[Open Forum] The Harmful National Capital Region Planning Act Should Be Repealed

Chilsung Cider produced in Gwangju, Gyeonggi Province, must first be sent to Daejeon and then brought back to the Seoul metropolitan area. This happens because there is not enough space to store the products before shipment, so the company must use warehouse space at its Daejeon plant. Products made at Lotte Chilsung Beverage’s Opo plant are briefly stored in a provincial location and then returned to stock supermarket shelves in Seoul. This is the reality created by the Seoul Metropolitan Area Readjustment Planning Act, under which not even a single pyeong of factory space can be added.

When, and on what grounds, was a law that has produced such conditions so far removed from industrial reality created? The Seoul Metropolitan Area Readjustment Planning Act is an enforcement decree enacted by the government in 1982 to address the regional gap between the capital region and non-capital regions. The basic rationale behind it was that excessive population concentration and corporate location in the capital region were causing stagnation in non-capital areas. The logic was that if the central government restricted corporate location, businesses would be pushed outward and regional development would follow.

The Seoul Metropolitan Area Readjustment Planning Act was designed with a sole focus on limiting the development of the capital region. In particular, for the sake of regulatory convenience, the greater metropolitan area was divided into overcrowding control zones, growth management zones, and nature conservation zones. These measures strictly controlled or restricted the location of industrial facilities in the capital region in order to prevent population outflow from non-capital areas. As a result, a cider factory ended up operating a logistics system involving round trips of more than 200 kilometers.

Now, 40 years after its enactment, has the Seoul Metropolitan Area Readjustment Planning Act actually narrowed the development gap between the capital region and non-capital regions? It has not. On the contrary, as the entire country worries about the crisis of local extinction, people are once again emphasizing “concentration in the capital region” as the cause. Frankly speaking, this amounts to ignoring the long-standing reality that suppressing the capital region does not lead to regional development.

The law the government created in the name of balanced regional development has, over time, become a monster that has dragged everyone into a swamp of regulation. For decades, while calls for capital-region regulation were made in the name of balanced national development, the result was not the easing of regional disparities but the blocking of opportunities and freedom for many companies and some regions to grow.

A law advanced under the banner of “reducing regional disparities” became an overbearing force that compelled companies to limit their own growth and profits. In particular, by imposing rules on facility site area, it deprived businesses of the benefits of agglomeration and opportunities to strengthen competitiveness. Sempio Foods, famous for soy sauce, found it difficult to expand its factory because of regulations under the “nature conservation zone” designation, and had to give up an export contract with a global food company just before finalization. Hyundai Elevator also maintained a logistics system for years by building a warehouse in Cheonan linked to its headquarters in Icheon, but the year before last it relocated its entire operation to Chungju.

For some regions in need of development, capital-region regulation was equally ruthless, without exception. Outer parts of the capital region with small populations are cases in which opportunities for development were lost because inflows of investment and capital were blocked. In 1996, Legoland planned to build a theme park in eastern Gyeonggi, but withdrew at the final stage because of a clause restricting the development of tourist sites larger than “30,000 square meters (㎡).” Ganghwa and Ongjin, though outside the capital region in practical terms, are subject to the Seoul Metropolitan Area Readjustment Planning Act, and therefore receive none of the benefits such as “support for corporate relocation to local areas” or “capital gains tax reductions.”

Therefore, this 1982-era law, which has consumed only time and money, can be defined as a regulation that has restrained the nation’s overall development and growth itself. As a result, most companies either stagnate or miss opportunities to grow into global firms. Regions, too, have been prevented from making the leap into competitive cities through the inflow of talent and capital. By any standard, capital-region regulation is a harmful policy that has led everyone down a path of defeat.

Capital-region regulation centered on formal equality produces nothing but countless evils and should be abolished as soon as possible. At the same time, we must break away from the paradigm of regulatory omnipotence and seek ways for both the capital region and non-capital regions to strengthen economic efficiency and competitiveness together.

Yongjin Park, Intern Researcher, Center for Free Enterprise (CFE)

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Original title: [자유발언대] 폐해 많은 수도권정비계획법 폐기해야

Author: Yong-jin Park

Date: 2023-03-31

Source: https://www.cfe.org/bbs/bbsDetail.php?cid=free_opinion&pn=6&idx=25507