[Exclusive] Government to Increase Private Capital Investment in National Strategic Projects... Revising Preliminary Feasibility Study

Announcement of This Month's Strategy to Promote Private Investment Projects
Plan to Expand by Identifying Additional Private Investment Project Targets
Detailing Measures and Reducing Preliminary Feasibility Study Costs

The government is set to officially begin the process of converting fiscal investment projects into private investment projects. Not only simple infrastructure facilities but also major national policy projects included in the ‘New Growth 4.0 Strategy’ will be actively promoted through private investment. The excessively long review periods will be shortened, and review costs will also be reduced.

According to a comprehensive report by Asia Economy on the 16th, the Ministry of Economy and Finance will announce the ‘Private Investment Project Revitalization Promotion Strategy’ containing these measures by the end of this month. The core of this strategy is to institutionalize the private investment project revitalization plan, which was disclosed last June, by establishing specific criteria and making it an official regulation.

According to the promotion strategy, the government plans to discover additional targets for private investment projects and expand them beyond the current scope. In particular, it is reviewing whether there are more projects within the New Growth 4.0 Strategy that can be implemented through private investment. Last June, it was announced that private investment projects, which had been focused on roads and railways, would be diversified into living, aging, and infrastructure sectors. Going further, this means that national strategic projects involving large-scale budgets will also be promoted through private investment.

Additionally, a ‘Private Investment Project Selection Model’ will be created and disclosed. Since the government announced the private investment revitalization plan, the Ministry of Economy and Finance has been flooded with inquiries about whether certain facilities qualify as private investment projects. Therefore, the ministry has decided to publicly announce which projects can be selected as private investment projects to increase predictability for private sector operators. Companies wishing to participate in private investment will be able to independently identify facilities with high potential and prepare related projects in advance.

The strategy also includes measures to reduce costs used in preliminary feasibility studies. Typically, investigation costs for government-led fiscal projects amount to several hundred million won, but private investment projects cost tens of billions of won. The Ministry of Economy and Finance believes that the appropriateness of private investment projects can be sufficiently verified even with reduced costs, and plans to lower the cost scale to the level of fiscal projects.

Furthermore, the method of converting fiscal projects into private investment projects will be clarified. Currently, facilities such as roads must be reviewed for private investment feasibility, but it is not specified who should conduct this review or by when. By clarifying this, projects that have mainly been carried out through fiscal investment will be actively promoted to convert into private investment projects.

The period required for selecting private investment projects will also be shortened to a degree that project operators can feel. Until now, private investment projects had a process to review whether they are more advantageous than pursuing the project as a fiscal project after completing preliminary feasibility studies. To shorten the time, the government plans to expand the role of specialized institutions responsible for the review.