Korea to offer $27.2 bil. to support local government mergers

Prime Minister Kim Min-seok speaks during a briefing on incentives for administrative integration at the Government Complex Seoul, Friday. Yonhap

The government will provide up to 40 trillion won ($27.2 billion) to support merger plans to turn four local governments into two so-called integrated special cities as part of the Lee Jae Myung administration’s push to strengthen regional development and decentralization.

Prime Minister Kim Min-seok announced the plan during a press briefing in Seoul, Friday, saying the government would provide up to 5 trillion won a year for up to four years to each integrated special city formed through administrative mergers.

The announcement comes as Gwangju and South Jeolla Province, as well as Daejeon and South Chungcheong Province, are seeking administrative integration, a step that would reshape local governance and carry political implications ahead of local elections in June.

“Local governments that merge will be given clear incentives and a matching level of autonomy and responsibility,” Kim said, “Balanced regional development is not a policy meant to favor certain regions but a survival strategy for the country’s future.”

Under the government’s plan, integrated special cities will be granted a status equivalent to that of the Seoul Metropolitan Government. This will enable the merged entities to appoint up to four deputy mayors, with their rank raised to the vice ministerial level. These measures are intended to strengthen administrative capacity and policy coordination.

The government also plans to expand the fiscal autonomy of integrated cities by introducing new funding mechanisms, including an integrated administration grant and dedicated support funds. Officials said the measures are intended to provide stable funding for large-scale regional projects.

“Integrated special cities will be given priority in the next phase of public institution relocation, which is scheduled to begin in 2027,” Kim said.

Support measures for businesses are also included. Companies that relocate to the merged regions will be eligible for incentives such as subsidies, rent reductions and tax exemptions. The government said it will also simplify administrative procedures related to investment approvals and development projects.

“The government will form a task force dedicated to providing financial support for the integration and will promptly prepare detailed measures in close consultation with the National Assembly,” Kim said.

The integration initiative is being advanced as part of the Lee administration’s broader regional development strategy, which aims to ease the overconcentration of resources and people in the Seoul metropolitan area and promote more balanced national growth. Government officials have identified population decline and widening regional disparities as key challenges driving the policy.

They said that the integrated special city model is designed to enable neighboring local governments to combine administrative resources, improve efficiency and form larger economic units that are better positioned to attract investment and talent.

The plan requires the agreement of participating local governments, as well as legislative backing to formalize new administrative structures and funding arrangements. The ruling Democratic Party of Korea plans to pass a special law allowing the integrations at the Assembly before March, so the inaugural heads of the Daejeon-South Chungcheong Province and Gwangju-South Jeolla Province governments can be selected in the upcoming June local elections.

Kim said the government will continue to collect opinions from local communities while working with relevant ministries and lawmakers to address outstanding issues, including the official naming of integrated cities and the allocation of financial resources.

“Now is the time to move forward with regional integration,” he said, emphasizing the need for administrative reform to ensure long-term sustainability and balanced development.