Ports in Pusan and Kwangyang have to be developed without political af

Discussions on delicate matters such as acquisition of port facilities, ocean safety, and maritime pollution met with conflict in a parliamentary inspection.

During a parliamentary audit of the Ministry of Maritime Affairs and Fisheries by members of the National Assembly's Agriculture and Maritime Affairs and Fisheries Committee October 31st, legislators spent most of their time criticizing MOMAF Minister, Noh Moo-hyon, instead of discussing maritime issues.

A group of lawmakers criticized plans for the early development of the Kwangyang and Pusan New Port, reasons for the failure to raise private capital for the Pusan New Port, how far to proceed with Port Authorities (PA), and the impropriety of applying the 200 percent debt to asset ratio to the shipping industry.

Rep. Huh Tae-yeol of the opposition Grand National Party (GNP) pointed out what the problem is in raising private capital for the Pusan New Port and asked about appropriate measures to get out of the stern 200 percent guideline. Mr. Huh indicated that the Pusan New Port plan is a national project with the purpose of building a complex international logistic port to handle increasing cargoes in the Port of Pusan. It, however, was pointed out that the Pusan New Port plan didn't reflect the tendency towards larger vessels in line with more advanced ship building techniques. So the first step to build nine 50,000-ton berths is inappropriate for vessels larger than 8,000 TEU, which will be the common size entering the 21st century. He said that the berths for 50,000-ton vessels are only suitable for the vessels being released right now.

He also criticized that the 200 percent debt to asset guideline for the 5 big groups and 64 affiliated companies was rigidly applied to the shipping industry, decreasing the competitiveness of Korean shipping companies. Most Korean shipping companies sold vessels to satisfy the criteria, sustaining losses because of falling international ship prices.

In case of the Port Authority, it was indicated that it is prerequisite for building bodies to equally take part in it, to be run autonomously, and to be operated independently. Also it is arguable whether the Port Authority manages Pusan New Port or not.

Rep. Jeong Jang-sun of the ruling Millennium Democratic Party emphasized that the Port Authority system shouldn't be introduced rough-and-ready. He suggested that Port Authorities are a global tendency in terms of port evolution, but they have to be pursued considering each country's specific situation, citing that the main factors for port evolution are regulation loosening, industrialization, and privatization.

The TOC (Terminal Operating Company) system in 37 piers at 9 Ports in Korea have been surprisingly successful to date with productivity up 12.5 percent, and detention ratios down 21.1 percent.

He added that raising private capital for the Pusan New Port didn't work well because there were problems in acquiring port facilities and that necessitated reconsidering large portions of the project. The government planned to raise 10,170 billion won of total building cost of 17,700 from private capital. But it failed to raise the money resulting in failure for the Pusan New Port.

He pointed out that the problems the government made are like that, first, pursuing private capital without pre-analysis of the project, and second, the project scope is too large for private capital.