Report No. 4423-KO Korea Transport Sector Issues Survey December 27, 1983 Projects Department East Asia and Pacific Regional Office FOR OFFICIAL USE ONLY Document of the World Bank This document has a restricted distribution and may be used by recipients onlK in the performance of their official duties. Its contents may not otherwise be disclosed without W%,orld Bank authorization. CURRENCY EQUIVALENTS Currency Unit = Won December 7, 1974 January 15, 1980 September 30, 1983 US$1 = W 485 = W 580 = 780 W 1,000 = US$2.06 = US$1,72 = US$1.28 US$1 million = W 485 million = W 580 million = W 780 million W 1 million = US$2,061 = US$1,724 = US$1,282 WEIGHTS AND MEASURES 1 meter (m) = 3.28 feet (ft) 1 square meter (sq m) = 10.76 square feet (sq ft) 1 cubic meter (cu m) = 35.29 cubic feet (cu ft) 1 kil'ometer (km) = 0.62 mile (mi) 1 kilogram (kg) = 2.2 pounds (lb) 1'liter (1) = 1.057 qt (US liquid) 1 metric ton (m ton) = 2,205 lb 1 revenue tone (rt) = on average about 600 kg (1,322 lbs) 1 pyeong = 35.5 sq ft (3.3 sq m) ABBREVIATIONS AND ACRONYMS ADB - Asian Development Bank BPR - Bureau of Public Roads EPB - Economic Planning Board FFYP - Fifth Five-Year Plan GNP - Gross National Product KAL - Korea Airlines KHC - Korea Highway Corporation KMPA - Korean Maritime and Port Authority KNR - Korean National Railroad MOC - Ministry of Construction MCI - Ministry of Commerce and Industry MOER - Ministry of Energy and Resources MOF - Ministry of Finance MOHA - Ministry of Home Affairs MOT - Ministry of Transportation SMESRS - Seoul Metropolitan Electric Suburban Railway System SET - Special Excise Tax TCC - Transport Coordination Committee TCO - Transport Coordination Office TPO - Transport Planning Office FISCAL YEAR: January 1 - December 31 FOR OFFICIAL USE ONLY This report is based upon the findings of the Transport Sector Mission which visited the Republic of Korea from March 2 to April 3, 1982. The mission members were: Alain F. Ballereau, Chief of Mission; Bernard Chatelin, Senior Transport Economist (TWD); Byoung Ho Chin, Transport Specialist (Consultant); Brendan Kennedy, Senior Highway Engineer; Marianne Millar, Transport Energy Specialist (Consultant); Gabriel Roth, Lecturer (EDI); and In Ok Kim, Mission Secretary. Mr. M. Zenick, Senior Loan Officer, joined the mission from March 2 to March 12. Messrs. Ismael Mobarek, Port Engineer, and Jacques Yenny, Senior Transport Economist, contributed to the report based on an advanced mission which visited Korea from February 8 to February 12, 1982. Mr. Hank Yen, Research Assistant, prepared the Statistical Appendix. Ms. Patricia Brereton, Operations Assistant, edited the Report. Another mission from February 2 to 9, 1983 comprising Messrs. Curt Carnemark, Alain Ballereau, Brendan Kennedy and Manuel Zenick discussed with the Korean Government the main findings of the report as embodied in the ExecutiLve Summary. Written comments were prepared mid-July 1983 by Government on the basis of a green cover report issued on April 21, 1983. Further discussions were held in October 1983 with Government and the present final report includes the main comments and responses by Government during that last clarification mission. This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. KOREA TRANSPORT SECTOR ISSUES SURVEY Table of Contents Page No. Executive Summary and Recommendations . . . . . . . . . . . . . i- xix 1. INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . 1 2. THE DEVELOPMENT OF KOREA'S TRANSPORT SYSTEM . . . . . . . . . . 3 A. Size, Growth Trends and Structure . . . . . . . . . . . . . 3 B. Recent Transport Investment Strategy . . . . . . . . . . . 5 Policy Objectives ... . . . . . . . . . . . . . . . . 5 Past Investment Plans (1962-81). . . . . . . . . . . . . 6 Performance Assessment. . . . . . . . . . . . . . . . . . 7 The Bank's Involvement. . . . . . . . . . . . . . . . . . 10 C. The Present Transport Systems . . . . . . . . . . . . . . . 12 Road Transport . . . . . . . . . . . . . 12 (a) Highway Network and Traffic . . . . . . . . . . . . 12 (b) Motor Vehicles and Motorization. . . . . . . . . . . 13 (c) Road Transport Industry. . . . . . . . . . . . . . . 14 Rail Transport . . . . . . . . . . . . . . . . . . . . . 16 Maritime Transport . . . . . . . . . . . . . . . . . . . 18 Air Transport . . . . . . . . . . . . . . . . . . . . . . 20 3. THE FIFTH TRANSPORT PLAN AND CURRENT ISSUES . . . . . . . . . . 21 A. The Transport Sector Plan Objectives . . . . . . . . . . . 21 B. Transport Subsector Programs . . . . . . . . . . . . . . . 23 Road Transport Programs . . . . . . . . . . . . . . . . 23 (a) Proposed Road Projects . . . . . . . . . . . . . . 26 (b) Other Road Transport Development . . . . . . . . . 27 Vehicle Fleet Growth and Safety Measures . . . . . 27 Construction of Freight Terminals and Warehouses . 28 Encouraging Larger Road Transport Firms . . . . . 30 Improving Passenger Transport Services . . . . . . 