Chapter 399 |
Prime Minister Ryu Jeong-hoon seemed lost in deep thought.
After a while, he spoke.
“How do you intend to develop Saemangeum?”
“There are largely two reasons why Saemangeum's development has been sluggish. First, the government failed to pursue a consistent policy, and second, capital wasn't properly invested. As you know, at this rate, proper development won't even have begun in ten years.”
“Are you saying OTK Company can shorten that period if it steps in?”
I nodded.
“Yes. But to do so, there are a few conditions.”
“Would you care to state them?”
I said, sipping my coffee.
“You mean Saemangeum, as a separate entity?”
“Yes.”
Actually, there was similar talk before. The plan then was to combine Gunsan City, Gimje City, and Buan County in Jeonbuk, along with Seocheon County in Chungnam, to create a metropolitan city. There was no compelling reason for it, and it wasn't very realistic, so it remained just talk and eventually fell through.
“If it goes according to plan, Saemangeum will be the size of a metropolitan city with a population of one million. It's inefficient for different local governments to manage separate parts of that area. Therefore, it would be best to reorganize the administrative districts before development begins.”
“Reorganizing administrative districts is not a simple matter.”
Local governments will resist, as they'd see it as losing land. Furthermore, if Saemangeum's population increases, electoral districts would also need to be redrawn. This is a highly sensitive issue in political circles.
“Resolving that is the government's role, isn't it? Fortunately, Saemangeum is in the Honam region, right?”
Saemangeum is in the Honam region. Honam is a stronghold for the New Politics Party, and most local government heads and council members there belong to that party.
“The Saemangeum development will greatly benefit the surrounding areas. Once construction is in full swing, local small and medium-sized construction companies and workers will welcome it.”
It's about transforming land that's currently just a dust bowl into a high-tech city of hundreds of thousands. Since the surrounding local governments stand to benefit the most, it should be possible to persuade them.
“What's the second condition?”
“Second, I would like OTK Company to take the lead in the Saemangeum development.”
Prime Minister Ryu Jeong-hoon frowned.
“Are you asking us to hand over development rights to a private company?”
“That would be ideal, but I suppose that would be difficult, wouldn't it?”
Saemangeum development has so far proceeded as a national project. It's realistically impossible for a private company to take it over. The opposition party and the public would object, and accusations of preferential treatment would surely arise.
“Besides, OTK Company isn't even a Korean company, is it?”
I chuckled.
“We are indeed a foreign company. So, I propose we proceed with public development as originally planned, but with OTK Company participating.”
“In what way?”
“I understand there are plans to establish a dedicated public corporation for Saemangeum development.”
The government is also aware that development has been sluggish. Consequently, several options were discussed to expedite the project: direct state intervention, entrusting the task to other existing public corporations, or establishing an entirely new, dedicated public corporation. Direct state involvement hadn't yielded significant results, and assigning it to bodies like the Korea Land & Housing Corporation or the Korea Rural Community Corporation was problematic, as their existing duties would prevent them from fully dedicating themselves to Saemangeum. Therefore, establishing a dedicated public corporation emerged as the most realistic alternative. The plan is to create a Saemangeum Development Corporation to rapidly advance land reclamation, attract investment, and manage related projects.
“Establish the Saemangeum Development Corporation, and I would like OTK Company to acquire a 49 percent stake in it.”
A public corporation is one established with government funding. Typically, the government holds a majority stake, and the corporation undertakes public roles like developing social infrastructure. However, it resembles a private company in structure and can even be traded on the market. Korea Electric Power Corporation (KEPCO) is a prime example.
“Establishing a new public corporation—with legal amendments, staff recruitment, and so on—will take at least a year before it's operational. If OTK Company can get started in the interim, progress could be much faster.”
“Is there a third condition?”
“I'd like to buy some land.”
Prime Minister Ryu Jeong-hoon frowned.
“Are you saying you want to secure prime land before development begins?”
Buying land cheaply before developing it to raise its value is a common tactic for companies.
“Isn't there plenty of land to go around anyway?”
Saemangeum's total area, including the freshwater lake, is 400 square kilometers. Ironically, the vastness of the site is one reason development has been continuously delayed. How much capital would be required to develop such an enormous area?
