Cash-strapped Korean local gov’ts seek to offload property

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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Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (, the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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