1. Korea’s Infrastructure
Market and PPI System
Thank you for your introduction, Mr. Ryu.
As Managing Director of PICKO, Private Infrastructure Investment Center of Korea, let me once again welcome you and thank you for participating in this PPI conference.
The assigned time for me is about an hour. Now, in the next 40 minutes or so, let me brief you on Korea’s infrastructure market and PPI system. The remaining 20 minutes will be used to talk about the Ten Year Plan for PPI.
By the way, PPI stands for Private Participation in Infrastructure, and PICKO stands for Private Infrastructure Investment Center of Korea.
PICKOI KRIHS

2. & Infrastructure Market
Contents
PPI Incentives
Policy Guideline
Korean Economy
& Infrastructure Market
Private Investment Project Implementation Status
0 1
0 2
0 3
0 4
My first presentation will be in four parts as you see here in this slide.
To begin with, I will brief you on the Korean economy and the status of the infrastructure market.
Next, policy guidelines and PPI incentives provided by the Korean government.
Lastly, I will outline the current status of private investment projects in Korea.

3. Korean Economy & Infrastructure Market
PICKOI KRIHS
Korean Economy & Infrastructure Market
0 1
I will start my talk with comments on the status of the Korean Economy and the infrastructure market.

4. CENTER OF NORTH-EAST ASIA
in a roundabout way, bear with me.
We just flew in from Incheon International Airport.
As you can see from the map, Korea is situated in the middle of North East Asia.
We hope to take advantage of this strategic location.

5. VISION OF THE FUTURE VISION Regional Logistics Center
Regional Business Center
And become a regional logistics center, a business center, and a hub for tourism and innovation.
There have been recent ups and downs, however, the economy is slowly recovering to support this grand vision for Korea.
VISION
Asian Test Market
Center of Tourism
Global Center of Innovation

6. Korean Economy ’98 ’99 ’00 ’01 ’02 Growth rate -6.7 10.9 9.3 3.1 6.3
Inflation rate
7.5
0.8
2.3
4.1
2.7
Interest rate
15.1
8.9
9.4
7.1
6.6
KRW/USD
1,399
1,189
1,131
1,291
1,251
The ‘Asian Currency Crisis’ hit Korea late in Economic measures were quickly taken, and key sectors were restructured. The effects of these actions were dramatic. They halted the downturn and created the necessary conditions for a rapid recovery starting in 1999 as the slide indicates. The currency has stabilized and interest rates have fallen. And the financial restructuring and reforms in the public sector and the labor market will continue to be pursued vigorously through the government’s initiatives and market mechanisms.
Just as importantly, the economy has become more open. There is increased transparency, both internally and for overseas investors.
Especially, since April 2001, new accounting practices have begun to be phased in to eliminate deceptive accounting and reporting methods that impair market mechanisms.
Based on these efforts, we have achieved 6% economic growth, a drop to a near 3% in unemployment, and a 8% increase in exports for Prices, interest rates, and exchange rates were also quite stable.
Less favorable outcomes are expected for this year, however.

7. KOREA IN 2010 Major Trading Partner to the World 53 million people
Per Capita GDP of $20,000
Economic Size Close to Britain or France
One of Top Ten World Economies
Mainstream Player in World Economy
Major Trading Partner to the World
Both Imports and Exports
Shift from Technology Transfer to Technology Leadership
Major Investor in Other Countries
Two-Way Capital Flows
Despite the economic slow-down this year, we believe the engine of economic growth has been reignited for the long run.
By the year 2010, we plan to achieve 20,000 dollars per capita GDP level, and become one of the top ten world economies. By then, Korea will be an integral part of the global economy and a responsible member of the international community.