“I understand the problem is that even when you try to sell the land, no companies are buying.”
Of course, it’s not just about selling land; various conditions are attached, like constructing buildings and factories, conducting business operations, and creating jobs. Even so, it's dirt cheap.
I said, as if it were obvious.
“This is an investment in a high-risk venture. It's only natural to reap the profits if it succeeds. You can think of it as a kind of stock option.”
A stock option is when a company grants shares to its executives in addition to their salary. If the company grows, the stock price increases, yielding substantial profits. Conversely, if the company fails, the stock becomes worthless, which motivates them to work hard.
“If the development is successful, the land's value will skyrocket hundreds, even thousands of times its current worth. Conversely, if it fails, it will remain nothing but a dust bowl. Since profits can only be realized upon success, wouldn't that serve as strong motivation to work hard?”
Prime Minister Ryu Jeong-hoon couldn't refute my words.
“If you agree to these conditions, I will transform Saemangeum into Korea's largest high-tech industrial city.”
It could solve the problems facing the Korean economy in one fell swoop and, additionally, boost the administration's approval ratings. If it succeeds, there's no reason to oppose it.
Prime Minister Ryu Jeong-hoon looked at me and asked.
“Why do you want to develop Saemangeum?”
Well, it was obviously because I'd seen the future, but...
“Because it will make money, of course.”
A company wants to do something that makes money. What more reason is needed?
“Do you believe the development will succeed?”
“I am an investor.”
That single statement should have been a sufficient answer. After all, investors never put money into ventures they expect to fail.
Prime Minister Ryu Jeong-hoon nodded slowly, his expression heavy.
“I will carefully review the proposal you've made.”
***
Park Jeong-soo, Head of the Investment Attraction and Cooperation Division at the Saemangeum Development and Investment Agency.
His job was to attract corporate investment to Saemangeum. He traveled all over the country by KTX, meeting with investment managers from various companies to persuade them to invest in Saemangeum.
CJH Company, a mid-sized enterprise producing raw materials for cosmetics, was considering establishing a factory and a research institute.
During his meeting with their investment manager, Park Jeong-soo enthusiastically outlined the advantages of Saemangeum.
The government had designated Saemangeum as a special economic zone and was actively encouraging businesses to set up there. The incentives offered were nothing short of groundbreaking.
If companies relocated factories or headquarters from large cities, they received a five-year deferral on corporate tax. Moving factories from the overcrowded Seoul metropolitan area or investing above a certain threshold brought corporate and income tax reductions. There were also benefits like local tax breaks, general tax exemptions, waivers on consumption and value-added taxes, and customs duty exemptions. Investment subsidies were offered, along with a one-stop service for processing all necessary paperwork.
“We can offer land for buildings and factories at unimaginably low prices. As you probably know, it's below the actual development cost.”
The investment manager nodded.
“Indeed, at this price, it's practically free.”
“We also offer a reduction in land acquisition tax, and the purchase price can be paid in installments over several decades.”
Compared to building a factory in the Seoul metropolitan area, these terms were indeed fantastic.
“We will review it favorably.”
“Please, I'm really counting on it.”
After leaving CJH Company's headquarters, he started calling other companies that had shown interest in Saemangeum.
“Daejeon? Of course. I should certainly come to you. If I leave now, I can be there by around 4 PM. I'll head out immediately.”
Another appointment was secured, and he boarded the KTX once more.
A few days later.
He received a call from the investment manager at CJH Company.
“Hello, Manager. Today's our meeting day, isn't it? I'll head up to Seoul to see you later.”
The manager on the other end sounded apologetic.
“[I'm very sorry, Mr. Park. It looks like our meeting today will be difficult. The executive board has tentatively decided to build the factory in the Seoul metropolitan area. I'm truly sorry.]”
Park Jeong-soo forced a cheerful tone.
“Not at all, Manager. I know you put a lot of effort into this. Even if it didn't work out this time, I hope we can connect on something positive in the future.”
“[Thank you for your understanding.]”
After the call ended, he heaved a long sigh.
Out of a hundred companies he consulted with, maybe one, if any, would actually lead to a contract. It wasn't the first or second time a deal had fallen through right at the brink of signing.