31 Railway Programs . . . . . . . . . . . . . . . . . . . . 32 (a) Main Railway Projects. . . . . . . . . . . . . . . . 34 (b) Other Projects . . . . . . . . . . . . . . . . . . . 36 (c) Management Improvements. . . . . . . . . . . . . . . 36 -2- Page No. Maritime Transport Programs . . . . . . . . . . . . . . . 37 (a) Vessel Fleet Growth . . . . . . . . . . . . . . . . . 38 (b) Port Expansions . . . . . . . . . . . . . . . . . . . 39 (c) Management Support for Shipping and Ports . . . . . . 40 Air Transport Programs . . . . . . . . . . . . . . . . . 41 (a) Aircraft and Routes ..... .. . ........ . 42 (b) Airports and Facilities Expansions. . . . . . . . . . 43 Urban Transport Programs . . . . . . . . . . . . . . . . 43 C. Evaluation of the Plan's Transport Policies . . . . . . . . 46 Strengths of the Plan. . . . . . . . . . . . . . . . . . 46 Weaknesses and Major Issues . . . . . . . . . . . . . . . 47 4. INSTITUTIONAL PLANNING ISSUES ..... . ....... .. . . 49 A. The Need for Improved Planning . . . . . . . . . . . . . . 49 B. Obstacles Hindering Planning . . . . . . . . . . . . . . . 50 (a) Planning Limitations . . . . . . . . . . . . . . . . 50 (b) Fragmentation of Transport Responsibilities . . . . . 51 (c) Differences in Funding Mechanisms . . . . . . . . . . 54 (d) Deficiences in the Existing Coordinating Setup . . . 55 C. Suggestions to Strengthen Transport Planning . . . . . . . 56 (a) Improving Planning within Transport Agencies . . . . 56 (b) Improving Intramodal Planning . . . . . . . . . . . . 57 (c) Improving Intermodal Planning . . . . . . . . . . . . 58 5. TRANSPORT REGULATION AND PRICING ISSUES . . . . . . . . . . . . 60 A. Overview . . . 60 Relationship between Pricing and Regulation . . . . . . . 60 B. Road Transport . . . . . . . . . . . . . . . . . . . . . . 61 Regulation and Pricing .61 Does the Present System Work? . . . . . . . . . . . . . . 63 Suggested Changes Towards Deregulation. . . . . . . . . . 64 Revenue Implications of Raising Diesel Fuel Tax. 66 C. Other Transport Modes . . . . . . . . . . . . . . . . . . . 68 Railways . . . . . . . . . . . . . . . . . . . . . . . . 68 Coastal Shipping and Ports . . . . . . . . . . . . . . . 69 Air Transport . . . . . . . . . . . . . . . . . . . ... 70 -3- Page No. 6. TRANSPORT ENERGY ISSUES ... . . . . . . . . . . . . . . . 72 A. Overview of Current Transport Energy Consumption and Related Policies ... . . . . . . . . . . . . . . . 72 Energy Intensity in the Economy and in Transport . . . 72 Economizing Energy in the Transport Sector . . . . . . 74 Energy Planning and Management Institutions . . . . . . 77 BE. Major Issues and Energy Inefficiencies. . . . . . . . . . 79 Institutional Dispersion of Responsibilities . . . . . 79 Road Vehicle Fuel Inefficiencies . . . . . . . . . . . 81 Inefficiencies in Road Transport . . . . . . . . . . . 83 Modal Shares and Other Transport Modes. . . . . . . . . 84 Magnitude of Potential Energy Savings . . . . . . . . . 86 C. Recommended Government Programs and Policies . . . . . . 87 Streamlining Institutional Responsibilities . . . . . . 88 Improving Fuel Efficiency in Transport . . . . . . . . 88 Pricing of Transport Fuel .89 Technology Assessments and Research Studies . . . . . . 91 Public Education .92 7. FUTURE ROLE OF THE BANK . . . . . . . . . . . . . . . . . . . 93 A. Shift from Project to Sector Lending . . . . . . . . . . 93 B. Policy Objectives in Sector Lending . . . . . . . . . . 94 C. Project Possibilities in Transport. . . . . . . . . . . . 95 ANNEXES Annex 1: Ministry of Transport - Division of Responsibilities and Powers . . . . . . . . . . . . . . . . . . . . . 101 Annex 2: Road Transport Licensing Procedures and Regulations . 108 Annex 3: Taxation, Tariffs, Vehicle Standards and Other Regulations . . . . . . . . . . . . . . . . . . . . . 115 Annex 4: Factors Affecting Fuel Consumption of Road and Rail Transport and Potential Fuel Savings by Selected Conservation Devices and Techniques . . . . . . . . . 126 Annex 5: List of Follow-up Studies . . . . . . . . . . . . . . . 128 Statistical Appendix - List of Tables . . . . . . . . . . . . . . 132 1. Transport Sector and Energy Data . . . . . . . . . . . . . . 135 2. Roads and Road Transport .162 3. Railways and Subways .................... 190 -4- Page No. 4. Ports and Maritime Transport .... . . . . . . . . . . . . 215 5. Airports and Air Transport . . . . . . . . . . . . . . . . . 232 Tables in text . . . . . . . . . . . . . . . . . . . . . . . . . . 232 Organization Charts 1. Ministry of Construction: WB24485 . . . . . . . . . . . . . 235 2. Korea Highway Corporation (KHC): WB24504 . . . . . . . . . . 236 3. Ministry of Home Affairs: WB24249 . . . . . . . . . . . . . 237 4. Ministry of Transportation: WB24486 . . . . . . . . . . . . 238 5. Korea National Railways (KNR): WB24503 . . . . . . . . . . 239 6. Korea Maritime and Port Authority (KMPA): WB24487 . . . . . 240 7. Ministry of Energy and Resources: WB24395 . . . . . . . . . 