Macquarie deal up for revision

The contract between Seoul City and investors in the capital’s subway line 9, including Macquarie Korea Infrastructure Fund (MKIF), is being reexamined and should be amended, if found to contain unfair and improper elements, Seoul Mayor Park Won-soon said, Monday.

“It appears that investors including Macquarie have failed to keep some parts of the agreement; besides elements in the contract are unfair to say the least,” the 56-year-old said in an interview.

The mayor said that if the Australian investment bank is making too much in returns on their investment the deal could be altered.

Subway line 9, connecting Gimpo International Airport with Gangnam, was built by inviting private investors, with Hyundai Rotem being the largest shareholder and the MKIF, the second largest.

The contract issue emerged in April when the consortium of investors, known as Seoul Metro Line 9 Corp., announced a plan to raise fares by 50 percent without the approval of the city government. It later scrapped the move.

Some claimed that in 2005 when the 30-year contract was signed, the mayor at the time, President Lee Myung-bak, guaranteed an after-tax investment earnings rate of 8.9 percent, higher than usual infrastructure deals as well as promised to protect them from losses based on a minimum revenue guarantee (MRG) agreement.

Park said of the 3.6 trillion won cost of the project, the private investors put in some 500 billion won, with a much greater portion coming from taxpayers’ money.

“They hold operational rights with a small investment, and if they gain excessive profits from it, that is unfair. While reviewing details of the contract, I wondered how such unreasonable terms were possible in some parts,” he said.

Concerning Ahn Cheol-soo, the software mogul-turned-professor who is enjoying high popularity should he run for the presidency despite not declaring a bid, Park said he would give his support to him, if he runs in the election.

Ahn was one of the strongest contenders for the Seoul mayor position during last October’s by-election. But he dropped out of the running and endorsed Park, a close associate who shared common views on social issues with him.

“What I can do to support Ahn is fulfill my mayoral role and present good policies. If I’m a poor and unpopular mayor, my support won’t be of any use to him. If I do my work well and express support for him, it will be effective support,” he said.

With more foreign tourists visiting Seoul, the mayor said tourism could be a future growth engine for the capital.

“A growing number of Chinese tourists keep the city’s tourism industry going. We already had about 10 million travelers last year, and I believe we can have 20 million in 10 year, if we make more effort.”

Park said a master plan to upgrade the capital’s tourism will come in a couple of months, and related offices will be reorganized to have a separate department in charge of tourism.

“Seoul has many good tourism resources, including nature, history and people. To take advantage of these, we have to make efforts, to preserve nature, restore historic properties and support the nation’s dynamic culture and art. More investment is also essential to support medical tourism and MICE industry,” he said.