Many of the public agencies that are to relocate from Seoul and its surrounding Gyeonggi Province to other cities have learned no lesson at all from local governments that ruined their finances by pouring money into exorbitant office buildings.
Under a balanced regional development scheme, 147 public agencies are required to move out of the capital zone to local “innovation hubs.” Of them, 121 have decided to construct their own office buildings, while 26 have chosen to rent. Of the 121 not renting, nine have already completed new office buildings, 74 are constructing new ones and the remainder will start construction within the year.
Some of the relocating agencies have invited criticism by constructing excessively spacious and luxurious buildings. For instance, LH Corp., which will relocate to Jinju, South Gyeongsang Province, is constructing a new headquarters that will cost the land and housing developer some 470 billion won ($415.5 million), not a small amount of money for a corporation that needs 13.3 trillion won this year alone to serve its staggering debt of more than 130 trillion won.
LH Corp. said it would finance the project with the proceeds from the sale of its existing building in Seongnam, Gyeonggi Province. But as the company is unable to find a buyer due to the slumping property market, it has to secure funds from other sources or borrow more.
Korea Electric Power Corp., which is to move to Naju City, South Jeolla Province, has earmarked some 360 billion won for a new office building. The utility company was recently allowed to increase electricity rates by 4.9 percent. But it faces public demand for it to tighten its belt before hiking power prices.
KEPCO suffered a loss of 4.3 trillion won in the first half of the year alone and is groaning under a debt of 55 trillion won. As such, the power utility should cut back on spending to minimize hikes in electricity charges.
Other state-run corporations under fire for constructing luxurious office buildings include Korea Gas Corp., Korea National Oil Corp. and Korea Resources Corp.
These public agencies are all heavily indebted. Considering their financial situation, they can hardly afford to spend lavishly on new office buildings. Rather, they all need to be on a tight budget and reduce expenses as much as possible.
The combined debt of the public agencies amounts to 460 trillion won. Some, if not all, of the debt is attributable to the irresponsible behavior and ineptitude of their officials. The government should not let them waste money on luxuries they cannot afford.
