Evaluation of Infrastructure Investment Policies
22 September 2016
Essential for maintaining citizens’ livelihood and a functional society, infrastructure is a means to enhance quality of life and a necessary factor for actually guaranteeing basic rights enshrined in the constitution. Infrastructure is also a country’s historic aggregation of economic and cultural development, an economic driving force and a factor determining a country’s national competitiveness and level of national welfare. Therefore, deciding to establish an adequate infrastructure can be regarded as an important national task.
However, the government has recently been significantly reducing financial investments in infrastructure. 4.4% of the infrastructure budget was cut in 2016 compared to the previous year, while the 2017 budget was further reduced by 8.2%. It may be necessary to scale down financial investments in infrastructure for efficient financial management, but considering the impact on the national economy induced by the establishment of infrastructure, there needs to be sufficient discussion at the parliamentary level on whether the current level of investment reduction is appropriate. In particular, since the government has revealed its intention to boost private sector investment programs in order to compensate for reduced financial investment in infrastructure, this may be seen as an admission that the current scope of reduction is less than adequate.
The National Assembly also needs to fully review the policy for expanding private sector investment programs following the reduction in financial investment. This is because although the government has introduced new types of private investment schemes to revitalize private investments such as the “profit-and-loss sharing scheme,” these programs have been pursued with the aim of increasing user burden rather than toward achieving creativity and efficiency in the private sector, which was the original purpose of the legislation. In particular, private investment programs based on private recommendations are being implemented without the review and approval of the National Assembly.
This report evaluated the feasibility of reducing financial investment and boosting private investment. As a result, although achievements from financial investments in infrastructure have been insufficient, the development of measures to shore up investment achievements should precede the reduction of fiscal investments. The report also concludes that legislative amendments need to be introduced for the National Assembly to deliberate on whether or not to pursue private sector investment programs.