'Forward-Looking
Construction Industry Buildup'

MOCT Strives to establish an efficient construction production structure

The government endeavors to secure world-class technological edge by expanding R&D outlays in a bid to upgrade the domestic construction industry to levels of advanced countries, a ranking official in charge of infrastructure says.
Nam In-hee, assistant minister of the Headquarters for Infrastructure at the Ministry of Construction and Transportation, "The ministry strives to build up an integrated, forward-looking construction industry while establishing a foundation for achieving a mid- and long-term growth by upgrading the industry's impartiality and transparency through information network buildup and by securing a stable supply of construction manpower and materials." "The ministry is making concerted efforts not only to cope with these changes in the construction sector, but also to make sure construction infrastructure buildup and technological development, "he said. "First, it will increase the budget for R&D outlays into the construction technology sector from 151.9 billion won in 2005 to a range of 260 billion won in 2006 in a bid to achieve construction productivity improvements like extended life span of structures, reduction of construction period and safety guarantee,"he added.
The ministry plans to formulate a road map for R&D innovations in the construction and transportation sector designed to ensure efficient management of R&D budgets and prevent an overlapping of investments, he said. The following are the excerpts of his interview with NewsWorld.
Question: Would you elaborate on mid- and long-term policy plans on the advancement of the construction industry?
Answer: The construction industry has played a pivotal role in the construction of national territory and economic growth for the past half century, but it has technology levels that still lag behind those of advanced countries and faces conflicts and confrontations between business areas, and bi-polarization between large- and small-sized companies.
Given the globalization of all industrial fields beyond the national and business boundaries, the environment of the construction industry is predicted to undergo changes at a faster pace and at a wider business area.
Corresponding to these latest developments, the government is putting more energy into securing world-class technological edge by expanding R&D outlays with the goal of upgrading the domestic construction industry to levels of advanced countries as well as building an efficient construction production structure by overhauling such systems as business areas and bidding.
The ministry strives to build up an integrated, forward-looking construction industry while establishing a foundation for achieving a mid- and long-term growth by upgrading the industry's impartiality and transparency through information network buildup and by securing a stable supply of construction manpower and materials.
Q: Will you be more specific as to policies designed to facilitate construction technology development?
A: The construction industry accounted for 17.5 percent of the nation's GDP and its annul order contracts amounted to 102 trillion won in 2003. The industry is faced with environment changes like continued urban growth, an aging population and knowledge informatization following IT development.
The ministry is making concerted efforts not only to cope with these changes in the construction sector, but also to make sure construction infrastructure buildup and technological development.
First, it will increase the budget for R&D outlays into the construction technology sector from 151.9 billion won in 2005 to a range of 260 billion won in 2006 in a bid to achieve construction productivity improvements like extended life span of structures, reduction of construction period and safety guarantee. The ministry plans to formulate a road map for R&D innovations in the construction and transportation sector designed to ensure efficient management of R&D budgets and prevent an overlapping of investments.
The tentatively named New Technology Application Screening Committee will be established to make assessments on design application of new technologies and filed application apparent, introduce post-project assessments on construction cost and period reduction and build up an integrated information system on new technologies.
Q: Will you tell our readers about plans to expand roads and railway networks?
A: The nation badly needs to concentrate on expanding such SOC investments as roads, railway and water resources development projects. A shortage of such SOC facilities is blamed for weakening competitive edge of the domestic economy.
In particular, most transportation networks have already reached limits due to a surge in traffic volumes arising from the recent economic recovery and rising automobile ownership arriving from improved living standards, but SOC investments have continuously declined. Nationwide SOC investments surged 13 percent to reach 16.79 trillion won in 2003, but dropped thereafter 15.74 trillion won in 2004, 16.01 trillion won in 2005 and 15.77 in 2006. Similarly, the MOCT's portion of SOC investments showed a decline a peak of 15.12 trillion won in 2003 and a drop to 13.82 trillion won in 2004, 13.91 trillion won in 2004 and 13.70 trillion won in 2006
Expanded SOC investments should be done on a continuous basis to secure national competitiveness and upgrade people's living quality so as to advance the goal of raising the per capita national income to $20,000 or $30,000.
First, take a look into the nation's investments into road network projects. Road network has evolved into a pivotal transportation means as it accounts for more than 90 percent of the nationwide passenger and cargo transportation needs thanks to continued investments since the late 1970s.
However, Korea's road capacity is still lacking compared to advanced countries in terms of such overall aspects as territory and population. Congested sections rose from 1,770 km in 1001 to 2,907 km in 2003, accounting for one-sixth of the aggregate trunk roads, causing 22.8 trillion won in congestion costs.
