[비즈한국] A Seoul-based environmental public institution has begun reviewing the possibility of relocating to a provincial area. With the Ministry of Land, Infrastructure and Transport recently beginning a full-scale survey for a second wave of public institution relocations in the second half of this year, the government's move has gained momentum, forcing agencies to prepare counter-measures. Naturally, the atmosphere among employees is unsettled. In particular, dual-income employees are concerned that relocation will make childcare and other daily challenges more difficult. Prospects suggest that relocation could become a reality within two to three years, as employees are already looking into how institutions that previously relocated are handling "commuter support to the capital region."
Person A, an employee at the institution, said, "Since talk of the relocation review emerged, some people are considering quitting to go to graduate school, while others are thinking about switching to related private companies. Although it will take years until the actual move, everyone is very interested in which region we will end up in and whether it will be possible to commute from the Seoul metropolitan area," they added.
As the Lee Jae-myung administration announced the second wave of public institution relocations, competition among cities and provinces across the country to host them has intensified. North Chungcheong Province recently formalized the start of its bidding efforts, and Daegu has formed a public-private consultative body with existing relocated institutions since the new administration took office. North Jeolla Province is pursuing a customized attraction strategy targeting institutions in the agricultural, life, and asset management finance sectors, such as the Korea Investment Corporation, while Daejeon and South Chungcheong Province, which were excluded from the first wave, are demanding priority rights for choosing institutions.
Gwangju, along with South Jeolla Province, is focusing on attracting related public institutions by making the energy industry and AI the core pillars of its regional strategic industries. Their plan is to attract energy-sector institutions such as the Korea Institute of Energy Technology Evaluation and Planning and the KEPCO Human Resources Development Institute, as well as AI and data-sector institutions like the National Information Society Agency and the Korea Airports Corporation.
Potential for up to 500 institutions to relocate
Observations suggest that the number of public institutions facing potential relocation this time could range from 300 to 500. The Ministry of Land, Infrastructure and Transport plans to order research services to conduct a full-scale survey of targets for the second relocation wave and to perform technical reviews of potential relocation sites. Along with evaluating the results of the first "Innovation City" project, the ministry is also concurrently conducting institutional research, such as building a conflict management model for the second wave, with the results expected in October.
The first wave of public institution relocations began in 2005 under the Roh Moo-hyun administration and continued until 2012. A total of 153 institutions and approximately 41,000 people moved, but there was significant criticism that the effects of relocating to some Innovation Cities were insufficient.
According to a report by the Korea Development Institute (KDI) titled "The Effects of Public Institution Relocation and Policy Directions" (Research Fellow Moon Yoon-sang, 2021), population movement from the capital region to Innovation Cities was concentrated between 2014 and 2015, but has since stagnated. In fact, since 2018, there has been a net outflow back to the capital region.
Nevertheless, the government has signaled cross-governmental discussions centered on a Presidential Office task force. President Lee Jae-myung remarked, "We need to carry out a consolidation of public institutions as well. There are so many that I can't even count them." This suggests that alongside provincial relocations, there is a possibility that institutions with overlapping functions may be merged. Employee A from the environmental agency hinted, "Since there is talk about the possibility of merging places with similar roles, I understand that each ministry is reviewing the functions of its affiliated public institutions."
Financial state-owned enterprises pushed to the back—starting with 'consolidation'?
Financial state-owned enterprises like the Korea Development Bank (KDB), whose relocation to Busan was discussed during the Yoon Suk-yeol administration, are currently sidelined from the provincial relocation plan. Instead, the possibility of consolidation is being raised as a priority.
There are currently eight financial state-owned enterprises: KDB, the Export-Import Bank of Korea, Industrial Bank of Korea024110, the Korea Credit Guarantee Fund, the Korea Technology Finance Corporation, the Korea Trade Insurance Corporation, the Korea Housing Finance Corporation, and the Korea Housing & Urban Guarantee Corporation (HUG). Among them, the potential consolidation of the Export-Import Bank with the Trade Insurance Corporation, the Credit Guarantee Fund with the Technology Finance Corporation, and the Housing Finance Corporation with HUG is being discussed. The Presidential Office has also signaled the launch of a "Public Institution Consolidation Task Force" led by Chief of Staff Kang Hoon-sik.
If the drive to consolidate financial state-owned enterprises is successful, the possibility of their eventual relocation cannot be ruled out; however, observers note that consolidation will not be easy due to the highly complex interests of various ministries. Currently, institutions with similar characteristics, such as KDB (Financial Services Commission) and the Export-Import Bank (Ministry of Economy and Finance), or the Korea Housing Finance Corporation (FSC) and HUG (Ministry of Land, Infrastructure and Transport), and the Credit Guarantee Fund (FSC) and the Technology Finance Corporation (Ministry of SMEs and Startups), all fall under different supervising ministries.
A financial authority official said, "Every time the administration changed, the consolidation of financial state-owned enterprises with similar characteristics was discussed, but it was always scrapped due to opposition from unions, political circles, and the supervising ministries of each agency, so it won't be easy this time either." They added, however, "With local elections coming up next year, is it not possible that the government will push for both the consolidation and provincial relocation of financial public enterprises in tandem?"