Troubled Incheon
Low-budget Asiad will save the city from debt trap
Incheon can ride out its financial trouble through hosting a budget-conscious Asiad in 2014. It can scrap a new stadium and instead remodel its existing facilities and delay subway construction. Even through this budget-minded preparation, the city can host the largest quadrennial sports festival without a hitch.
Its financial trouble should be temporary and are mostly attributable to the multi-billion dollar projects linked to the Asian summer games. It is a model for future intelligent cities. The recent facelift was another miracle made on the mudflats. The ongoing stagnation in the property market has strained its budget. Its free economic zone has enormous potential for becoming a hub for foreign investors.
Civic society should be patient. Instead of calling for giving up the hosting rights, it must pool wisdom with the city for hosting the event in a successful way.
The city knows how to pull itself out of the emerging financial strains, even though it hesitates to implement radical downsizing. Now action is necessary to kill two birds with one stone ― a successful hosting of the Asiad and recovery from the overstretched fiscal spending.
Asia should not worry that its temporary cash flow problem will spoil the Asiad. Incheon is already a modern and intelligent city with clean air and fantastic ocean views. It is also home for one of the world’s best airports.
Its temporary delay in paying salary to city employees is not surprising because it drained too much of its budget for the Asiad. Mayor Song Young-gil should not exaggerate its financial pinch to squeeze extra subsidies from central government. He could emerge as a hero if he is bold enough to host the Asiad without risking additional debt.
The city outspent its budget on mega construction projects. In five years, its debt doubled to $2.7 billion. Like Incheon, many counties, cities and provincial governments are in ugly financial shape.
The local autonomy system has ushered in grass-roots democracy and helping each region develop in its unique and independent way. However, the heads of the local autonomous bodies get addicted to the easygoing mentality that the central government will back them in any financial trouble.
Out of hunger to get re-elected, mayors and governors initiated politically sexy but economically unattractive demonstrative projects.
The central government should be strict in helping local governments stand on their own two feet ― it should link budgets to progress in improving financial health.
Voters should re-call budget squandering leaders. Civic society should be vigilant over fiscal discipline. Bankrupt bodies should have the right to confiscate property of the elected leaders.
In 2010, Seongnam City, just outside Seoul, declared a moratorium on its maturing bonds, the first time in Korea.
Incheon should initiate immediate talks with the Asian Olympic Organizing Committee. Incheon should adopt the slogan of Fiscal Prudence Shines Here when it hosts the 2014 Asiad with the slogan of Diversity Shines Here.