241 Bibliography . . . . . . . . . . . . . . . . . . . . . . . . . . 242 Maps Korea Road, Port and Airport Systems (IBRD-16730R) Korea National Railroad Network (IBRD-13134R1) Seoul Metropolitan Rail and Subway Networks (IBRD-13135R2) Executive Summary and Recommendations 1. Despite rapid and substantial progress in the Korean transport sector, many needs remain to be met. The new and more demanding economic environment resulting from the prolonged worldwide recession and increased, temporarily stabilized, fuel costs requires the country to take a more prudent approach than before in developing its basic transport infrastructure so as to optimize the use of scarce investment capital in a very capital-intensive sector. The increasingly complex transport patterns, higher traffic densities, and the growing need to conserve energy and to maintain an expanded system call also for greater efforts than in the past to maximize efficiency of service. In particular, it will be crucial in the years ahead to improve transport planning mechanisms, relax regulation and pricing policies, and streamline agencies' functions to make the sector's development more rational, its operations more efficient and its energy savings substantial. 2. Such an approach appears to be in line with the Fifth 5-Year Plan for 1982-86 which has introduced some fundamental changes in the Government's objectives for national development. Stability, efficiency and balanced regional development are the main new goals. To reach them, the Government intended, and was successful, to fight inflation by putting a lid on its own expenditures and lowering interest rates. It planned to encourage rises in productivity by strengthening economic management and opening up competition. It also intended to decentralize its decision-making process, and thus, to turn away from the past tendency to place almost all government authority at the highest levels. In view of the new perspectives opened by these proposed major _hanges in direction, it seemed opportune at the start of the new plan to review the status of Korea's transport sector, which plays a critical role in the country's development. This review was to consider, in particular, how Government's new priorities could be supported by further specific policy adjustments and measures that would foster the sector's future evolution. A. Recent Development of Korea's Transport System 3. Korea's remarkable economic growth over the last two decades has been supported by an impressive development of its transport system. With a GDP of over US$1,600 per capita, Korea is now-a-days a semi-industrialized country with 56% of its nearly 40 million population living in urban areas and served by a modern transport network. With the exception of recent low growth until 1981, transport demand grew during 1961-78 faster than GNP. Domestic passenger traffic increased thirteen times and freight six times while per capita income more than tripled and real GNP multiplied five-fold. 4. During the past two decades, the former predominant transport role of the railways was replaced by a more balanced distribution of traffic among rail, coastal shipping and road for freight and among road and rail for passenger transport. About half of all passenger traffic is in urban - ii - areas. International trade is served almost exclusively by air for passengers and by sea for freight. Areas for further expansion still remain, however. Road facilities and transport means could be improved in rural areas and near large cities. The development of ports and shipping which was limited to only few areas could be developed further in other areas with good potential. And rail services could further concentrate on the long- distance passenger traffic they can serve best while reducing short-distance traffic that can better be handled by road. Considerable gains in transport productivity could take place in improving complementarity between modes, in particular by providing intermodal terminals. 5. Major transport investments during this period helped to increase and modernize the system's capacity. About 20% to 25% of public capital expenditures were allocated to the sector during four successive 5-Year Plans (1962-81). Large amounts were borrowed from the World Bank and other development agencies to assist in funding public expenditures. Through this assistance, substantial progress was achieved toward a more efficient use of resources. Projects have been better designed, construction quality improved with the rapid expansion of the contracting industry, and mainte- nance systems have been established for national roads and strengthened for the railways. 