8. Opportunities for Infrastructure Investors
A LOT OF INFRASTRUCTURE STILL TO BE DEVELOPED
PPI CAN MOBILIZE FAR MORE CAPITAL THAN GOVERNMENT ALONE
CAN PROVIDE LOWER RISK INVESTMENT THAN CORPORATE SECTOR
HIGHER RETURNS THAN CORPORATE OR GOVERNMENT
BADLY-NEEDED LONG-TERM INVESTMENT INSTRUMENTS
KEY ROLE IN DEVELOPING KOREA AS AN INTERNATIONAL HUB
FOREIGN PARTICIPATION ESSENTIAL FOR ADVANCED DEVELOPMENT
CATALYST FOR LEADERSHIP
As in the past, Korea will have to partly rely on foreign capital if it is to realize it’s vision for the future.
Especially in the infrastructure sector, a lot of facilities need to be constructed, and in the process a huge amount of investment will have to be raised from the private sector, both domestic and foreign.
Korea’s infrastructure projects have many attractions. Because private participation in infrastructure supply is a relatively new concept in Korea, PPI projects offers relatively lower risk and higher return investment opportunities.

9. NEW BUSAN GADUK PORT Finance Asia Magazine
Foreign investors may not be comfortable with Korean financial practice, particularly in limited recourse financing. However, the Korean financial market is evolving towards the global standard, and we are seeing some positive results, as shown in the magazine news clip heralding the success of project financing for the Gaduk Port.
Not only this. We have other examples.

10. Foreign Investment Statistics
(Unit : USD Million)
# of
Projects
Confirmed
Under
Nego
Total
Equity 10
189 79
268
Debt
Finance 4
515
100
615 14
704
179
883
In 14 projects 704 million dollar is confirmed and 179 million dollar is under negotiation, in equity or debt financing.
And there are much more rooms for foreign investors in terms of financial need.

11. Estimated Infrastructure Investment Needs ( 2002 ~ 2011 )
(unit: USD bil.,%)
Sectors
Amount
Ratio
Roads 84
54.9
Railways 44
28.8
The demands for future investment in transport infrastructure are considerable.
The Ten-Year Plan for PPI estimates that in the next ten years a total of 153 billion dollars would be required for investments in transport infrastructure. Over half of this would be for roads.
When considering the fact that the table excludes the investment needs for local roads, urban rail, and environmental facilities, the total investment needs for infrastructure is enormous.
Airports 5
3.3
Ports
17.3
11.3
Logistics
2.5
1.7
Total
152.8
100

12. Leading Sectors of Infrastructure
Road
Port
Now, I will briefly go over some of the highlights of each of the leading sectors of infrastructure.
Rail & LRT
Environment

13. Road 200,000 km of principal roads and 10,000 km
of high-speed arterial network planned by 2020
PPI projects in operation : New Airport
Expressway, Cheonan-Nonsan Expressway
PPI projects under construction : Daegu-Busan
Expressway, Daejeon Riverside Expressway
Several projects in various stages of progress
A comprehensive and integrated road development program has been adopted as a key element in the national development plan.
A national master plan, with a completion date of 2020, sets the target for adding some 52,000 km to the network, giving the country a total of 200,000 km of principal roads.
Recently, participation by the private sector has increased in the central governments’ highway construction projects and in local government tunnel and bridge projects.
There are many more projects in various stages of progress.

14. Port Growth particularly strong in northeast Asian
trade and coastal shipping
Container terminal facilities in Busan and Gwangyang are being expanded to become hub ports in the region
7 PPI ports under construction including Busan New Port and several projects are in the inception and negotiation stages
In the port sector, there has been a strong growth in trade, and cargo handling.
The growth had been particularly strong in northeast Asian trade and in coastal trade.
The congestion at ocean going container berths has eased since new capacity came on stream at Busan and Gwangyang in 1998.
However, port facilities need to be expanded or newly built to meet the sustained growth in trade. The private sector is expected to play a major role.

