Jeonbuk Development Corporation, Highest Selling and Administrative Expense Ratio Nationwide

Jeonbuk Provincial Councilor Lee Byung-do Criticizes Seriousness of Construction Financial Situation
"Excessive Expenditure Regardless of Project Volume... Need to Discover Profit-Making Projects"

Lee Byung-do, a member of the Jeonbuk Special Self-Governing Province Council (Jeonju 6), criticized the serious financial situation of Jeonbuk Development Corporation during the administrative affairs audit on the 18th.

According to Assemblyman Lee, the financial results of Jeonbuk Development Corporation for last year showed an operating profit margin of -8.99%, selling and administrative expenses at 34.79%, and cost of goods sold at 74.20%. The negative operating profit margin was uniquely recorded by Jeonbuk Development Corporation, the lowest among 15 urban development corporations nationwide. In contrast, selling and administrative expenses were the highest in the country. By region, the figures were ▲Chungnam 5.13% ▲Gyeonggi 4.74% ▲Jeonnam 12.06% ▲Gangwon 5.50%.

The only negative operating profit margin recorded nationwide last year was by 'Jeonbuk Development Corporation'. Provided by the office of Lee Byung-do, Jeonbuk Provincial Assembly.

On the day, Choi Jeong-ho, president of Jeonbuk Development Corporation, responded, "Of the total selling and administrative expenses of 27.8 billion KRW, 17.1 billion KRW is related to rental housing, accounting for 61.5% of the total," adding, "The proportion of selling and administrative expenses increased because we have been conducting many rental housing projects to improve residents' housing welfare, but once the repayment of the National Housing Fund loan and the conversion to sale are completed, the costs will be recovered."

In response, Assemblyman Lee stated, "If the selling and administrative expenses related to rental housing are high, resulting in overall high expenditures, we need to examine whether the development corporation has undertaken too many rental housing projects relative to its capacity," and insisted, "A careful review of the overall business areas is necessary."

He continued, "To maintain the rental housing projects as they are now, it is necessary to discover profit-making projects as well as public interest projects to cover the deficits," and criticized, "Currently, the small-scale land development and land readjustment methods mainly conducted by the development corporation are far from being profit-making businesses."

Assemblyman Lee also pointed out, "Even the Saemangeum floating solar power generation project, which was confidently claimed to generate continuous profits, is stagnant," and added, "The Saemangeum tourism complex project, which has invested over 50 billion KRW, has been underway since 2008, but due to reclamation costs and the resulting opportunity cost losses, there has been no progress in the project even after 16 years."