End ‘zombie’ projects

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End ‘zombie’ projects

Many pork-barrel projects are being kept alive despite serious questions about their feasibility and business merits. According to a report by the National Assembly Budget Office, 23 infrastructure projects that failed their feasibility tests between 2003 and this year have yet to be shut down.

The total cost of these glitzy projects amounts to 11.25 trillion won ($10.59 billion). Just 330 billion won has been spent on them so far because construction on them was stopped once their lack of merit was noted. However, despite their uselessness, these projects are included in budgetary proposals every year. The sponsors of the projects hope that they might eventually sneak through, especially during sensitive budget seasons. Because these proposals never fully die, they are called “zombie projects,” popping up repeatedly during the political season. About 11 trillion won are in constant danger of being wasted on useless projects.

If any of these zombie projects were to make it through the budget process, they would inevitably just become a waste of tax money and hurt the country’s fiscal health. Unfortunately, however, there is no legal framework to stop these zombies for good once they’ve been approved, even though they’ve failed feasibility tests. Under current laws, infrastructure projects can be pursued for reasons other than business and economic factors. With the influence of political bigwigs, highways and other pork-barrel construction projects can always be approved.

Local governments are required by the central government to conduct preliminary feasibility tests on large-scale projects to prevent reckless budgetary spending. For a project that calls for an estimated total cost of more than 50 billion won, with government funding costing more than 30 billion won, for instance, the government reviews the overall business benefits and contribution to the regional economy for a balanced development of the country. But many large projects that fail in both categories still can be pursued when the need arises. What use is the preliminary feasibility test if it does not have binding force?

We have so far seen the disastrous fallout from large-scale projects that were pushed ahead purely on political grounds. Keeping those needless projects on the books only raises suspicions that they could be used for political purposes. The National Assembly should establish the legal foundation to kill infrastructure projects that have failed in feasibility tests. That’s one of the solutions to garner economic efficiency as well as effectiveness.
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