6. The Government's development objective in transport was to support economic growth by rapidly expanding the system's capacity. This goal was appropriate for conditions at the time (although it may not in all case be desirable in the context of current economic constraints). The goal was generally well achieved, and only a few misinvestments occurred. Investments were concentrated on the Seoul-Busan axis where most industrial development has taken place and other corridors serving the northeastern and southwestern parts of Korea. Regional and coastal developments were favored for strategic and economic reasons. Heavy industries relying on sea transport were localized near natural ports. The economic advantages of the various modes were exploited, with rail and coastal shipping increasingly serving long distance traffic and bulk commodities and road transport handling short distance and general cargo. 7. To manage the then limited transport means available, the Government maintained tight regulations most of which are still enforced today. Surprisingly for an increasingly market oriented economy, Korea is still a country where regulatory practice involves rigid operating licensing for road and coastal shipping and administered pricing for all transport modes. The private road vehicle fleet has been kept small through a policy of high taxation on car and gasoline prices. At the same time, the organization and management of the various transport institutions have been either strengthened (for the railways) or established (for the road and port systems). In fact, the railways' efficiency was raised to one of the highest in the world and its tariff system is now being restructured with the objective of making the system financially self-sufficient by 1986. - iii - 8. The Bank has assisted Korea in reaching its transport objectives through the provision of technical advice and financing. US$434 million were invested in seven projects to help modernize and expand rail capacity, and a dialogue was maintained concerning railway investment plans, financial performance and tariff structure. US$147 million were also invested in two ports projects mainly to introduce containerization in Busan and thus ease the serious, chronic congestion of external trade, and to improve the organization and management of ports. US$465 million were invested in five road projects and a technical assistance credit to develop and maintain the national road network and, more recently, the provincial and county roads. Policy changes were encouraged that led to more appropriate road standards, weight and vehicle dimensions, and a modified toll system, while institutional improve- ments strengthened the agencies responsible for project preparation and implementation. B. Transport Objectives and Programs in the 1980s 9. The Fifth 5-Year Economic and Social Development Plan (1982-86) states Government's objectives and programs for the transport sector that were recommended by a Transport Planning Task Force under the Ministry of Transport (MOT). The main goals are to: (a) selectively increase transport capacity by modernizing equipment and optimizing investments in the sector; (b) enhance transport efficiency by improving intermodal traffic allocation and conserving energy; and (c) strengthen maintenance activities. During the Plan period, GNP is expected to grow at 7.6% p.a. and transport demand is expected to increase by about 47 billion passenger-km and 10 million ton-km, or 50% and 30%, respectively, above actual levels achieved during the Fourth Plan period. Transport investments (both public and private) proposed in the Plan are expected to reach US$16.3 billion at 1980 prices and exchange rate, or 45% in real terms over outlays under the Fourth Plan. Compared to the Fourth Plan, investments in subways, aviation, road vehicles and ships would be increased significantly, while investment in rail, road and port infrastructure would increase by less than 20%. The Plan proposed major investments to increase transport capacity although its objectives put the emphasis on a more balanced mix of selected capacity increases together with productivity and management improvements. 10. It seems clear now that the original Plan's physical investment targets will not be attained as some substantial cuts were made for rail and port investments at recent semi-annual reviews. A general revision of the Plan was started in July 1983 and will be issued early 1984, reflecting major changes due to budget constraints. These budgetary limitations were already apparent in 1982 and reflected in the Government's intentions, now confirmed, to limit borrowings which has sharply constrained the scope and timing of many investment proposals. Another uncertainty stemmed from the absence of refer- ence in the Plan to the slowdown in economic growth in 1980/81 which had seriously depressed transport demand and was to jeopardize the full realiza- tion of the Plan targets as the Plan's base year was over estimated. Although a modest economic recovery was evident late in 1982 (which is followed by more encouraging results in 1983) and very positive signs such as a decline in - iv - inflation and a reduction in the balance of payments deficit, the rapidity of renewed transport growth remains uncertain. In addition, the Transport Plan is really not comprehensive as it excluded major investments for roads by the Ministry of Home Affairs (MOHA) and industrial ports by the Ministry of Construction (MOC) and thus made it doubtful whether the large real increase in funds required to carry out the proposed overall transport investments would be available. 