Research Reports

Recently adversities our economy faces are being aggravated. Especially the excess liquidity caused by expansive fiscal measures by most of countries to cope with the COVID-19 is bearing the concerns about instability in asset and financial market around the world. In this research we searched for practical ways to induce money in the market into the construction sector of public building and facilities where new demand for investment explodes these days. And we hoped these could contribute to alleviating the side-effect of current excessive liquidity we have difficulty in dealing with. The most important and difficult part of institutional design we were trying in this research is that the objects that are needed to be invested in are government-owned properties. In Korea government-owned properties are under strict legal regulation and have practically no way to induce private capital to invest into them. The legal framework that rules development activities involved with government-owned properties is twofold in Korea: National Properties Law and Law of Management in Local Properties and Commodities. In this research, we tried to find a way to institutionalize private investment channel while not impeding the objectives of these two laws. Especially we focused on the institutional design to utilize partially or only nominally adopted development tools in these laws. To be more concrete, measures to directly utilize private-public partnership, public trust development, private trust development which are already stipulated in these laws are suggested. The way to combine the three development method with indirect investment vehicles such as real-estate fund or REITs is recommended as well. Because there is not much of research work related to the topic we dealt with in this report, we hope this report could invoke further discussion on the enhancement of institutional huddles that prohibit private investment into the newly-emerging area where government budget has manifest limitation in its expandability.