BDI Publishes Policy Focus on Active Utilization of Public Offering Type Private Investment Projects for Public Facility Provision and Regional Development

Attracting Private Creativity and Investment to Expand Public Facilities in Busan
Reducing Fiscal Burden and Enhancing Urban Competitiveness

The Busan Institute of Urban Affairs (President Shin Hyunseok) has published a BDI Policy Focus proposing the active utilization of the 'Target Site Public Offering Type Private Investment Project' (public offering type private investment project) for regional development and the provision of public facilities.

This report highlights the need for a new private investment approach that enables efficient public facility development while reducing the burden of fiscal investment.

According to the report, the public offering type private investment project is a method in which the competent authority first presents the project site in the form of a public offering, and the private sector proposes a preliminary business plan. In October 2024, the Ministry of Economy and Finance established the legal foundation for this approach by revising the Basic Plan for Private Investment Projects.

In particular, the case in which the Seoul Metropolitan Government took the lead by publicly offering three target sites and successfully selecting outstanding proposers demonstrated that even community SOC facilities, which were previously promoted as fiscal investment projects, can be converted to private investment methods.

The report pointed out that the public offering type private investment project can attract private sector participation even without a cap on the total project cost. It suggested that this approach could be highly effective if applied to projects in Busan that are facing difficulties due to large-scale financing issues, as well as to aging public facilities that are more than 20 years old.

For this purpose, the report presented the following three key strategies.

First, it is necessary to establish a strategy for discovering strategic target sites. A comprehensive survey should be conducted focusing on idle land, vacant lots, and aging public facilities in Busan, and sites suitable for revenue-type private investment projects (BTO) should be prioritized.

Second, by establishing a systematic public offering plan, the city should clearly define development direction, required facilities, implementation methods, and public interest requirements in advance through public offering guidelines, so as to balance private sector autonomy with public expectations.

Third, an efficient implementation system should be established by designating a general management department and collaborating with the Busan Public Investment Management Center, a specialized agency for private investment projects, to build an integrated system from the formulation of the public offering plan to the evaluation of proposals, ensuring consistency and efficiency in project implementation.

The report suggested the park parking lot within Geumgang Park and the area of Busan Sports Complex as promising candidate sites for the public offering type private investment project. The Geumgang Park parking lot site is currently a vacant lot and can be developed as a complex facility including parking, while the Busan Sports Complex can be redeveloped as a large-scale complex facility, including the reconstruction of existing sports facilities, through a revenue-type private investment project (BTO).

Jung Changki, Senior Research Fellow at the Busan Institute of Urban Affairs, stated, "Through the ongoing 'Study on the Utilization of Target Site Public Offering Type Private Investment Projects,' which is currently being discussed with the Busan Metropolitan Government, we are reviewing ways to contribute to policy institutionalization and actively support the city's practical implementation." He added, "The public offering type private investment project approach will not only reduce the fiscal burden but also serve as an alternative to enhance the quality of life for Busan citizens by promoting regional development and providing pleasant public facilities."