11. In view of the serious funding shortage, Government might have been better off to consider some of the many measures and policies already implied in the Plan to increase productivity in each mode at little cost. In the roads subsector, for example, would it not have been preferable to stretch out the construction of the Olympic Highway and delay the widening of the Daejeon-Chonju expressway or now to consider delaying the further extension of the Chonju-Gwangju expressway in order to ease budgetary pressure? Instead, more urgent projects might be undertaken, such as the construction of expressway sections near Seoul, the improvement of high priority national and provincial roads, and of the county road network, the condition of which con- strains rural development. Also, as clearly stated in the Plan objectives, more attention could be placed on road maintenance to preserve the existing network. 12. For the railways, the strategy to give priority to long-distance passenger and bulk freight services which it can serve best is worth being encouraged under the Plan. Suburban services are also worth to be developed in the Seoul Metropolitan Area to provide links with the subway and restrain increased motorization. A more commercial attitude would also be promoted to relieve the growing financial deficit for operations. These objectives all seem sound, but, as with the roads subsector, certain invest- ments to expand capacity seem questionable. Questions have yet to be answered such as whether traffic volume on the Honam line between Iri and Songjeongri, which is now being double tracked, is sufficiently high to merit the large investment being made? Korean National Railways (KNR) made early 1983 some substantial reductions in its investment program which were deemed appropriate to ease its financial difficulties. But KNR could consider other more pro- ductive operations such as marketing door-to-door services for container, steel and other bulk products. It is very appropriate in particular con- cerning the proposed Seoul-Busan high-speed passenger line to find out about its feasibility and timing in the ongoing study. 13. For sea transport, major investments were planned for ships to handle international trade, the mainstay of Korea's export-oriented indus- trialization policy. But would it be reasonable to maintain 50% of this transport under the national flag, as Government hoped to do, when this would require substantial funding which might otherwise go to more pressing require- ments like rural roads? And, although Korean shipping is efficient and a good foreign exchange earner, would it be appropriate to expand capacity at a time of worldwide shipping overcapacity? Port investments are concentrated on few areas but funding shortages have led to postponing construction projects such as the Busan Third Phase container program, giving an opportunity to streamline cumbersome port clearance procedures and use Incheon Port more fully. But would it be more cost-effective to consolidate the activities of less efficient ports and improve cargo handling whose high costs limit regional development? 14. The problem is similar for aviation which actual traffic growth recorded to date has been less than forecasted. Proposed investments are mainly for the purchase of aircraft to increase capacity, standardize and modernize the fleet, but is this expansion timely in view of the overcapacity and deficits which have hurt Korean Airlines' operations since 1980? The proposed expansion of Kimpo airport, mainly to accommodate the temporary surge in use for the 1988 Olympics, seems unnecessary, as much of this extra capacity will become obsolete when Seoul's new airport is built, probably in the early 1990s. 15. In the same line, large investments undertaken for the subways in Seoul and Busan, though useful, may not have equal priority. Subway construc- tion in Seoul could have been phased so as to first serve high density north- south traffic rather than the long and expensive circular route which was actually started. More attention to design and finances during the initial studies for the subway could also have reduced future operating costs and helped to recover a larger proportion of costs from users. Major Issues in the Transport Sector 16. Although most of the transport investments proposed under the Fifth Plan pursue development priorities which in our view are right, we believe more could be done to increase