The Korean government has been implementing Build-Transfer-Lease (BTL) projects since 2009 after submitting the expense limit on BTL projects along with the annual government budget bill to the National Assembly for deliberation. The expense limit for the fiscal year 2014 presented to the National Assembly amounts to KRW 706.2 billion.   

    BTL projects harness the efficiency and creativity of the private sector and are able to move forward more quickly in providing social infrastructure facilities, which otherwise would take a backseat in public investment due to fiscal conditions. However, the long-term payments borne by the government lead to the issue of transferring the current financial burden to future generations. Against this backdrop, the National Assembly Budget Office (NABO) has forecasted government payments on BTL projects in the coming years and assessed the feasibility of each project facility under the BTL expense plan for the fiscal year 2014 in order to support the National Assembly's deliberation on the budget.

    According to the projection, the estimated government payments will be KRW 52,988.7 billion for the BTL projects in which execution agreements have been concluded from 2005 until today. Among them, KRW 28,721.3 billion should be funded by the national finance, including KRW 26,860.9 billion to be paid after 2014. The government payments are estimated to surpass KRW 2 trillion each year from 2014 through 2029, and in 2026 alone, the government is expected to pay KRW 2,680.1 billion.   

    The findings of the feasibility study on BTL project facilities are as follows. First, as the difference between the BTL project rate of return and the 20-year treasury bond yield can incur an unnecessary public spending increase, the government needs to consider a measure to lower the former for the fiscal year 2014 to the level of the latter.   

    Second, when applying the same discount rate to both, while the BTL project rate of return and the 20-year treasury bond yield differ, the present values of the public sector comparator (PSC) and private finance investment (PFI) are not statistically significant enough to compare.

    Third, the government needs to revisit government-led BTL project plans on incorporated national universities. As the state grants for these universities are earmarked every year reflecting their previous budget amounts and the size and growth rate of the nation's higher education budget, the Ministry of Education will not be able to afford to pay incorporated state-run universities with an extra budget account for lease fees on their dormitories built under the BTL projects.

    Fourth, the permissible limit on hospital bed shortages may change in tandem with how to apply the maximum value of the Relevance Index (RI) and Commitment Index (CI). Therefore, it is worthwhile for the Gyeonggi Provincial Government and the Ministry of Health and Welfare to consider that the number of newly built hospitals could change, which is determined through institutional judgement based on the actual number and maximum limit of bed shortages.

    Fifth, the government needs to review the second-phase of the Songdo ConvensiA project to adjust its implementation schedule to reflect the utilization rate of existing facilities, connectivity to other exhibition venues around the capital area, and the potential of Songdo to grow into an international convention city. Moreover, it is essential for the government to acquire the know-how to organize an international conference through sharing duties with other exhibition halls and to pursue the project guided by actual demands after international organizations move into the facility.

    Sixth, although it is tricky to examine and monitor the performance of BTL projects since they are implemented alongside public investment projects, the government should closely analyze and assess the performance of the BTL project on sewage pipelines. 

    Lastly, the government needs to find a way to cut its spending through unleashing the creativity and efficiency of the private sector when carrying out BTL projects for constructing public office buildings.