But today, for some reason, he felt particularly drained.
He headed to the employee cafeteria for lunch with his colleagues.
“Struck out all week.”
“Do we really deserve to get paid for this?”
“Ah! What happened with CJH Company?”
Park Jeong-soo shook his head.
“It's a bust.”
“Figured as much. They seemed like they were just testing the waters from the start. By the way, CJH Company, AGK Company, PL Company... why do all these company names sound so similar?”
After OTK Company gained fame, it became trendy in Korea to form company names by adding 'Company' to English initials. Some businesses even rebranded. CJH Company, for instance, was originally 'Cham Joheun Hwajangpum' (Very Good Cosmetics).
“It's ridiculous to ask companies to move in after slashing the infrastructure budget.”
“If the construction had just proceeded as scheduled, hundreds more companies would have moved in by now.”
Companies were reluctant to move to Saemangeum because it still lacked necessary infrastructure. But building infrastructure costs money. The government's budget allocation for the year was less than half of what was needed. Consequently, progress on roads, not to mention the airport, port, and railway, had all stalled.
The government's stance wasn't entirely incomprehensible. No matter how much money they poured into it, companies weren't interested in moving in. With businesses reluctant to invest, all plans were at a standstill. It was probably more politically advantageous to spend that money on populist measures like welfare or job support to boost approval ratings.
“The CEO I met last time said that unless someone like Kang Jin-hoo invested, Saemangeum would struggle.”
“Pfft! Would Kang Jin-hoo be crazy enough to invest in such a barren wasteland?”
“Hehe, true that. There must be tons of countries begging him to invest.”
This was a common joke among the employees—that the only way to save Saemangeum was for Kang Jin-hoo to step in.
Park Jeong-soo gave a wry smile.
'Not a chance,' he thought. Kang Jin-hoo was a world-renowned investor. Why would someone who operated on a global stage bother with Saemangeum?
In truth, before working for the Saemangeum Development and Investment Agency, he hadn't known much about Saemangeum. But after years of visiting companies and tirelessly promoting the area, he'd unknowingly developed an affection for it.
A promotional video for Saemangeum was playing on the cafeteria TV.
The Saemangeum depicted in the video was a beautiful landscape of towering skyscrapers, artificial islands, theme parks, green parks, and lakes, all harmoniously blended.
He muttered to himself, almost unconsciously, “I wish I could see it really become like that before I die.”
Suddenly, the screen changed, and a news broadcast began. The words "BREAKING NEWS" flashed in the corner, and the President appeared.
Everyone stopped eating and turned their heads towards the TV.
An announcement by President Heo Chang-min at an economic policy meeting was being broadcast.
“To stabilize real estate prices in the capital region and promote balanced national development, the government will embark on the full-scale development of a new Saemangeum city. To this end, we plan to establish the Saemangeum Development Corporation and collaborate with OTK Company.”
Following this, OTK Company issued a statement.
“OTK Company will take the lead, in cooperation with the government, in creating the new Saemangeum city. In the future, Saemangeum will be reborn as a beautiful, world-class high-tech city, integrating finance, electric vehicles, advanced industries, aerospace, biotechnology, research institutes, resorts, and theme parks.”
Everyone looked on in disbelief.
'Is this real? Not some kind of prank?'
At that moment, the silence was shattered by the clamor of ringing phones.
Park Jeong-soo, who had been staring blankly at the news, realized the ringing was coming from his own pocket. He quickly fished out his phone and answered.
The caller was none other than the investment manager from CJH Company.
“Hello, Manager. To what do I owe the...”
Before he could finish, the manager interjected urgently.
“[Is there any chance we could meet right now?]”
“R-Right now?”
“[If you could come to Seoul... no, actually, I'll head to the Saemangeum Agency immediately. I'd like to revisit our discussion about that investment proposal.]”
“Pardon? So suddenly?”
This was only the beginning. Phones started ringing all around. Not just his lunch companions, but other employees as well.
Everyone stopped eating, scrambling to answer their phones.
“Send the contract? Right now?”
“The terms we proposed back then? Yes, they're still valid.”
“You're on your way here now? Ah! Hold on, I have another call coming in. I'll call you back.”
“What? You want to build a factory in Saemangeum right away?”