[Asia Economy Reporter Kwangho Lee] On the 22nd, Park Hong-geun, a member of the National Assembly's Planning and Finance Committee from the Democratic Party of Korea, proposed a solution to the increasing problem of fraudulent claims of government subsidies.
According to data from the Ministry of Strategy and Finance, the national treasury subsidies in 2020 amounted to 86.7 trillion KRW. Of this, about 59%, or 51.2 trillion KRW, were social welfare subsidies, while agricultural, forestry, fisheries, and environmental subsidies reached 9.9 trillion KRW and 6.1 trillion KRW respectively.
The number of subsidy projects allocated by central government ministries is substantial, with 57,000 projects under the Ministry of Health and Welfare, 26,000 projects under the Ministry of Culture, Sports and Tourism, totaling up to 200,000 projects.
The number of detected fraudulent subsidy claims has also steadily increased, rising from 66,000 cases in 2017 to 206,000 cases in 2019, a 3.1-fold increase.
The amount decided for recovery likewise increased from 39 billion KRW in 2017 to 86.3 billion KRW in 2019, a 2.2-fold rise.
Park proposed strengthening the recovery of non-welfare subsidies that require settlement obligations (submission of performance or settlement reports), excluding welfare subsidies and capital subsidies used for construction.
Park estimated that non-welfare subsidies amount to approximately 27.4 trillion KRW, calculated by combining the non-welfare budget portion of local government current subsidies and the entire amount of private current subsidies.
As a concrete implementation plan, he suggested amending the "Act on the Management of Subsidies" to clearly classify current subsidies into welfare and non-welfare subsidies for management purposes, and to introduce a provision for securing claims when paying non-welfare subsidies.
Park stated, "I plan to propose a bill to ensure that subsidies funded by the people's taxes are used appropriately and that fraudulent claims can be actively recovered."
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