The FY 2012 Program Evaluation gives an overall assessment of how well fiscal programs functioned in fiscal year 2012 in preparation for a review of the FY 2012 Settlement of Accounts by the National Assembly. This report covered 33 topics—including key fiscal issues in national finance, major national projects, and projects run by several ministries—and classified them into three volumes, i.e. multi-ministerial programs, economic and industrial programs, and social programs. In the last four years, the National Assembly Budget Office evaluated the organization of the government’s performance plans and performance report. This year, we instead focused on major fiscal programs.
According to a performance evaluation of economic and industrial projects, the national tax collection system (National Tax Service) is not fully equipped to clear off tax amounts in arrears and fails to estimate the performance of efforts to eradicate offshore tax evasion. The guarantee fund program (Financial Services Commission) is being extended primarily to top-ranking companies; there must be more equity in execution of the fund. There is a need to reduce long-term and large guarantees. A consolidated system governing policy funds must be established to prevent duplicate guarantees from being taken out from the Guarantee Fund and regional credit guarantee foundations, as this would allow financial information on guarantees and loans to be shared. Financial loan programs require more analysis on why certain initiatives continue to underperform every year, such as the housing environment improvement initiative and the buy & lease initiative of the Ministry of Land, Transport and Maritime Affairs, and other programs that run on the government’s loan program, and further investigation is needed to determine whether the terms of loan are appropriate. Given that the outcomes of financial loans are estimated not just by external measures such as higher revenues of loan beneficiaries and improved customer satisfaction, other indicators such as the loan delinquency rate, recovery rate, loss rate, and duplicate loan rate are needed.
Inaccurate pricing was used in the preliminary feasibility study of Yeongyang Dam. Instead of applying the unit price of KRW464.41/m3 for household water, which is the price of water supply, and KRW855.2/m3 for industrial water, the rate of KRW50.3/m3 should have been used to estimate the benefits of this project. In the case of the Gyeongin Arabaetgil Project, the range of construction works subject to the feasibility study was found to be inappropriate. Despite the fact that the project involves the construction of a canal, terminal, logistics complex, wharf, and roads, the feasibility study considered it as a single construction project, allowing economically unfeasible works to be executed. In the light rail transit project, the Public Procurement Service and the Korea Rail Network Authority failed to comply with the applicable laws and regulations in the ordering of light rail vehicles. It is also reported that light rail vehicles (KRW2.4 billion per vehicle for Incheon Line 2, an unmanned automatic system) are overpriced compared to the price of heavy rail transit vehicles (KRW1.3 billion per vehicle for Seoul Line 9 and KRW1.4 billion per vehicle for the Sin-Bundangseon Line, an unmanned automatic system).
Despite the fact that they receive various tax benefits, projects to attract foreign investment (Ministry of Trade, Industry & Energy) have failed to create many new jobs and the occupancy rate is still low. Compared to the expected cost of KRW362.5 billion, the projects have actually cost KRW536.8 billion, thus requiring a careful review of the appropriateness of spending. Also, few of the successful R&D efforts under component and material competitiveness enhancement programs (Ministry of Trade, Industry & Energy) were actually commercialized.
Jeong Yuhoon
According to a performance evaluation of economic and industrial projects, the national tax collection system (National Tax Service) is not fully equipped to clear off tax amounts in arrears and fails to estimate the performance of efforts to eradicate offshore tax evasion. The guarantee fund program (Financial Services Commission) is being extended primarily to top-ranking companies; there must be more equity in execution of the fund. There is a need to reduce long-term and large guarantees. A consolidated system governing policy funds must be established to prevent duplicate guarantees from being taken out from the Guarantee Fund and regional credit guarantee foundations, as this would allow financial information on guarantees and loans to be shared. Financial loan programs require more analysis on why certain initiatives continue to underperform every year, such as the housing environment improvement initiative and the buy & lease initiative of the Ministry of Land, Transport and Maritime Affairs, and other programs that run on the government’s loan program, and further investigation is needed to determine whether the terms of loan are appropriate. Given that the outcomes of financial loans are estimated not just by external measures such as higher revenues of loan beneficiaries and improved customer satisfaction, other indicators such as the loan delinquency rate, recovery rate, loss rate, and duplicate loan rate are needed.
Inaccurate pricing was used in the preliminary feasibility study of Yeongyang Dam. Instead of applying the unit price of KRW464.41/m3 for household water, which is the price of water supply, and KRW855.2/m3 for industrial water, the rate of KRW50.3/m3 should have been used to estimate the benefits of this project. In the case of the Gyeongin Arabaetgil Project, the range of construction works subject to the feasibility study was found to be inappropriate. Despite the fact that the project involves the construction of a canal, terminal, logistics complex, wharf, and roads, the feasibility study considered it as a single construction project, allowing economically unfeasible works to be executed. In the light rail transit project, the Public Procurement Service and the Korea Rail Network Authority failed to comply with the applicable laws and regulations in the ordering of light rail vehicles. It is also reported that light rail vehicles (KRW2.4 billion per vehicle for Incheon Line 2, an unmanned automatic system) are overpriced compared to the price of heavy rail transit vehicles (KRW1.3 billion per vehicle for Seoul Line 9 and KRW1.4 billion per vehicle for the Sin-Bundangseon Line, an unmanned automatic system).
Despite the fact that they receive various tax benefits, projects to attract foreign investment (Ministry of Trade, Industry & Energy) have failed to create many new jobs and the occupancy rate is still low. Compared to the expected cost of KRW362.5 billion, the projects have actually cost KRW536.8 billion, thus requiring a careful review of the appropriateness of spending. Also, few of the successful R&D efforts under component and material competitiveness enhancement programs (Ministry of Trade, Industry & Energy) were actually commercialized.
Jeong Yuhoon