KOTRA Reports Low Purchase Rate of Eco-Friendly Vehicles at Overseas Trade Centers

Preference for Luxury Cars Still Higher Than Eco-Friendly Cars When Purchasing Vehicles

[Asia Economy Reporter Park Sun-mi, Sejong=Reporter Lee Jun-hyung] Although the purchase of 100% eco-friendly vehicles has been mandated for public institution vehicle acquisitions, it has been confirmed that KOTRA has been exploiting exceptions for overseas trade offices to continue purchasing more expensive internal combustion engine-based luxury vehicles instead of eco-friendly vehicles. There are criticisms that KOTRA is going against the government's eco-friendly policies.

According to the 'KOTRA Overseas Trade Office Vehicle Purchase Performance' submitted by KOTRA to the office of Yang Geum-hee, a member of the People Power Party, on the 13th, out of a total of 70 new vehicles purchased over the past five years (2018 to July 2022), only 12 were eco-friendly vehicles. Only 17% of the total purchases were eco-friendly vehicles. During the same period, KOTRA spent $588,216 (approximately 840 million KRW) on eco-friendly vehicles for overseas trade offices. This accounts for only about 18.8% of the total official vehicle purchase amount ($3,124,211). More than 80% of the official vehicle budget for KOTRA’s overseas trade offices was spent on internal combustion engine vehicles.

The problem is that public institutions are required to purchase eco-friendly vehicles. Previously, the Ministry of Trade, Industry and Energy introduced the ‘Public Institution Eco-Friendly Vehicle Mandatory Purchase System’ in 2016, making it mandatory for public institutions to adopt eco-friendly vehicles. The ministry then revised the related enforcement decree last year, raising the mandatory purchase ratio of eco-friendly vehicles for public institutions from 70% to 100%.

In particular, KOTRA frequently purchased luxury internal combustion engine vehicles instead of eco-friendly vehicles. Among the 70 official vehicles purchased by KOTRA for overseas trade offices in the past five years, 33 were imported cars or luxury vehicles with engine displacement over 3000cc. The cost spent on purchasing these 33 luxury vehicles was $1,740,247, accounting for about 56% of the total official vehicle purchase amount ($3,124,211). Among the luxury vehicles purchased by overseas trade offices, only 5 were eco-friendly vehicles.

This raises questions about KOTRA’s commitment to adopting eco-friendly vehicles. The average price of eco-friendly vehicles is around $40,000, while the average price of luxury vehicles purchased by overseas trade offices was $54,000, which is mostly similar to or more expensive than eco-friendly vehicles. Especially, the three luxury vehicles purchased this year were in Copenhagen, Auckland, and Tehran?areas where the environment is sufficiently prepared for purchasing eco-friendly vehicles.

In some regions such as China, many of the vehicles purchased were high-priced foreign brand vehicles rather than domestic cars. According to KOTRA’s overseas trade office official vehicle operation guidelines, purchasing domestic cars is the principle, but there are frequent cases where this is not followed. In 2020, in four locations in China?Qingdao, Guangzhou, Shanghai, and Xi’an?Audi A6 vehicles priced over $60,000 were assigned as overseas trade office vehicles.

In contrast, during the same period, Hyundai vehicles equipped with emission reduction devices priced around $40,000 were purchased in Xiamen and Changchun. This shows that if overseas trade offices had been committed to purchasing eco-friendly vehicles, they could have achieved the ‘public institution eco-friendly vehicle mandatory purchase’ performance, but instead, the purchase of luxury vehicles led to failure in achieving the performance and excessive foreign currency waste.

The fact that the 100% mandatory purchase ratio for eco-friendly vehicles in public institutions does not apply to overseas trade offices is pointed out as a loophole in the government’s 'Public Institution Eco-Friendly Vehicle Mandatory Purchase System.' A Ministry of Trade, Industry and Energy official said, “KOTRA overseas offices, unlike Korean diplomatic missions which are Korean territory, belong to foreign territories,” and added, “Domestic laws cannot be enforced, so (the mandatory purchase of eco-friendly vehicles) is applied as a recommendation.” KOTRA also explained the background of continuing to purchase luxury internal combustion engine vehicles instead of eco-friendly vehicles by stating, "The 100% mandatory purchase ratio for eco-friendly vehicles raised during the Moon Jae-in administration does not apply to overseas trade offices.”

However, since KOTRA President Yoo Jung-yeol has emphasized carbon neutrality and has been promoting ESG (Environmental, Social, and Governance) management practices such as obtaining international eco-friendly certifications and joining the Korean version of RE100 (K-RE100), there are criticisms that KOTRA’s preference for luxury vehicles over eco-friendly vehicles contradicts the government’s eco-friendly policies.

Regarding this, Representative Yang said, "While the government is expanding eco-friendly policies, overseas trade offices have been disconnected from government policies by purchasing luxury vehicles and wasting foreign currency," and added, "This raises concerns about public service discipline lapses and unnecessary tax waste. The government should strengthen performance management of government policies for overseas institutions, and KOTRA should re-examine public service discipline to prevent unnecessary foreign currency waste.”

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