Dr Kwon - u-City Busan, Development of Sustainable Cities

June 2010 Development of Sustainable Cities - Issues & Solutions - H. Kwon

I Busan Metropolitan City II u-City Busan III Business Model IV Le gal Perspectives V Suggestions

Busan Metropolitan City Se lf-sufficient Market Busan

u-City Busan : Overview The City Innovation Project : Future-oriented City Development Innovations with U-IT Technology • To create a new growth engine for the city • To improve the quality of life for all citizens

u-City Busan : Progress Initiated 28 Projects in 5 Core Areas • Total Investment : USD 74.33 million (Gov’t 52.4%, City 41.1%, Private 6.5%) Emission Reduction • Land Fill Gas Power Plant (2,775㎡) - Power Generation Capacity : 5 MW/hr (1MW/hr x 5) - Project Cost : USD 7.92 million → Wholly invested by private investor - Project Period : 2001~2020 - Electricity Generation & Sales (2009) : 20,178 MW, USD 1.93 million - Benefit to the City (2009) : USD 87,000, LFG Reduction u-Infra • Wi-Fi Zones (24) : Wireless Internet Access (Free of Charge) • CCTV Integration System Phase I, II • Multi-dimension Urban Space Information Service System New City! • Busan Information Highway : 319 organizations, 1,278㎞ u-Fire Service : Multi-service Provisioning Platform • High Speed Broadband Communications Network → Transmission speed ↑100 times Issues to be solved • Fail to appeal to the public • Short-term based projects • Small scale projects → Lacking durability • Difficult to secure profitability → Difficult to attract private investments

Business Models : Green u-City Development Busan Green u-City • Purpose : Green u-City for Green Growth • Objective : 67.8% Low Carbon City , 70,000 Knowledge-based jobs • Area : 50㎢ • Project Cost : USD 500 million • Unit Projects M ultipurpose - Smart Community (Public Administration, Medical Services, Education) Logistics ♦ Integrated Video Call Center, Mobile Treatment, Video-based Green u-Education Complex - User-friendly Public Transportation ♦ Green u-Bike, Smart Transportation Station, Eco-Pass - Recycled Energy / Resource 20㎢ Industrial ♦ Green Integrated Data Center, Smart Building Management, Eco-Milage Com plex - Integrated Intelligent Disaster Prevention / Safety Management ♦ Smart Video Controlling System, Integrated City Management 9㎢ - Green u-Logistics ♦ Real-time Logistic Information Infrastructure, Green Logistic Management GB 50㎢ Knowledge-based City 4㎢

Green u-City Development : Budget Project Type Characteristics Projects (No.) Budget (est.) • Integrated Intelligent Efficiency Productivity Crime Prevention / Gov’t Lead Facility Management (5) USD 98 million • Green Urban Mobility (3) Experience, Speedy Process • Green u-City Network Profitability Attractiveness • Smart Community (3) • Green Urban Mobility (2) Private USD 146 million Partnership • Energy/Resource Mgmt (1) Precise Business Model, • Green u-City Integrated Global Promotion Control Center Visionary Collaboration • Green u-Logistics (3) Innovative USD 208 million • Energy/Resource Mgmt (2) Projects Global Test-bed, New Projects USD 452 million

Green u-City Development : Investment Barriers Basic Planning Stage • Competing projects / facilities - Strategy, execution, u-Experience projects • Short-term Contracts City • Financing Cost Gov’t • Difficult to receive gov’t funds / subsidies • Project Feasibility Investment of • Initial Investment vs. Production Payment $452 Mil. • Project / Payment Guarantee Province innovation • Technology projects to balanced Ubiquitous Infra • Human Resource development - Public services, fee based projects • Rules & Regulations • Culture

Green u-City Development : Shared Investment Land Lease Developer Lease Fees / Profit Sharing Land release / City and/or Co-development / Responsible Authority Investment Land Lease JV / SPC / AMC Lease Fees / Profit Sharing

Legal Perspectives : Public & Private Infrastructure Investment Private Participation in Infrastructure – PPP Act • August 1994 Enactment of Act The Promotion of Private Capital into Social Overhead Capital Investment Act • Jan. 1999 Revision of Act The Act on Private Participation in Infrastructure - Risk Sharing, Minimum Revenue Guarantee • Jan. 2005 Amendment of Act Expansion of investor profile & facility types - Introduction of BTL Scheme, Diversification of PPP Project Purpose of Act : To enhance efficiency & transparency • To provide infrastructure & public services by creating cooperation and partnership between public & private sectors Track Records – 475 Projects • Completed 97 Return-oriented and 33 Lease-based projects Investment Issues : High Risk, Low Profitability, Evaluation Procedures PPP Scheme Ubiquitous Urban Infrastructures

Legal Perspectives : Foreign Investment Foreign Investment Promotion Act – FDI • September 1998 Enactment of Act - 55 Amendments since enactment • Investment Methods - Purchasing stocks, extending a long-term loan, contributing to a non-profit corporation Foreign Investment Zones • 2-types : Stand-alone, complex Restriction of Special Taxation Act • Reduction of or exemption of taxes : Corporate, Income, Acquisition, Registration, Property • Exemption from customs duties, special consumption tax, VAT • Tax reduction or exemption for capital increase Other Incentives : Cash Grants, National/Local Property Lease & Rent Reduction Investment Issues : Foreign Investment Restrictions (Schools, Postal Service, etc)

Legal Perspectives : Ubiquitous City Development Ubiquitous City Construction Act • March 2008 Enactment of Act - 5 Amendments since enactment • Purpose of Act - To develop u-City by improving the general urban infrastructures through convergences with the advanced information, communication technology - To develop competitive city & to promote sustainable growth - To develop u-City that provides u-Services Target Projects • New city development or urban rehabilitation/urban improvement of existing cities u-City Developer • Central /local government, Korea Land & Housing Corporation, Public Corporation (Local), Private Partners Investment Issues : Financing Plan, Subsidy/Loans

Suggestions 1 Risk Diversification 2 Business and/or project convergence 3 Export / Sell, Import / Buy Technologies 4 Create demands, work with technology, get a long term commitment 5 Business Model Development

Thank You.

Dr Kwon - u-City Busan, Development of Sustainable Cities

by Shane Mitchell on Jun 23, 2010

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Dr Kwon - u-City Busan, Development of Sustainable Cities — Presentation Transcript