songdo foreigner-only rental apartments into general sales without adhering to regulations.

According to the Special Act on the Designation and Operation of Free Economic Zones (Free Economic Zone Act) enacted in 2009, project implementers were required to supply foreigner-only rental apartments within 1-10% of the total housing supply to improve living conditions for foreigners. Accordingly, the developer NSIC (Songdo International City Development LLC) planned 89 foreigner-only rental apartment units in 'Songdo The Sharp Green Walk.'

Although the foreigner-only rental apartment clause was removed from the Free Economic Zone Act in 2016, the 89 units remained under a supplementary provision stating that projects approved before the law's amendment must comply with the foreigner rental obligation.

Subsequently, the Free Economic Zone Act was amended in 2018 to allow developers to convert foreigner-only rental housing units that had not been rented for over one year after the rental announcement into general sales (Supplementary Article 3).

Accordingly, NSIC applied to the Incheon Free Economic Zone Authority for conversion of the 89 units in 'Songdo The Sharp Green Walk' into general sales, received approval, and announced general sales in July this year. The issue lies in whether the Economic Zone Authority verified the one-year announcement period before approving the general sales, which remains unclear.

Incheon Peace Welfare Solidarity claimed, "After NSIC announced the rental on December 14, 2018, POSCO Construction posted a notice stating, 'This real estate is occupied and managed by POSCO Construction exercising a lien to secure construction cost claims' until June 2020, effectively exercising a lien," adding, "POSCO Construction effectively managed the security devices of the foreigner rental apartments during this period."

They continued, "Excluding the lien period, the rental announcement period until mid-June when the Incheon Free Economic Zone Authority approved the general sales is less than one month. Nevertheless, the Economic Zone Authority judged that the rental announcement period exceeded one year, and Incheon City accepted POSCO Construction's explanation that the lien was not substantive, concluding there was no problem," they pointed out.

The group stated, "We view the Economic Zone Authority's administration as preferential treatment toward the large corporation POSCO Construction and have filed a public audit request with the Board of Audit and Inspection," adding, "We hope a thorough audit will ensure fair administration."

A public audit request is a system that allows filing an audit when a public institution significantly harms the public interest through illegal or improper business handling. The Board of Audit and Inspection decides whether to conduct an audit after consulting the Public Audit Request Advisory Committee.