15. Rail & LRT
Rail accounts for 30% of traffic flow in the greater Seoul area
The first stage of the ‘TGV’ style high-speed line is
under construction between Seoul and Busan
Gov’t is continuing to invest heavily in Rail & LRT systems as PPI projects
A section of Cheola Rail is being promoted as RTL project, many LRT projects under negotiation
Rail is an important urban mode of transport, currently accounting for over 30% of travel in the greater Seoul urban area.
The first stage of the ‘TGV’ style high-speed line is currently under construction between Seoul and Busan, with operation scheduled to start in 2004.
And the Government is continuing to invest heavily in rail transport, including subways and LRT systems in urban areas.
Many subways and LRT projects are being promoted as PPI projects and recently a proposal was made by the private sector to electrify the Cheola Railine using the RTL method.

16. Environment
Increased environment budget, construction subsidy announced in the relevant Act, user charge paid by the government
Active private participation in wastewater
facilities due to friendly policy environment
Trend toward private participation of water
supply, gas generated power plant, etc.
The environment budget of the central government is increasing along with the growing importance of environmental protection.
The Ministry of Construction and Transportation (MOCT) and the Ministry of Environment (MOE) have budgets for large scale water infrastructure, and the public management fund provides loans for environmental infrastructure. The ratio of construction subsidy is preset in the relevant Acts. User charges are paid by the relevant authority.
Thanks to this friendly policy environment, private participation is rapidly increasing in various environment related facilities.

17. Policy Guideline 0 2 PICKOI KRIHS
Now, I will introduce the Korean PPI system.

18. History of PPI 1994 Enactment of Act on PPI 1999. 1
Enactment of the Promotion of Private Capital
into Social Overhead Capital Investment Act
Establishment of PICKO
(Private Infrastructure Investment Center of Korea)
Formulation of the Ten-Year Plan for PPI
1994
The origins of the PPI program can be found in the 1994 “Promotion of Private Capital into Social Overhead Capital Investment Act.”
Based on this Act, a number of solicited projects were developed and offered for private investment. However, progress in reaching closure on these projects was very slow.
Because of the limited success of this initial effort and in response to the financial crisis in 1997, the government introduced a new PPI law in April 1999 to address the concerns of private investors.
This act also created PICKO to assist in the implementation of these projects.
In the year 2001, the Ten-Year Plan for PPI was formulated for the purpose of providing predictability to government investment policies and enhancing the effectiveness of private infrastructure investment.

19. Policy Direction Change to a private-sector-initiated orientation
Promotion of creativity and efficiency
from the private sector
Conformity to international standards
for foreign capital inducement
With the enactment of the new law on PPI, the policy direction change went from a government-centered to private-sector-initiated orientation.
Creativity and efficiency from the private sector was encouraged.
The new policy direction conformed to the international standards for foreign capital inducement, as you can see in the following slides.

20. Eligible Facilities under PPI System
36 types of infrastructure facilities in 10 categories
Road 3
Railway 2
Harbor
Energy
Environment 6
Distribution
Culture
& Tourism 7
Airport 1
Water
Resource 4
Communi
- cation
As you see in the slide, there is a wide array of infrastructure facilities which can be implemented under the Act on PPI including roads, railways, harbors, airport, environmental facilities, international conference facilities.
The government has recognized that some transport projects such as urban transit are difficult to finance because of low rate of return.
In order to make these projects more attractive, the PPI program allows for the introduction of supplementary projects, such as housing development projects, which will enhance the overall project rate of return.

21. Solicited Projects Selection of Private Investment Project
DEDPI: Detailed Engineering and Design Plan for Implementation
Concerned
Authorities
Authorities /PICKO
Selection of Private Investment Project
Public Notification of Instruction for Proposal
Submission of Project Proposal
Evaluation of Proposals
Plan Approval of DEDPI*
Negotiation of Concession Agreement
& Designation of Concessionaire
The procedure for processing a solicited project has been simplified as shown in the diagram. The process has been modified to encourage competitive bidding for projects that are financially attractive.
It also allows for negotiation of the terms of the concession agreement. The initial development of the project is undertaken by the concerned Authority, for example Ministry of Construction and Transportation in the case of transport infrastructure. The Authority is also responsible for approval of the Engineering Plan and confirmation of project completion.
The selection of Investment projects, evaluation of proposals and negotiation of the concession agreement involves various parties such as Ministry of Planning and Budget, concerned Authorities and PICKO.

