The Act of Private Investment in Social Infrastructure was established to introduce efficiency and innovation in the private sector and attract capital from private companies. Although it is clearly inconsistent with that purpose, the public sector has recently become the largest stockholder of Incheon international railroad, Seoul belt highway, and Daegu-Busan highway. The Act on Managing a Government Office, enacted in 2007, allows private investment corporations to become a part of the public sector if they possess half of proprietary equity in the public sector.
    In this report, we reviewed the Act and the related government activities. The results showed that government did not designate private investment corporations as public institutions because they were not able to guarantee minimum operating revenue with regard to public sectors. Moreover, legislation on private infrastructure investment for phasing in private efficiency, creativity and funding has been impeded by public funds from the onset of the projects. For example, the public sector is scheduled to supply 80% of the shares in the New Bundang railroad and 77% of enterprising funding for the Suwon-Kwangmyung highway.
    Consequently, considering the purpose of private investment projects, we need to review limitations on excessive investments from the public sector in those projects and adjust them so that they prevent the public sector from pushing ahead with those projects and playing a leading role in them. Also, government should consider placing a fee on the projects in order to slash public expenditure.

Ahn Taehoon