National industrial complexes have contributed greatly to Korea's economic growth and industrialization as core hubs of national basic industries and strategic industries. As of December 2013, 41 national industrial complexes accounted for more than 45% of production, 25% of employment, and 50% of exports of the overall manufacturing industries in Korea. However, national industrial complexes are now faced with coordination issues with industrial complexes that rapidly increased in the late 2000s and the aging of the existing national industrial complexes. This report divided national industrial complex projects into a development and a management phase and evaluated each phase. The following were the evaluation points in the development phase of national industrial complexes.
First, with the delay of the development of national industrial complexes designated altogether in 2009, land compensation costs as well as total project costs increased. While the number of national industrial complexes increased by nine over the 20 years from 1994 to 2003, there were five new complexes designated in 2009 alone. Among those, only three complexes started construction and project periods were also extended by up to six years. As a result, land compensation costs increased by 20.3 billion won to 130.7 billion won for each complex in consideration of land price fluctuations and the producer price index as appraisals and assessments were newly conducted every year due to the change of the base time point because of the prolonged period from the date of appointment notice to the start of compensation or delays in compensation after the start of compensation.
Second, there were on-going restrictions of the property rights of landowners in an inconsistent and unreasonable way in the development phases of national industrial complexes. As the「Act on Special Cases Concerning the Simplification of Authorization and Permission Procedures for Industrial Complexes」was applied to large-scale national industrial complexes designated in 2008~2009, procedures to guarantee the participation of landowners close to industrial complexes in development planning and to reflect their opinions were weakened. Among development restriction areas, lands that fell under national industrial complexes were eligible for future compensation and expropriation but as for other lands, only property rights were restricted for a long time without separate compensation. Moreover, the intent of the applicable provisions to apply development restrictions for the shortest achievable period was not followed.
Third, while the use of the "annual average demand area of industrial facility land within industrial complexes by city and province" published by the Ministry of Land, Infrastructure and Transport increased, there was a wide gap between it and the actual areas sold due to limitations in estimation methods of demand area, irregular procedures of change, and a limited scope of investigation.
Fourth, while the total amount adjustment by the Ministry of Land, Infrastructure and Transport was important to maintain consistency between national land planning and the supply and demand plan of industrial locations, the Ministry is not sufficiently fulfilling its role in the case of industrial complexes in free economic zones.
The evaluation items in the management phase of national industrial complexes were as follows.
First, it is necessary to adjust the budget for the development and management of the infrastructures of industrial complexes when considering the concerns over the possible oversupply of new industrial complexes and the aging of infrastructures of the existing industrial complexes. The current「Guidelines for Support for Industrial Complexes」excludes constructed industrial complexes from the target for assistance or support for the improvement of basic facilities. However, actual-condition research conducted by the Ministry of Land, Infrastructure and Transport found that existing industrial complexes had serious issues including the damage and deformation of roads, the collapse of bridges, and the lack of sufficient parking space within existing industrial complexes. With regard to industrial complexes, not only their development but also the maintenance of their continuous competitiveness through efficient management is important. In particular, it is necessary to efficiently invest budget in the management of industrial complexes including on infrastructure management, which is essential for the operation of plants given the oversupply of industrial facility lands.
Second, while the Ministry of Land, Infrastructure and Transport and the Ministry of Trade, Industry and Energy are planning to collaborate on the remodelling of 25 old industrial complexes to improve their basic/cultural/childcare facilities, laws to support the plan have yet to be properly established. While the past urban regeneration project by the Ministry of Land, Infrastructure and Transport was pursued based on the ｢Industrial Sites and Development Act｣, and the structural upgrading project by the Ministry of Trade, Industry and Energy was pursued based on the「Industrial Cluster Development and Factory Establishment Act｣, there could be conflicts in diverse areas including on the designated land size, overlap of project scope, procedures of planning, and consent of landowners, etc. when the two ministries collaborate on national industrial complexes. Therefore, it is necessary to consider the coordination of the dual legal system in the long-term for the effective improvement of old national industrial complexes.
