Korea Eases Feasibility Study Rules After 27 Years; Critics Warn of Election Abuse

The Ministry of Economy and Finance is revising the preliminary feasibility study system that has filtered out wasteful government projects for the past 27 years.

The exemption threshold for social overhead capital (SOC) projects will be raised from 500 billion won to 1 trillion won in total construction costs. This adjustment reflects increased construction-related prices since the system's introduction in 1999. The economic feasibility weighting will be reduced by 5 percentage points for population-declining regions, while regional balanced development evaluation weighting will increase by 5 percentage points. Next year, the regional balanced development evaluation will be reorganized into a regional balanced growth evaluation, incorporating qualitative criteria such as regional characteristics alongside existing quantitative measures like regional underdevelopment indices.

The government cites promoting regional balanced growth, supporting national agendas, and effectively implementing fiscal support projects as reasons for the revision. Given the urgency of addressing issues like regional depopulation, these measures have merit. However, concerns remain that poorly conceived projects disguised as national agenda items may pass without proper scrutiny.

Furthermore, the ministry plans to expand feasibility study institutions beyond the Korea Development Institute (KDI) and establish private expert consulting groups to advise on securing project feasibility. This raises conflict-of-interest concerns, as the system designed to filter out flawed projects would simultaneously provide consulting to help them pass review. If additional institutions or private consultants lack expertise and neutrality, confidence in government budget allocation could be undermined.

Easing feasibility criteria ahead of the June 3 local elections invites suspicion of exploitation for populist campaign promises. The revised guidelines, expected in May, will retroactively apply to third-round feasibility projects selected last year. Regional grievance-based pledges from the presidential election may also clear fiscal hurdles.

The National Finance Act, the parent law of the feasibility study system, explicitly states fiscal efficiency and soundness as legislative objectives. The ministry must ensure these principles are not compromised during the reform process. Both ruling and opposition parties should promptly establish fiscal rules to alleviate public anxiety over taxpayer waste.