22. Unsolicited Projects Project Preparation & Submission of Proposal
Proposer
 Concerned
Authorities
Project Preparation & Submission of Proposal
Review of Proposal
PICKO
Concerned
Authorities
Public Notification of Proposal
For unsolicited projects, the procedure is similar but allows for counter proposals as shown in the diagram. The private sector prepares the proposal and the submitted proposal is evaluated by PICKO.
If approved, it is then submitted for public bidding. A 90 + day period is allowed for submitting counter proposals by the third party. These are evaluated and a winning bidder is selected.
The original proposer is given an advantage in the evaluation of the bids up to a maximum of 10 % of the total evaluation score.
Project structure is determined through negotiations, following the same procedure as the solicited project case.
(No Third Party Proposals)
Award Contract to Initial Bidder
(More Proposals Tendered)
Evaluation of all the Proposals
Award Contract to Winning Bidder
Negotiation of Concession Agreement

23. Role of PICKO PICKO Provide Promote Provide Research & Formulate
Review / Evaluate
Solicited
& Unsolicited Project
Proposals
Provide
Assistance
in Concession
Negotiations
Promote
Various Activities
to Induce
Foreign Investment
PICKO
PICKO participates with the Line Ministry in the review and evaluation of proposals. It also assists in the development of the concession agreement and subsequent negotiations to reach closure.
Where the agreement includes a government subsidy or other financial commitment, the Ministry of Planning and Budget will also participate in negotiations.
PICKO is involved in providing consultation to foreign & domestic investors. PICKO also provides educational programs for government officials and perspective investors.
Provide
Educational
Programs
Research
& Formulate
PPI Policies

24. PPI Incentives 0 3 PICKOI KRIHS
I will now introduce to you some of the incentives we have under the PPI system and policy.

25. Project Return Criteria
FIRR (relative to)
Borrowing Rates
Risk Premium
Competitive Rates
Guideline : 12~15%
Type of Project
Level of Risk
The financial viability of the projects presented for private sector investment is of critical concern to the government.
If a project is not projected to produce an acceptable financial rate of return, then the economic evaluation is reviewed to determine whether the investment is justified in terms of the benefits provided to the economy. If this is the case, then various options will be considered for improving the acceptable rate of return.
The acceptable financial rate of return is determined by taking into account three factors:
1. The average cost of borrowing for infrastructure projects
2. The risk premium associated with the type and scale of the project
3. The rate of return for similar projects in other countries competing for investor funds
The possible range in determining the rate of return for PPI projects is 12%~15% and the exact number is determined through negotiation considering the type of project and level of risk.

26. Land Acquisition Use of Public Land wherever Possible
Government Acquisition of Private Land
Prior to Concession
Use of Eminent Domain where Necessary
to Enable Project Concessionaire to
Complete Land Acquisition
The acquisition of land is a major risk to any investor in greenfield infrastructure projects, particularly road and rail projects.
In order to limit the difficulties of land acquisition, the government has given priority to the use of public lands for infrastructure projects.
The government will also undertake to acquire the private land required for the project.
In situations where the investor is required to negotiate with the owners for the purchase of the land, the government will assist the investor through its use of the right of eminent domain.

27. Revenue Guarantees Unsolicited Negotiated as Part of Project Agreement
Based on Annual Projected Revenues as follows
Solicited
< 90%
< 80%
> 110%
Proponent
Rebate
> 120%
Government
Subsidy
Unsolicited
While it is the intention of the government to identify financially robust projects, it is inevitable that some of the projects will have a degree of risk which is unacceptable to the private sector. Greenfield projects often fall within this category.
For high-risk projects, the government is willing to provide revenue guarantees. Under the PPI law, the government were able to guarantee up to 90% of the projected revenues for solicited projects and 80% of the projected revenues for unsolicited projects.
Where these guarantees are provided, the government will also limit the amount of revenue which the project developer can retain. This amount would be 110% of projected revenues for solicited projects and 120% of projected revenues for unsolicited projects.