Third, the successful improvement of old national industrial complexes should be preceded by institutional improvements for the enhancement of project competitiveness, and it should be ensured that projects are executed in consideration of the characteristics of individual national industrial complexes. There should be improvement plans prepared in such a way that the causes for delays of urban regeneration projects are not repeated in the national industrial complex improvement plan. Moreover, improvement projects should be conducted in consideration of the characteristics of each old national industrial complex as the productivity of old complexes are not low although their infrastructures are old or their industries are falling behind.
First, with the delay of the development of national industrial complexes designated altogether in 2009, land compensation costs as well as total project costs increased. While the number of national industrial complexes increased by nine over the 20 years from 1994 to 2003, there were five new complexes designated in 2009 alone. Among those, only three complexes started construction and project periods were also extended by up to six years. As a result, land compensation costs increased by 20.3 billion won to 130.7 billion won for each complex in consideration of land price fluctuations and the producer price index as appraisals and assessments were newly conducted every year due to the change of the base time point because of the prolonged period from the date of appointment notice to the start of compensation or delays in compensation after the start of compensation.
Second, there were on-going restrictions of the property rights of landowners in an inconsistent and unreasonable way in the development phases of national industrial complexes. As the「Act on Special Cases Concerning the Simplification of Authorization and Permission Procedures for Industrial Complexes」was applied to large-scale national industrial complexes designated in 2008~2009, procedures to guarantee the participation of landowners close to industrial complexes in development planning and to reflect their opinions were weakened. Among development restriction areas, lands that fell under national industrial complexes were eligible for future compensation and expropriation but as for other lands, only property rights were restricted for a long time without separate compensation. Moreover, the intent of the applicable provisions to apply development restrictions for the shortest achievable period was not followed.
Third, while the use of the "annual average demand area of industrial facility land within industrial complexes by city and province" published by the Ministry of Land, Infrastructure and Transport increased, there was a wide gap between it and the actual areas sold due to limitations in estimation methods of demand area, irregular procedures of change, and a limited scope of investigation.
Fourth, while the total amount adjustment by the Ministry of Land, Infrastructure and Transport was important to maintain consistency between national land planning and the supply and demand plan of industrial locations, the Ministry is not sufficiently fulfilling its role in the case of industrial complexes in free economic zones.
The evaluation items in the management phase of national industrial complexes were as follows.
First, it is necessary to adjust the budget for the development and management of the infrastructures of industrial complexes when considering the concerns over the possible oversupply of new industrial complexes and the aging of infrastructures of the existing industrial complexes. The current「Guidelines for Support for Industrial Complexes」excludes constructed industrial complexes from the target for assistance or support for the improvement of basic facilities. However, actual-condition research conducted by the Ministry of Land, Infrastructure and Transport found that existing industrial complexes had serious issues including the damage and deformation of roads, the collapse of bridges, and the lack of sufficient parking space within existing industrial complexes. With regard to industrial complexes, not only their development but also the maintenance of their continuous competitiveness through efficient management is important. In particular, it is necessary to efficiently invest budget in the management of industrial complexes including on infrastructure management, which is essential for the operation of plants given the oversupply of industrial facility lands.
Second, while the Ministry of Land, Infrastructure and Transport and the Ministry of Trade, Industry and Energy are planning to collaborate on the remodelling of 25 old industrial complexes to improve their basic/cultural/childcare facilities, laws to support the plan have yet to be properly established. While the past urban regeneration project by the Ministry of Land, Infrastructure and Transport was pursued based on the ｢Industrial Sites and Development Act｣, and the structural upgrading project by the Ministry of Trade, Industry and Energy was pursued based on the「Industrial Cluster Development and Factory Establishment Act｣, there could be conflicts in diverse areas including on the designated land size, overlap of project scope, procedures of planning, and consent of landowners, etc. when the two ministries collaborate on national industrial complexes. Therefore, it is necessary to consider the coordination of the dual legal system in the long-term for the effective improvement of old national industrial complexes.
Third, the successful improvement of old national industrial complexes should be preceded by institutional improvements for the enhancement of project competitiveness, and it should be ensured that projects are executed in consideration of the characteristics of individual national industrial complexes. There should be improvement plans prepared in such a way that the causes for delays of urban regeneration projects are not repeated in the national industrial complex improvement plan. Moreover, improvement projects should be conducted in consideration of the characteristics of each old national industrial complex as the productivity of old complexes are not low although their infrastructures are old or their industries are falling behind.