The "Special City" Has Launched... What Changes Are Happening in Changwon?

On the 13th, Local Elections: Changwon City in the Provinces, Suwon, Goyang, and Yongin Cities in the Capital Region Emerge

Changwon Mayor Heo Seong-mu is explaining the plan to maintain a population of 1 million at the New Year's press conference on the 6th. Photo by Sanghyun Lee lsh2055@

[Asia Economy Yeongnam Reporting Headquarters Reporter Lee Sang-hyun] New cities were born in South Korea on the 13th. These include Changwon as a ‘Special City’ and three other cities: Suwon, Goyang, and Yongin. They can be considered cities that fall between basic local governments and special/metropolitan cities.

The names do not change like Busan Metropolitan City or Seoul Special City. Although the administrative title of Special City is granted, the city name remains Changwon-si.

Although the four cities simultaneously opened the ‘prologue of a great transformation’ on the 13th, citizens do not particularly feel any difference. This is because they are neither basic local governments nor metropolitan governments.

However, looking at it from another angle, there is a ‘substantial’ answer here. It means that there are benefits beyond those of basic local governments, and that they gain administrative and autonomous powers and social welfare benefits commensurate with the status of a metropolitan city.

A Special City is an administrative title given to cities designated by the Minister of the Interior and Safety according to standards and procedures prescribed by Presidential Decree, considering factors such as a population exceeding 1 million, actual administrative demand, national balanced development, and the risk of local extinction, based on the ‘Local Autonomy Act Amendment’ passed by the National Assembly plenary session on December 9, 2020.

The designated cities this time?Changwon-si, Suwon-si, Yongin-si, and Goyang-si?are all large cities with populations exceeding 1 million. Their administrative demands far exceed those of other small and medium-sized cities, but their powers were the same, which limited urban growth.

Among these four cities, Changwon-si is the only one not located in the Seoul metropolitan area. Therefore, attention is focused not only on the expansion of administrative authority but also from the perspective of regional balanced development. We examined the challenge Changwon-si has taken on to secure more effective and driving Special City powers.

▲ What changes?

During the initial discussions on Special Cities, the goal was ‘metropolitan-level’ administration and ‘financial authority,’ but the passed Local Autonomy Act included a supplementary opinion stating that ‘special provisions that cause a reduction in other local governments’ resources or infringe on the approval authority of city/county basic plans by provinces should not be established,’ limiting financial privileges.

There is criticism that the Special City is ‘only in name’ due to restrictions on the most tangible financial authority, but in terms of administrative authority, 86 functions and 383 administrative tasks have been transferred from metropolitan local governments.

Representative tasks include issuing local development bonds, building permits, designation of housing development districts, farmland conversion permits, designation and cancellation of development-restricted areas, adjustment of ranks and personnel for public officials below grade 5, establishment and registration of local research institutes, among eight key tasks.

Although some aspects such as area and permit scope still require consultation with metropolitan governments for each task, a significant portion can now be handled directly, which is expected to reduce administrative procedures.

Matters that citizens can directly feel include the raising of the basic property amount standard for social welfare benefits to that of a ‘large city,’ allowing them to receive social welfare benefits equivalent to metropolitan cities.

The basic property deduction for social welfare benefits in small and medium-sized cities is 42 million KRW, compared to 69 million KRW in large cities, showing a significant difference. The housing property limit for basic livelihood security recipients is 120 million KRW in large cities and 90 million KRW in small and medium-sized cities. Emergency welfare support housing costs for 1-2 person households are 387,200 KRW in large cities and 290,300 KRW in small and medium-sized cities. In terms of various welfare benefit standards, Changwon had been at a disadvantage despite being a large city.

From the 13th, nine benefits including livelihood, housing, medical, education benefits, emergency welfare, basic and disability pensions, single-parent family support, and near-poverty disability allowances will be provided under the same conditions as metropolitan cities. As a result, about 10,000 Changwon citizens will receive additional support totaling approximately 17 billion KRW.

Along with this, Changwon-si, which was the only basic local government directly responsible for fire services as a special benefit of the 2010 integrated Changwon city launch, will receive 6.34 billion KRW in fire safety grant tax, a 50% increase (2.12 billion KRW) compared to the previous year.

Previously, it received less grant tax than even Sejong-si, which has a population of 300,000, let alone other metropolitan cities. This was an unreasonable discrimination in building fire facilities and equipment and directly performing fire services to protect citizen safety.

In the ‘Regulations on Fire Safety Grant Tax Allocation Standards, etc. (Amendment Draft)’ promulgated last November, a special provision concerning Changwon-si was newly established, enabling Changwon to handle fire service tasks appropriate to its city size with the launch of the Special City.

▲ Limitations and future directions

The limitation lies in the failure to secure ‘financial authority’ mentioned earlier.

Changwon-si’s financial independence ratio was 49.9% at the time of integration, but due to a significant increase in resources invested to meet the regional balanced development demands of the three cities (Masan, Changwon, Jinhae), it decreased to 37.5% as of 2021, far below the national average of 48.7%. Changwon wanted to secure additional financial authority to resolve this, but the increase in Changwon’s finances led to a decrease in finances of other Gyeongnam cities, resulting in restrictions.

For freer urban planning, reliance on financial authority is inevitable.

Currently, the National Assembly Legislative Office is discussing ways to increase finances without harming other local governments’ finances, such as establishing a Special City account in the National Balanced Development Special Account, raising Special City property tax rates, and expanding the scope of Special City flexible tax rates.

The Special City selection condition of ‘maintaining a population of over 1 million for two years’ is also an important issue. Changwon started with a population of 1.08 million but steadily decreased to 1.03 million as of October 2021.

Mayor Heo Seong-mu of Changwon said at a New Year meeting on the 6th, “Including the foreign resident population who reside permanently, the population is 1.05 million, and even at the current trend, it is judged that it can be maintained for about 6 to 7 years.”

Mayor Heo said, “Since recent new corporate investment attraction is progressing successfully, there is hope for a rebound along with the slowing decline, so there is no need to worry about the population.”

Specifically, this year, 17,000 new apartment units will be supplied, and standards for special supply floor area ratio benefits for redevelopment and reconstruction housing for youth and newlyweds are being prepared. Also, the ‘Marriage Dream Loan,’ which was a major issue for providing 100 million KRW loans at marriage and interest support and principal forgiveness for each child’s birth, is being restructured as the ‘Changwon Dream Loan’ to support youth housing stability.

Efforts to secure additional administrative authority are also in full swing.

For example, in terms of port autonomy, it is expected to create great synergy in the progress of the ‘Jinhae New Port Phase 1 Construction Project,’ which recently passed the preliminary feasibility study by the Ministry of Strategy and Finance.

Jinhae New Port is the largest national project in Changwon’s history, with an investment of 15 trillion KRW by 2040, expected to generate production inducement effects of 28.4 trillion KRW and employment inducement effects of 178,000 jobs.

Mayor Heo said, “The launching Special City is like a child just taking its first steps, but no one can deny that change has begun.”

He also said, “We will mobilize all administrative capabilities to ensure that practical benefits reach citizens and to secure additional special powers through the revision of the Local Decentralization Act, promotion of the Local Transfer Act, and enactment of the Special City Support Special Act.”

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