The government finds it difficult to provide financial support to road construction as much as it did in the past due to a diversion to budgets to national defense and welfare sectors. In the past, it focused on quantitative expansion of road network, so some people raised a shortage of transportation volumes in some sections and inefficient investments.
The ministry has shifted its transportation policy from a quantitative focus to a qualitative one: Expanding investments in congested urban sections, raising the public corporations'financial burden on the construction of expressways to diversity financing resources and giving more weight to completing projects rather than launching new ones and improving facilities in the bottlenecks of the existing roads.
It is striving to make people's living sphere a half-day one and build up a 6,160 km-long expressway network in a grid pattern with seven artery expressways running from north to south and nine artery ones running from east to west by 2020. To this end, Korea will invest 1,725 billion won, including 995 billion won from national coffers, during 2006 to work on 17 new express routes with an aggregate length of 1,093 km, including the Jinju-Gwangyang one, and expansion of 16 routes, totaling 611 km in length.
The ministry will spend 3,389.4 billion won in 2006 with the goal of raising to 42 percent the portion of national roads with four lanes or more in a bid to reduce logistics costs and prop up industrial support. Among the major projects are the launch of 21 national roads, totaling 225 km in length, including the National Road No. 4 between Yeongdong and Chupungryeong, and the six national road substitutes, totaling 41 km in length, including the national road substitute between Hoecheon and Sangpae as well as the completion of 58 national road projects, totaling 577 km in length, including National Road No. 37 between Ildong and Yeongjung.
As to the railway construction sector, early this year, the ministry has drawn up a railway network development plan calling for completing the ongoing construction sections of Gyeongbu (Seoul-Busan) high-speed railway and making all artery railway routes electrified and double-tracked by 2015 with the goal of reaching major cities within two or three hours.
The government plans to pour a whopping 20 trillion won by 2010 in undertaking the Gyeongbu High-speed Railway Phase II, Gyeongjeon Line/Jeolla Line Double-tracked project, Jungang Line Deokso-Wonju section electrified, double-track project, Janghang Line improvement project, Gyeongchun electrified, double-tracked project, Yongsan-munsan electrified, double-tracked project, and Gangnam-Jeongja electrified, double-tracked project.
After 2010, it is planning to push ahead with such projects as the Honam (Seoul-Mokpo) high-speed railway project, Wonju-Gangnung railway construction project, Seongnam-Yeoju electrified, double-tracked project, Busan-Ulsan electrified, double-tracked projects.
The government is making strenuous efforts to expand railway networks along the East Coast and the restoration of Gyeongwon Line to link Korean railway networks with Trans-China Railway and Tran-Siberian Railway in a bid to capitalize on the railway, an efficient means of transporting long-haul and large amounts of cargo.
Q: Will you speak about the current situation of private-sector investments and plans to expand them?
A: Currently, the MOCT is seeking to attract private sector's investments into roads, railway and logistics sectors, which amounted to 2.6 trillion won in 2005 1.6 trillion won shouldered by the private sector and 800 billion won in government subsidies and compensations.
The road construction sector takes up a 70 percent share in the total investments by the private sector. The private sector has so far primarily participated in investments into expressway construction projects.
A total of 19 expressway projects have been completed, under way or planned. Three expressways built with investments from the private sector are now operational. They are the Incheon Airport Highway that opened in 2000 between the airport and Seoul, Cheonan-Nonsan Expressway that opened to traffic in 2002 and Daegu-Busan Expressway that opened last January. Six projects, including Seoul Outer Circular Line between Ilsan and Taegaewon) are under way and 10 other projects are planned.
The ministry plans to implement a project of building a railway connecting Incheon Int'l Airport Seoul with investments from the private sector Phase II (between Yeongjong Island and Gimpo Airport), to be dedicated by 2007 and Phase II ( between Gimpo Airport and Seoul Railway Station), to be opened by 2010. Some sections of the Gyeongjeon Line and Jeolla Line will be pushed in a BTL (Build-Transfer-Lease) basis.
The ministry has adopted a principle of expanding SOC investments from the private sector in consideration of a trend of declining SOC budgets. Even if SOC projects are implemented with investments from the private sector, it is required to provide a certain portion of project money with financial support from national coppers in the form of subsidies and compensation payments, so it will take into account such factors as budgetary allotment of SOC investments into each sector.
In particular, the ministry plans to consider widening the BTL method, now limited to railway projects, to road construction projects.
It will encourage competition among companies bidding for private-sector investments to lower toll charges or solve other problems as initial projects were criticized for hefty toll charges, inaccurate demand and a guarantee of excessive operational revenues. The ministry plans to introduce a penalty system to preempt inaccurate demand and a guarantee of excessive operational revenues. nw

Nam In-hee, assistant minister of the Headquarters for Infrastructure at the Ministry of Construction and Transportation