Aug. 6 (Bloomberg) -- South Korea is spending $20 billion and uprooting almost 10,000 civil servants in the biggest relocation of government since communist forces swept through Seoul in 1951, a move that may disrupt economic decision making.
“We will have to change our way of working and a lot of us will have to learn to work on the road,” Finance Minister Bahk Jae Wan said on Aug. 1. “I expect there to be sizable inconveniences.”
The construction of Sejong City 120 kilometers (75 miles) south of the capital fulfills the vision of the late President Roh Moo Hyun, who pledged to reduce the dominance of Seoul and pump money into a region courted for its swing voters. It also marks a defeat for his successor Lee Myung Bak, whose prime minister resigned after failing to roll back the plan amid financial headwinds that have cut projected growth in Asia’s fourth-largest economy to 3.0 percent this year from the 7 percent Lee targeted when he took office in 2008.
“We will have a government remote from the financial markets and business centers,” said Lee Sung Kwon, an economist at Shinhan Investment Corp. in Seoul. “The nation needs prompt policy responses and close policy coordination more than ever.”
The prime minister’s office moves to Sejong next month, the Finance Ministry in December and 36 state agencies by the end of 2014. Seoul will retain both the president’s complex and the parliament, along with everything from the stock exchange to the headquarters of the Samsung Group and Hyundai Motor Co.
The government has spent 2.8 trillion won ($2.5 billion) on Sejong since 2006 and state funding may reach 22.5 trillion won by the time the project is complete, according to the Finance Ministry.
About 33.8 billion won is being allocated this year for video conferencing equipment, secure mobile-phone networks and other technologies to mitigate disruptions, the Ministry of Public Administration and Security said in an e-mailed statement. KT Corp., LG CNS Co. and Kolon Benit Co. are among the companies contracted for the work, said Shin Min Pil, a deputy director at the ministry.
Of the almost 10,500 full-time officials whose offices will shift to Sejong, about 1,260 said they won’t move their homes, while 3,800 will relocate alone, in many cases leaving spouses and children in Seoul, according to an April survey by the prime minister’s office.
“I’m afraid the quality of government could deteriorate, not just because officials are wasting time commuting, but because there may be a brain drain,” said Oh Seong Taek, head of the labor union representing government office workers. “Many people are applying to move to ministries remaining in Seoul and female officials are taking maternity leave to coincide with the relocation.”
Deputy Finance Minister Joo Hyung Hwan said policy making won’t be compromised and that spending for Sejong accounts for less than 1 percent of the national budget annually. Kim Jung Min, a deputy minister in the prime minister’s office, said the nation had become too focused on Seoul.
“It is unsustainable in the long run to have all government functions, the legislature, judiciary, corporate headquarters and factories there,” said Kim.
Park Geun Hye, the leading contender among ruling party candidates for the presidential election in December, spearheaded efforts in 2010 to ensure ministries move to Sejong when Lee proposed saving government money by using the private sector to turn the area into a hub for technology and innovation.
The last three presidents were all elected with the support of the two provinces surrounding Sejong, whose swing voters give the region political power far greater than the 6 percent to 10 percent of the national electorate that they represent, according to Lee Taek Soo, president of the Seoul-based polling service Realmeter.
To get to Sejong from Seoul, commuters first negotiate the congested streets of the capital and surrounding Gyeonggi province, home to half the country’s 50 million people. Then it’s mostly uninterrupted highway travel until dozens of towering, orange construction cranes come into view against the backdrop of green hillsides flanking the Geum River valley.
There are no direct services to Sejong on South Korea’s KTX bullet trains and a combined rail and bus journey from Seoul station takes about two hours, the same as driving by car. Direct express bus services are also planned to ferry civil servants.
To be sure, the inconvenience and upheaval pales by comparison to 1951, when government functions were forced by war to Busan on the southeastern tip of the Korean peninsula. They returned to Seoul in 1953, when a ceasefire was signed.
The population of Sejong City is projected to grow from 100,000 now to 500,000 by 2030. While land has been set aside, there is no timetable yet for building a hospital or university, according to the Multifunctional Administrative City Construction Agency, which is responsible for the center’s construction.
“I came here to check if all the buildings were completed and whether childcare centers were opening,” said Lee Mi Jeong, a 42-year-old mother of two children who works at the Environment Ministry, as she stood at a viewing platform overlooking Sejong. “All I see is a dusty building site.”
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