Universal Studios project stalled again
K-Water will still try to complete contract by the end of the year
Once again, the construction of a Universal Studios amusement park in Hwaseong, Gyeonggi, seems to be going nowhere.
The Korean Water Resources Corporation (K-Water) failed on Tuesday to sign a contract with Universal Studios Korea (USK) to build a Universal Studios amusement park in Hwaseong, Gyeonggi. The first deadline for concluding a contract was Aug. 31.
The contract was not concluded as the USK consortium failed to raise sufficient funds to start the construction of the amusement park and could not conduct several preliminary procedures, such as feasibility examinations, in time.
The project was previously cancelled in 2012, but was restarted as President Park Geun-hye proposed to build an amusement park as a presidential campaign pledge.
K-Water designated USK as the preferred bidder for a project to construct an internally famous theme park on Dec. 22, 2015.
Among those participating in the consortium were Chinese Travel Agency Limited (CTS), China State Construction Engineering Corp. LTD (CSCEC) and Daewoo Engineering and Construction. The theme park project was initially scheduled to have been completed by 2020 in Sinoe-dong, Hwaseong.
The site for the theme park project is 4.21 million square meters (421 hectares) in size, or 1.4 times that of Yeouido. K-Water owns the land for the project as the water resources management agency reclaimed Lake Sihwa in 1994.
The consortium planned to construct a Korean version of Universal Studios along with a water park and hotel for the first phase of construction, and a shopping mall, golf course and condominiums were planned for the second phase.
If the theme park were to be built on schedule, Korea would join the United States, Japan, Singapore and China as the fifth location of the international amusement park.
K-Water officially permitted USK to proceed with the proposed construction plan on June 1, and offered Aug. 31 as the first deadline to conclude a contract. But the consortium ran into issues regarding its funding plan. Of the required 5 trillion won ($4.5 billion), 1 trillion won was to have come from its own finances while 2 trillion won was to have come from sales of existing apartments on the land, but K-Water said they failed to secure the remaining 2 trillion won.
“With the current domestic economic situation in mind,” a K-Water official said, “it is difficult to raise such large funds within a short period of time since the approval of the project three months ago.”
The official added, “We are currently negotiating with many financial institutions, including Korea Development Bank, pension funds and mutual aid associations. Among the 60 clauses necessary to form an agreeable contract with the consortium, we have completed 40.”
Questions as to whether there was a lack of investment due to poor business feasibility were also raised.
“In the face of the new Disney World opening in Shanghai, China, which is only a one-hour flight away,” said Ko Dong-wan, a professor of Tourism Development at Gyeonggi University, “there are doubts as to whether Chinese and other tourists would be willing to travel to a theme park in Korea.”
But Kang Sung-kwi, K-Water Project Manager, said, “We expect 7.5 million visitors if Universal Studios were to open in Hwaseong, which is much more than Universal Studios in Singapore (3.84 million visitors). We predict the project has great business potential, as it will be located 30 minutes from Incheon International Airport.”
Though they failed to sign the contract by the first deadline, K-Water will try to conclude the contract with the consortium by the end of this year and enter construction by the latter half of next year.
The amusement park project was first introduced in 2007 with the name Hwaseong Universal Studios Korea Resort (USKR). At the time, K-Water designated the USKR consortium as the preferred bidder, which was supported by Lotte Asset Development Co., but the project was cancelled in 2012.
Due to the Foreigner Investment Promotion Act at the time, they failed to attract 10 percent of foreign investment, and there was a breakdown in negotiations regarding the 504 billion won needed to purchase the land site.
BY KIM BANG-HYUN, KIM MIN-WOOK [firstname.lastname@example.org]