[Column] Where Did the Government's 'Bold Move' to Stop SOC Go?

President Moon Jae-in speaking at the 'Balanced Development Achievements and Ultra-wide Area Cooperation Support Strategy Report' event held at the Government Sejong Convention Center on the afternoon of the 14th. (Photo by Yonhap News)

[Sejong=Asia Economy Reporter Moon Chaeseok] The government announced a super-regional support strategy and decided to relax the preliminary feasibility study (PFS) criteria for social overhead capital (SOC) projects to a total project cost of 100 billion KRW and national financial support of 50 billion KRW or more. This raises the original PFS criteria from 50 billion KRW and 30 billion KRW, effectively signaling an expansion of SOC projects.

The government made this decision as part of strengthening balanced regional development, but compared to the initial stance announced by the Moon Jae-in administration, it is hard to hide a sense of bitterness. The Moon administration emphasized avoiding construction-oriented policies at the beginning of its term. To this end, the SOC-related budget was cut by as much as 20% in the 2018 budget compared to 2017.

However, after job disasters occurred due to income-led growth policies, the government quietly began increasing the SOC budget. Construction projects resumed across various local areas under the name of living SOC. The related budget is also increasing, with the SOC budget expected to reach 27.5 trillion KRW next year, an increase of 1.5 trillion KRW from this year.

The problem is that in the process of shifting the SOC project policy from reduction to expansion, the government may have left room to loosen the fiscal soundness control system. The weaker the PFS system becomes, the more likely it is that large-scale development projects funded by taxpayers' money will proceed without significant 'brakes.'

Why did the government choose to loosen the strictly applied PFS system now? The official reason is to improve the efficiency of local government SOC projects and reduce polarization with the metropolitan area. However, considering that the presidential election is scheduled for next year, political reasons cannot be ruled out.

If the government changes principles and systems, it should have properly explained this to the public. It should also have prepared alternatives to maintain fiscal soundness. However, considering the government's failure to present a proper plan for restructuring cash-based welfare budgets, public skepticism about the government's announcement to promote nationwide SOC projects just before the presidential election will likely grow.