[Exclusive] Will the 'Preliminary Feasibility Study Exemption Criteria' Be Eased for the First Time in 24 Years?... Today, the Ministry of Economy and Finance Subcommittee Decision

Agenda Submitted at the Subcommittee of the Budget Committee on the 11th
Total Project Cost 100 Billion KRW, Financial Support Over 50 Billion KRW
Criticism of Expanding Populist Projects Ahead of the General Election

The criteria for exemption from preliminary feasibility studies (PFS), which assess the viability of new public investment projects, are expected to be significantly relaxed. For the first time in 24 years since the PFS system was introduced, the exemption threshold will be raised from the current total project cost of 50 billion KRW to 100 billion KRW, and the national financial support threshold will be increased from 30 billion KRW to 50 billion KRW, following an agreement between the ruling and opposition parties.

On the morning of the 11th, the National Assembly's Planning and Finance Committee will approve four agenda items, including a partial amendment bill to the National Finance Act that adjusts the criteria for projects subject to PFS, at the Finance Subcommittee meeting. A committee official stated, "Since there are many disagreements on the State Affairs Act and fiscal rules, those will be discussed later, and this subcommittee will focus on reviewing non-controversial bills," adding, "It is highly likely that the bill will pass based on the previously agreed alternative in the subcommittee."

Earlier, in December last year, the Finance Subcommittee of the Planning and Finance Committee tentatively agreed on the government's proposal to raise the PFS criteria while reviewing eight amendment bills to the National Finance Act submitted by lawmakers from both parties. The government proposal stipulates that PFS will be conducted for projects with a total cost of 100 billion KRW or more and national financial support of 50 billion KRW or more, targeting social overhead capital (SOC) and national research and development (R&D) projects. At the meeting, Deputy Minister Bang Gi-seon of the Ministry of Economy and Finance explained, "For projects other than SOC and R&D, we have prepared an alternative to maintain the current criteria of national financial support of 50 billion KRW or more and 30 billion KRW or more, respectively."

The PFS system requires the Minister of Economy and Finance to conduct a preliminary feasibility study for new projects with a total cost of 50 billion KRW or more and national financial support of 30 billion KRW or more. The projects subject to PFS include construction works, intelligent informatization projects, national R&D projects, and new projects in social welfare, health, education, labor, culture and tourism, environment, etc., that involve financial expenditures of 50 billion KRW or more based on the mid-term project plan.

This adjustment to the PFS exemption amount will be the first revision since its introduction in 1999.

Some critics argue that the ruling and opposition parties are pushing this through to pass regionally favorable industries ahead of the general election in a year. A staff member from a Planning and Finance Committee member's office commented, "Lawmakers have submitted these bills a long time ago, but it seems coincidental that they are trying to process them just before the general election," adding, "It even seems like they are postponing the controversial fiscal rules bill to prioritize raising the PFS exemption limit."