28. Revenue Guarantee Revised
Guarantee up to 90%(80%) of revenue for first five years,
80%(70%) for second five years, and 70%(60%) for third
five years
Symmetric rebate arrangement
Self Responsibility Limit of 50% is introduced
Revenue Guarantee will not be provided for projects
which earn less than 50% of projected revenue
This year, as the Korean PPI system is settling down and as unsolicited proposals are rapidly increasing the revenue guarantee policy is moving toward taking less market risk for the government.
For a solicited project, the government may offer a revenue guarantee of up to 90% and decrease the limit by 10% for each five years for 15 years. The limits are 10% less for an unsolicited project. Symmetrically, any revenue above a certain limit must be remitted to the government.
A new concept, self responsibility limit is introduced to prevent ill prepared proposals. If revenue falls below 50%, revenue guarantee will not be provided.
This new policy will be adopted for future projects.

29. Tax Incentives Application of 0% for value added tax on the
No acquisition and registration taxes : BOT
Application of 0% for value added tax on the
facilities and construction services : BOT, BTO
Tax reduction for infrastructure bonds
Reduction and exemption of various
appropriation charges
As you see in the slides, various tax incentives are provided. They are
1. Exemption from acquisition and registration taxes for BOT projects
2. Application of zero percent for value added tax on the construction services for BOT and BTO projects
3. Reduction and exemption of various appropriation charges
Other tax incentives granted to the project companies under the PPI program are that
1. 5% of the investment will be recognized as a reserve and treated as an expense for the purpose of computing corporate taxes; and
2. 50% reduction on capital gains taxes from the sale of assets (for example, land and building) connected with projects during the implementation
In addition, the project company will be able to issue infrastructure bonds that have a lower tax rate on interest.

30. Protection against F/X Risks
Allowable Fluctuation of ± 20%
Mitigation Measures
Adjustment of tariffs
Direct operating subsidies
Contract re-negotiation
One of the concerns uppermost in the minds of foreign investors in Asia is foreign exchange risk.
The revenues from the services provided through infrastructure projects is primarily in Won.
Therefore, the government has undertaken to limit the investor’s risk from foreign exchange fluctuations.
The extent of the provisions for tariff modification or government support, etc. due to f/x loss shall be agreed upon in the concession agreement within fifty percent (50%) of the loss amount. The loss amount is calculated by substracting the loss due to 20% changes in the exchange rate from the entire foreign exchange loss. In other words, the loss due to exchange fluctuation above 20% will be covered.

31. Additional Incentives
Buyouts
force majeure
other specific events
There will be no adjustment in tariffs or concession period when construction cost is saved
For solicited projects, the government covers the cost of the feasibility study, and preliminary and final design
For unsolicited projects, a part of preparation cost of second best bidder can be reimbursed
The PPI law provides for government buyout of a project in cases of prolonged force majeure. Government buyouts may also be provided in certain extraordinary circumstances as indicated in the concession agreement.
Another incentive is protection from a reduction in tariff or in the period of the concession, if the project developer is able to reduce the construction costs below those estimated in the agreement. However, this also implies that there would be no adjustment if the construction costs exceed the original estimate.
In the case of solicited projects the government covers the costs for the preliminary design, feasibility study and detailed design. However, the exact terms will be negotiated as part of the concession agreement.
Budget permitting, to promote competition for the unsolicited projects, one third of the project preparation cost of the second best bidder may be reimbursed.

32. Private Investment Project Implementation Status
0 4
Private Investment Project Implementation Status
Now, I will introduce to you the implementation status of PPI Projects in the years from 2000 to present.

