Major projects under the "Korean New Deal," which the Moon Jae-in administration pursued with a pledge to invest 220 trillion won ($158 billion) by 2025, have been scaled back or halted one after another. According to a Seoul Economic Daily report on the 29th, the Ministry of SMEs and Startups has decided to stop building new "Green Startup Towns," a regional startup initiative. New Deal projects at other ministries, including the "Smart Hospital Leading Model Development" and "Smart Green City" programs, also fizzled out because of weak results and insufficient demand.
Cleaning up overlapping and poorly designed projects, even belatedly, is the right thing to do. The problem is that national slogans and policy priorities change with every transfer of power, and major state projects launched by the previous government repeatedly run aground. Before the New Deal fund, the Lee Myung-bak administration's "Green Growth Fund" and the Park Geun-hye administration's "Unification Fund" followed the same path. No matter how good the policy intent, results are hard to achieve without continuity.
On that count, the Lee Jae-myung administration's Future Response Fund is also cause for concern. According to data submitted to Rep. Park Soo-young of the People Power Party by the Ministry of Planning and Budget, only one of the fund's 77 new projects has passed a preliminary feasibility study. The budget allocated to the new projects totals 29 trillion won, but projects worth more than 10 trillion won skipped feasibility studies or fiscal reviews. When upfront screening is weak, taxpayer money is wasted and projects struggle to survive. One analysis also found that cash-type support accounts for 34.1% of the fund's project spending next year, while capital-building outlays make up only a third of the total.
The Future Response Fund's resources are projected to exceed 220 trillion won, including roughly 60 trillion won in excess tax revenue this year. These are valuable resources for investing in advanced future industries and cushioning swings in tax revenue. Even so, the government itself is not confident that the fund's main revenue sources will be sufficient after 2030 if the semiconductor boom ends. To keep the country's core development strategy from repeatedly being reduced to a five-year lifespan, the government needs detailed planning and design that ensure policy continuity. Rigorous project feasibility analysis and clear lines of accountability are also required. The government should treat the previous administrations' national policy projects, which began with fanfare and ended in little, as cautionary examples.
