Government's 100 Trillion Investment Goal at Risk?

Currently 81.8 Trillion Executed... Concerns Over Poor and Hasty Handling of Unexecuted Funds by Year-End

[Asia Economy Reporter Jang Sehee] Due to the novel coronavirus infection (COVID-19), achieving the investment target of 100 trillion won set for this year has become uncertain. Although the government intends to expedite the execution of the remaining budget as much as possible, concerns over a resurgence of COVID-19 raise doubts about the actual possibility of additional discovery and execution. Furthermore, issues such as poor execution and hasty processing may arise during the handling of unexecuted funds at the end of the year.

According to the Ministry of Economy and Finance on the 7th, the government has so far discovered and executed only 81.8 trillion won out of the promised 100 trillion won investment from last year's '2020 Economic Policy Direction.' With concerns over a third large-scale resurgence of COVID-19, it remains uncertain whether all remaining investment discovery and execution can be completed by around the 20th.

Last December, the government announced it would lead investments totaling 100 trillion won across three major sectors: private (25 trillion won), private investment (15 trillion won), and public (60 trillion won). At that time, Deputy Prime Minister and Minister of Economy and Finance Hong Nam-ki stated, "The top priority breakthrough is investment," adding, "We will actively discover and execute investment projects totaling 100 trillion won and mobilize investment capacity in both the private and public sectors."

First, investment in the private sector has been the slowest. Out of 25 trillion won, 22 trillion won worth of corporate investment projects have been discovered so far. Currently, projects worth 5.2 trillion won are under discovery. A government official explained, "Discovering investments in the private sector involves resolving regulations demanded by the industry," adding, "There are ongoing consultations with related ministries and local governments."

The situation is not favorable in the private investment sector either. Although 10 trillion won each was promised for discovery and execution, as of the end of the third quarter, execution amounted to only 3.5 trillion won. The prolonged COVID-19 pandemic has delayed various construction projects, causing execution delays. However, the government expects the execution rate of private investment projects this year to be higher than last year's 95%.

In the public sector, out of 60 trillion won, 46.3 trillion won had been executed by the end of the third quarter, leaving 15.2 trillion won to be executed in the fourth quarter. Since the public sector has announced an additional execution of 1.5 trillion won to stimulate domestic demand, executing 15.2 trillion won in the fourth quarter is necessary to barely meet the target. The government had previously stated it would expand new investments focusing on public housing, social overhead capital (SOC) infrastructure such as railroads, highways, and ports, and power plant construction.

Academics advise focusing not only on the investment amount figures but also on the actual economic effects relative to the investments.

Professor Sung Tae-yoon of Yonsei University's Department of Economics said, "Injecting fiscal funds does not necessarily lead to private sector investment," adding, "To discover profitable projects, institutional support alongside fiscal input is necessary." He emphasized, "It is important to create an environment where companies can invest by easing existing regulations such as labor rigidity."

Professor Kim So-young of Seoul National University's Department of Economics also added, "Meeting the total investment amount of 100 trillion won is important, but it is even more crucial whether economic effects will appear later as a result of the current investments."

This content was produced with the assistance of AI translation services.