33. Contract Awarded Projects
Central Gov’t : USD 14.3 Bil in 19 projects(’03.6)
8.3
(11)
2.7
(4)
3.0
(2)
0.3
Road
Harbor
Rail & LRT
Logistics
Units : USD Bil.
In addition, 29 projects amounting to over 6 billion US dollars, are currently under negotiations.
Municipal Gov’t : USD 3.9 Bil. in 79 projects (’03.6)

34. Projects under Negotiation
 Central Gov’t : USD 5.4 Bil in 14 projects(’03.9)
2.9
(6)
0.6
(3)
1.6
(4)
0.3
(1)
Road
Harbor
Rail & LRT
Logistics
Units : USD Bil.
In addition, 29 projects amounting to over 6 billion US dollars, are currently under negotiations.
 Municipal Gov’t : USD 935 Million in 15 projects(’03.6)

35. The Ten-Year Plan for PPI
2002 ~ 2011
Now, I will introduce to you The Ten-Year Plan for PPI.

36. PICKOI KRIHS
Why the Ten-Year Plan
for PPI ?
0 1
continue

37. Increased demand for gov’t expenditure
for welfare and future investment
Increased needs of private investment
in infrastructure
Need for forseeable government investment
policies
There is a strong constraint in the government’s infrastructure investment funding.
This is mainly due to fast growing government expenditure in the area of welfare transfer and the promotion of the knowledge industry.
Moreover, infrastructure demand is still growing.
Therefore, the government has to encourage more private sector involvement in infrastructure provision.
To promote private investment in infrastructure effectively, it is essential to provide the government’s blueprint on PPI and project information to potential investors.
In this context, the Ten-Year Plan was formulated.
The Plan was formulated based on Article 7 of the Act on PPI and in consideration of investment policy direction and priorities by sectors.

38. Infrastructure Investment Status & Prospects
PICKOI KRIHS
Infrastructure Investment Status & Prospects
0 2
In part 2, I will introduce to you the status & prospects of infrstructure investment.

39. 1. Estimated Amount of Investment
in Infrastructure
Scale of infrastructure investment demand
in the 10-year plan
- USD 153 billion during the plan period
(On average USD 15.3 billion per year )
Estimation of government expenditure
in infrastructure during the plan period
- USD ~ billion
The estimation for the plan period from 2002 through 2011 is mainly based on the Mid-term Transportation Facilities Investment Plan (2000∼2004) and investment demand of other national transportation network plans.
The investment need for infrastructure up to year 2011 is forecasted at 153 billion dollars which is 15.3 billion dollars annually.
The available amount from government source is estimated to be from 123 to 139 billion dollars which is an annual investment of 12.3 to 13.9 billion dollars.

40. 2. Private Infrastructure Investment Needs
Difference of about USD 14 ~ 30 bil.
(USD 1.4 ~ 3.0 billion annually) needed
as additional investment
: Active participation by private sector in
infrastructure is urgently needed
to resolve the problem of fund shortage
When comparing the infrastructure investment needs and the estimated possible government investment amount during the Plan period, the amount from 14 to 30 billion dollars must be provided by private sector participation in infrastructure.

41. of Infrastructure Investment
3. Appropriate Distribution
of Infrastructure Investment
(USD : bil.)
Sector
Investment
Need
Government Investment
Private Investment
Government Subsidy
Road 84
58.2∼71.1
13∼25.9
3.9∼7.8
Rail 44
30∼38.1
5.9∼14
2.4∼5.6
Port
17.3
11.8∼14.8
2.5∼5.5
1.0∼2.2
Airport 5
4.6~5.0
0.0~0.5
0.0~0.2
Logistics
2.5
1.9∼2.3
0.3∼0.6
0.1∼0.1
Total
152.8
106.5∼131.3
21.7∼46.5
7.4∼15.9
Taking into account the funding gap, appropriate distribution of infrastructure investment is as shown in this slide.
There is a total infrastructure investment need of billion dollars.
The amount of government investment in infrastructure is to billion dollars. That is gov’t financed project cost.
The amount of government subsidy is 7.4 to 15.9 billion dollars.
14.2~30.5 billion dollars is the private sector’s contribution to infrastructure funding.
The total volume of private investment projects in Korea, which includes the government subsidy, should be from 21.7 to 46.5 billion dollars during the next 10 years.

