"National Assembly Reviews Preliminary Feasibility Study Results"... Growing Momentum for Loosening Preliminary Feasibility Investigations Initiated by the National Assembly

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[Asia Economy Reporter Hyunju Lee] There is a growing movement to ease the preliminary feasibility study (PFS) conducted to assess the appropriateness of large-scale national projects.

According to the National Assembly on the 26th, the Planning and Finance Committee will hold a public hearing on the PFS system on the 27th. This hearing is a forum to discuss the PFS-related bills proposed during the 21st National Assembly. Currently, a total of 26 bills related to PFS, including the Act on the Operation of Public Enterprises, have been proposed in the National Assembly. Witnesses attending include Professors Park Hyun and Son Eui-young from the University of Seoul, Lee Tae-kyung, a specialist from Yale Accounting Corporation, and Jung Chang-soo, director of the National Budget Research Institute.

At tomorrow’s public hearing, a bill to raise the PFS target threshold from 50 billion won to 100 billion won is expected to be mainly reviewed. This is also the most frequently pending issue among PFS-related bills in the National Assembly. The threshold has not changed since the PFS system was introduced in 1999. Additionally, a partial amendment to the National Finance Act is expected to be discussed, which proposes changing the PFS authority from the current Minister of Strategy and Finance to each central government minister, and for projects aimed at regional balanced development, having the Balanced National Development Committee conduct the PFS instead of the Ministry of Strategy and Finance’s Financial Project Evaluation Committee.

Amid the recent passage of a special law exempting the PFS for the Gadeokdo New Airport project led by the ruling party, a plan to have the National Assembly review PFS results is also being promoted. Yang Kyung-sook, a member of the Planning and Finance Committee from the Democratic Party of Korea, proposed an amendment to the National Assembly Act the day before, granting the National Assembly the authority to review PFS results and request a re-investigation by the government. According to the bill, the National Assembly can demand correction measures such as re-investigation, system improvement, or budget adjustment from the government if there is a violation of laws during the PFS process, if the government refuses to submit data without justifiable reasons or submits false data, or if the validity regarding regional balanced development or urgent socio-economic responses is lacking.

Experts have expressed negative views on these political moves. Professor Kang Sung-jin of Korea University’s Department of Economics said, “The preliminary feasibility study was created to avoid political situations, but if they say they won’t do it, it means lawmakers will ‘deal’ among themselves,” adding, “The economic role of the Ministry of Strategy and Finance will disappear.” Professor Kim So-young of Seoul National University’s Department of Economics also said, “It should be reviewed by other objective institutions rather than the National Assembly,” and “If PFS is done in the National Assembly, there is a high possibility it will be decided politically.”

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