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(Yonhap Feature) S. Korea's leading builders setting sights on canal project
By Nam Kwang-sik
SEOUL, Jan. 20 (Yonhap) -- South Korea's major builders have been showing keen interest in a cross-country waterway project, President-elect Lee Myung-bak's key campaign promise, amid growing controversy over its feasibility and environmental impact.
The high-profile project, estimated to cost at least 15 trillion won (US$16 billion), aims at linking 12 waterways in the country, including the Han River and the Nakdong River, to create a canal for transport and travel.
During the campaign, Lee stressed that if completed, the waterway could cut the nation's logistics costs by a third, promote balanced regional development, create thousands of jobs and boost tourism.
In a show of interest, South Korea's top five builders formed a joint consultative body on Jan. 13 to assess whether the "Korean Peninsula Grand Canal" project is viable. They have yet to disclose when their assessment will become available.
Analysts say the builders -- Daewoo Engineering & Construction Co., Samsung Engineering & Construction Co., Hyundai Engineering & Construction, GS Engineering & Construction Co. and Daelim Industrial Co. -- are upbeat about the project's viability, but they remain wary.
"Although the builders have yet to release data on the feasibility of the canal project, they are optimistic," said Choi Na-young, an analyst at Woori Investment & Securities Co. "However, they remain jittery over whether they could recoup their investment in the project."
Hu Moon-wook, another analyst at Samsung Securities Co., said the builders are weighing whether the project would be financially viable. "The builders are reviewing whether the canal could lead to large-scale housing developments around its terminals."
"If they determine that is possible, they will enter the project without hesitation to secure a share of the housing development market ahead of other rivals," he said.
The incoming government plans to push for the project under a build-operate-transfer (BOT) system, according to data posted on the Web site of Lee's Grand National Party.
Under the BOT program, the government will hire private construction companies to build the waterway and other facilities. The builders will operate the facilities to recoup their investments for a specified period before ownership is transferred to the government.
By South Korean law, the government does not guarantee profits of private companies that participate in BOT projects.
President-elect Lee reconfirmed in his New Year's news conference held on Jan. 14 that the canal should be funded with private capital, stressing his incoming administration has no plan to finance it.
"The incoming government will conduct a feasibility study and carry out an environmental impact assessment only after private investors propose constructing it," he said.
Lee's plan to attract private capital for the canal project has also caught the attention of foreign investors. On Jan. 3, Lee's transition team said six investors from countries such Germany, the United Arab Emirates and Saudi Arabia had expressed interest in the project.
However, there is also opposition to the project. Critics insist that it would be economically unviable and environmentally disastrous, not to mention immensely expensive.
On Jan. 10, an alliance of 181 civic groups proposed to Lee's transition team that a joint committee be set up to conduct an environmental assessment of the project and gather diverse opinions from the public.
Lee pledged that the incoming government will gather public opinion before starting the project. During his New Year's news conference, Lee stressed the canal project should be pushed forward based on a national consensus.
The transition team is to hold a public hearing on the project in February, and an on-site survey of the proposed canal area including environmentalists is due in March.
ksnam@yna.co.kr
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