42. Projects to be Promoted
PICKOI KRIHS
0 3
Projects to be Promoted
as PPI scheme
In part 3, I will introduce to you the projects to be promoted through PPI.
You can look up the English version Ten Year Plan provided to find the detailed information.

43. 1. Road Selection Criteria Individual feasibility studies
- IRR, ROE, Toll
- The level of government subsidy
18 Projects : USD 14.5 billion
The selection criteria for the road sector are based on individual feasibility studies.
The categories of IRR, ROE, toll, and the level of government subsidy were evaluated for several projects planned.
Based on these, a total of 18 candidate projects of the road sector have been selected.
10 expressways of 8.9 billion dollars were selected as well as 6 national highways of 1.2 billion dollars, and 2 local roads of 4.4 billion dollars were selected, which totals to 14.5 billion dollars in total project costs.
Seoul-Chuncheon Expressway project is already proposed by the private sector and is under negotiation.
(USD : bil.)
Type
Projects
Cost
Expressway
Yangpyeong-Ganam, Seoul-Chuncheon, and 8 others
8.9
National Highway
Ansandong-Misandong-Mansu, Dunpo-Oseong, and 4 others
1.2
Local Roads
The 3rd Circulatory Line, West Coast Beltway
4.4
18 Projects
14.5

44. 2. Rail Selection Criteria 23 Projects : USD 10. 2 billion
Passenger demand
Traffic density
B/C Ratio
23 Projects : USD billion
(USD : bil.)
The selection criteria for the rail sector are based on passenger demand, traffic density, and cost-benefit ratio among others.
Based on these, a total of 23 candidate projects of the rail sector were selected.
Two main network railways of 900 million dollars, two metropolitan railways of 3.1 billion dollars, 3 urban railway extensions of 1 billion dollars and 15 light rail transits of 5.2 billion dollars were selected, which totals to 10.2 billion dollars in total project costs.
Public notification of the New Bundang Line was recently announced to invite competing proposals.
Type
Projects
Cost
Main Network Railway
Bujeon-Sasang Double Track Railway, Gyeongeui Line, Gyeongwon Line
0.9
Metropolitan
Railway
New Bundang Line, New Ansan Line
3.1
Urban
Extension of Seoul Subway Line 7, 8, 9
1.0
LRT
Yongin LRT, Gangnam PRT, and 13 others
5.2
23 Projects
10.2

45. 3. Port Selection Criteria 29 Projects : USD 5.4 billion
Consideration of undeveloped projects out of current harbor
development plan
Projects with high priority and favorable private investment conditions
29 Projects : USD 5.4 billion
(USD : bil.)
The port sector includes the urgency of a facility, project scale, profitability, and subsidy scale as selection criteria.
In addition, development projects that have not been promoted in the current harbor development plan were selected.
A total of 29 candidate projects were selected.
The selected projects are 23 trading ports of 4.7 billion dollars, 3 waterfront facilities of 600 million dollars, and two fishing ports of 100 million dollars, and 1 combined passenger facility of 20 million dollars, which totals to 5.4 billion dollars in total project cost.
The concession agreement was signed for Bieungdo port last year.
Type
Projects
Cost
Trading Port
Incheon North Harbor Sector 3,
Gwangyang Port Sector 4-1, and 21 others
4.7
Waterfront Facility
Busan Dongsam-dong Ocean Park, Ulsan Port Ocean Park, Masan Port Western Sector
0.6
Fishing Port
Facility
Daepo Port, Bieungdo Port
0.1
Passenger Facility
Jeju Harbor Int`l Passenger Terminal
0.02
29 Projects
5.4

46. 4. Environment Selection Criteria
Facilities included in Basic Plan for Sewage
Completion and Rehabilitation
Facilities with high profitability
Facilities for which government subsidy plan
has been confirmed or is under consideration
The candidate projects of environment sector were selected from the basic plan for sewage completion and rehabilitation.
The selection criteria were project profitability and whether the government subsidy plan on the project had been confirmed or is under consideration.

