dr kwon - u-city busan, development of sustainable cities
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Development of Sustainable Cities- Issues & Solutions -
H. Kwon
June 2010
I Busan Metropolitan City
II u-City Busan
IV
III
Legal Perspectives
V Suggestions
Business Model
Busan
Busan Metropolitan City
Self-sufficient Market
u-City Busan : Overview
Innovations with U-IT Technology • To create a new growth engine for the city • To improve the quality of life for all citizens
The City Innovation Project : Future-oriented City Development
New City!
u-City Busan : Progress
Issues to be solved• Fail to appeal to the public • Short-term based projects• Small scale projects → Lacking durability•Difficult to secure profitability → Difficult to attract private investments
u-Fire Service : Multi-service Provisioning Platform•High Speed Broadband Communications Network → Transmission speed ↑100 times
u-Infra•Wi-Fi Zones (24) : Wireless Internet Access (Free of Charge)• CCTV Integration System Phase I, II•Multi-dimension Urban Space Information Service System• Busan Information Highway : 319 organizations, 1,278㎞
Emission Reduction• Land Fill Gas Power Plant (2,775㎡)
- Power Generation Capacity : 5 MW/hr (1MW/hr x 5)- Project Cost : USD 7.92 million → Wholly invested by private investor- Project Period : 2001~2020- Electricity Generation & Sales (2009) : 20,178 MW, USD 1.93 million - Benefit to the City (2009) : USD 87,000, LFG Reduction
Initiated 28 Projects in 5 Core Areas• Total Investment : USD 74.33 million (Gov’t 52.4%, City 41.1%, Private 6.5%)
Industrial Complex
Knowledge-based City
Multipurpose LogisticsComplex
GB 50㎢
20㎢
4㎢
9㎢
Business Models : Green u-City Development
Busan Green u-City• Purpose : Green u-City for Green Growth• Objective : 67.8% Low Carbon City , 70,000 Knowledge-based jobs• Area : 50㎢• Project Cost : USD 500 million• Unit Projects
- Smart Community (Public Administration, Medical Services, Education)♦ Integrated Video Call Center, Mobile Treatment, Video-based Green u-Education
- User-friendly Public Transportation♦ Green u-Bike, Smart Transportation Station, Eco-Pass- Recycled Energy / Resource♦ Green Integrated Data Center, Smart Building Management, Eco-Milage- Integrated Intelligent Disaster Prevention / Safety Management♦ Smart Video Controlling System, Integrated City Management- Green u-Logistics♦ Real-time Logistic Information Infrastructure, Green Logistic Management
Gov’t Lead
Private Partnership
Innovative Projects
• Integrated Intelligent Crime Prevention / Facility Management (5) • Green Urban Mobility (3)• Green u-City Network
EfficiencyProductivity
ProfitabilityAttractiveness
VisionaryCollaboration
Experience, Speedy Process
Precise Business Model, Global Promotion
Global Test-bed, New Projects
• Smart Community (3)• Green Urban Mobility (2)• Energy/Resource Mgmt (1)•Green u-City Integrated Control Center
• Green u-Logistics (3)• Energy/Resource Mgmt (2)
USD 98 million
USD 146 million
USD 208 million
USD 452 million
Green u-City Development : Budget
Project Type Characteristics Projects (No.) Budget (est.)
Ubiquitous Infra - Public services,fee based projects
Province innovationprojects to balanced development
Basic Planning Stage- Strategy, execution, u-Experience projects
CityGov’t
Investment of $452 Mil.
Green u-City Development : Investment Barriers
• Competing projects / facilities
• Short-term Contracts
• Financing Cost
•Difficult to receive gov’t funds / subsidies
• Project Feasibility
• Initial Investment vs. Production Payment
• Project / Payment Guarantee
• Technology
•Human Resource
• Rules & Regulations
• Culture
City and/or Responsible Authority
Developer
JV / SPC / AMC
Lease Fees / Profit Sharing
Land Lease
Land release /Co-development /
Investment
Land Lease
Lease Fees / Profit Sharing
Green u-City Development : Shared Investment
Legal Perspectives : Public & Private Infrastructure Investment
Private Participation in Infrastructure – PPP Act• August 1994 Enactment of Act The Promotion of Private Capital into Social Overhead Capital Investment Act
• Jan. 1999 Revision of Act The Act on Private Participation in Infrastructure- Risk Sharing, Minimum Revenue Guarantee
• Jan. 2005 Amendment of Act Expansion of investor profile & facility types- Introduction of BTL Scheme, Diversification of PPP Project
Purpose of Act : To enhance efficiency & transparency• To provide infrastructure & public services by creating cooperation and partnership
between public & private sectors
Track Records – 475 Projects• Completed 97 Return-oriented and 33 Lease-based projects
Investment Issues : High Risk, Low Profitability, Evaluation Procedures
PPP Scheme
Ubiquitous Urban Infrastructures
Legal Perspectives : Foreign Investment
Foreign Investment Promotion Act – FDI• September 1998 Enactment of Act
- 55 Amendments since enactment• Investment Methods
- Purchasing stocks, extending a long-term loan, contributing to a non-profit corporation
Foreign Investment Zones• 2-types : Stand-alone, complex
Restriction of Special Taxation Act• Reduction of or exemption of taxes : Corporate, Income, Acquisition, Registration, Property• Exemption from customs duties, special consumption tax, VAT• Tax reduction or exemption for capital increase
Other Incentives : Cash Grants, National/Local Property Lease & Rent Reduction
Investment Issues : Foreign Investment Restrictions (Schools, Postal Service, etc)
Legal Perspectives : Ubiquitous City Development
Ubiquitous City Construction Act•March 2008 Enactment of Act
- 5 Amendments since enactment• Purpose of Act
- To develop u-City by improving the general urban infrastructures through convergences with the advanced information, communication technology
- To develop competitive city & to promote sustainable growth- To develop u-City that provides u-Services
Target Projects• New city development or urban rehabilitation/urban improvement of existing cities
u-City Developer• Central /local government, Korea Land & Housing Corporation, Public Corporation
(Local), Private Partners
Investment Issues : Financing Plan, Subsidy/Loans
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1
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5
Risk Diversification
Business and/or project convergence
Export / Sell, Import / Buy Technologies
Create demands, work with technology, get a long term commitment
Business Model Development
Suggestions
Thank You.