Cash-strapped Korean local gov’ts seek to offload property
November 11, 2013 Leave a comment
Cash-strapped local gov’ts seek to offload property
Cho Han-phil, Ji Hong-gu, Woo Sung-duk
2013.11.11 18:07:18
South Korea’s local authorities in financial woes have decided to put their property holdings up for sale. The move seems inevitable for local governments grappling with tax revenue shortfall and difficulties in raising capital for next year’s budget. Local governments plan to sell their property worth a total of around 1.3 trillion won ($1.2 billion, an estimate), according to the Maeil Business Newspaper’s analysis on the 2014 budget plans of city and province municipalities Monday. The Seoul City government will dispose of a sizeable property next year, the first of its kind in its history. The city government’s budget for next year grew 4.2 percent from this year to 24.5 trillion won. However, with the allocation of additional welfare benefits worth 934.1 billion won, the available budget excluding the number shrank a startling 128.3 billion won. Therefore, it will raise 300 billion won through disposal of the land of Seoul Medical Center in Samsung-dong.
An official from the government noted, “some of leftover properties have been sold but this is the first time to sell a core land,” adding “the Seoul City government’s financial health is in so poor shape as to sell such a large land.”
The Incheon City government has earned about two trillion won via sale of Sondo zone 6 and 8 in the latter half of last year and Incheon Terminal this year. It will also sell about 500 billion won worth of property next year.
A series of large projects including Incheon Asian Games will come around, but the city’s total budget came to 7.8 trillion won, shrinking 7.8 percent or 659.5 billion won from this year’s supplementary budget. Despite that, the city government plans to sell its assets in the face of difficulties to finance the budget.
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