47. 89 environment projects : USD 3.0 billion
Type
No. of Projects
Cost
Sewage Treatment Plant 51
2.5
Sewage Sludge Treatment Plant 17
0.2
Waste Treatment Plant 11
General Waste Landfill Gas Plant 8
0.04
Food-Waste Recycling Plant
and Refuse Derived Fuel 2
0.07
89 Projects
3.0
Therefore, a total of 89 candidate projects of the environment sector have been selected.
The selected projects are 51 sewage treatment plants of 2.5 billion dollars, 17 sewage sludge treatment plants of 200 million dollars, 11 waste treatment plants of 200 million dollars, 8 general wastes landfill gas plant of 40 million dollars, one food-wastes recycling plant and one refuse derived fuel plant, which totals to 3 billion dollars in total project costs.

48. 5. Other Selection Criteria 20 Projects : USD 15.4 billion
Logistics : Government’s Basic Plan in Logistics
Energy : Power plants that are planned for private participation
Tourism
- Regions that serve as strategic base for foreign tourism
- Balanced regional development considered
20 Projects : USD 15.4 billion
Other facilities include the sectors of logistics, energy, and tourism. The selection criteria for logistics were based on the government’s basic plan in logistics.
The energy-related projects were selected based on whether the plants would be promoted for private sector participation.
Tourism-related projects were selected based on location as a strategic base for foreign tourism and whether balanced regional development is promoted.
Therefore, a total of 20 projects have been selected as candidate projects.
Two logistics projects are selected with total project cost of 700 million dollars. 13 energy projects of 11 billion dollars were selected and 5 tourist facilities of 3.7 billion dollars were selected, totaling 15.4 billion dollars for the entire project cost in this area.
( USD : bil. )
Type
Projects
Cost
Logistics
Central Region Integrated Freight Terminal,
Yeongnam Region Integrated Freight Terminal
0.7
Energy
Dangjin(Coal), Ulsan(Orimulsion), and 11 others
11.0
Tourism
Capital Region Lodging, Lake Andong, and 3 others
3.7
20 Projects
15.4

49. 6. Summary Total Project Cost : USD 48.4 billion Classification
No. of
Projects
Government
Subsidy
Private
Investment
Road
14.5 18
4.3
10.2
Environment
Facilities
3.0 89
1.3
1.7
Port
5.3 29
2.1
3.2
Rail 23
4.0
6.2
Total
48.4
179
12.4
36.0
Other Facilities
15.4 20
0.7
14.7
( USD : bil. )
In sum, the total project cost for the 179 selected private investment projects is 48.4 billion dollars.
When excluding 12.4 billion dollars of government subsidy, the net private investment needs are 36 billion dollars.
The private investment needs can be further broken down to 10.2 billion dollars for roads, 6.2 billion dollars for railways, 3.2 billion dollars for ports, 1.7 billion dollars for environment facilities, and 14.7 billion dollars for other sectors of logistics, energy, and tourism.
I would like to direct your attention to the subsidy ratio of environment facilities. The government subsidy provision ratio for this sector is higher than other sectors due to growing concerns of preserving the environment.
In conclusion, I’d like to point out that the Ten-Year Plan for PPI lays out a clear blueprint of the private infrastructure market status of Korea.
Many investment opportunities exist in Korea and more detailed information about the Plan is provided in the ten-year plan book.

50. Thank You Very Much
I have briefly introduced Korean PPI system and overviewed the Ten Year Plan.
To save time, questions from the floor will be entertained after the presentation.
Thank you very much, you have been a wonderful audience.
Like I promised I will now invite questions, comments from the floor. We have government officials, project sponsors from the private sector, and PICKO staff, so the question can be related to today’s presentation or any issues in general.
I will now have to close the morning session because the lunch is waiting for us. Everybody is invited and we hope see you all at the individual meetings in the afternoon.