the productivity of existing facilities and equipment. In addition to the wide range of measures to encourage efficiency in road maintenance, port management, and railway operations, three main areas deserve specific attention: (a) planning; (b) regulation and pricing; and (c) energy conservation. C. Institutional Planning Issues 17. Transport planning is generally weak in Korea. The overall plan lacks comprehensiveness, investment proposals are not always consistently treated and appraisal techniques are still somewhat deficient. This weakness has resulted in (a) occasional past misinvestments, (b) the difficulty under the current Development Plan to relate investments to stated development objectives and (c) the exclusion under the Plan of large ongoing and proposed transport investments for local government roads and industrial ports. In the past, the inadequate planning process caused few problems. But, in view of the substantial amounts to be spent, the budgetary constraints, the slower growth of the economy, and the more complicated intermodal transport problems now being faced, planning will be crucial in the future to avoid major mis- investments and to improve the efficiency of investments undertaken. In general, planning has been constrained by four main factors. First, previous Governments have disregarded planning or dealt with it by shortcuts in order to satisfy other, possibly more pressing, political objectives. Second, responsibilities have been fragmented, and this has been exacerbated by a tendency toward bureaucratic isolation. Third, different funding mechanisms - vi - exist, giving relative freedom to revenue-earning agencies compared to those funded from the central budget. And fourth, an effective transport coordinat- ing agency could not be successfully established despite considerable efforts, largely due to the reluctance of agencies to abandon certain practices and institutional privileges. As in other countries, these problems are complex and compounded by vested interests. 18. Suggestions to Strengthen Transport Planning./1 If planning is to be improved, Government should recognize that it is an essential part of government management, and that the decision-making process requires efficient planning at three levels: (a) within each agency that must integrate its projects into cost- effective programs; (b) between the various agencies responsible for investments in the same mode to ensure consistency and complementarity; and (c) among the agencies reponsible for investments in different modes to ensure that interdependencies and comparative advantages are reconciled to yield optimal programs. 19. Following from the three primary planning needs are three areas where improvements might be made: (a) Improving the quality of planning within transport agencies. There are two fundamental prerequisites for this - a desire to delegate responsibilities and decentralize decision-making (which the current Government now adheres to in principle and increasingly in practice) and - a recognition of the necessity and importance of studies as the key to identifying cost-effective solutions. The high returns gained from studies justify the limited investment required for them and should induce budget reviewers to protect rather than to elimi- nate them as they now tend to do. Given acceptance of these condi- tions, a variety of means could be used to improve planning within agencies. Generally, more attention could be directed to master better economic appraisal techniques for pre-investment studies. Also, work could be encouraged on a number of current issues, some of which are identified in this report. Staff skills could be upgraded through appropriate training, and experienced planners, transport economists, intermodal and program analysts, and transport operations specialists could be recruited. And, sector work could be continued through Korean research institutes and local consultants; (b) Improving intramodal planning within the road and port subsectors. The problem is confined within each of these two subsectors. /1 In the meantime, parts of these suggestions have been accepted by Govern- ment and are embodied in an Action Plan to be implemented under a recently negotiated Highway Sector Loan. - vii - Internal mechanisms, procedures and criteria need to be established to ensure that investments and action programs proposed by the various responsible agencies in each mode are internally fully consistent. While in the past the main planning need was to meet demand, it is now just as important to avoid duplications and gross misadaptation of standards. Institutional mechanisms are required and need to be adapted in each case: (i) Road Planning. There is a need first to bring consistency to the road planning done by the various agencies under the Ministry of Construction (MOC) and the planning done by provinces, counties, cities and "special cities" /1 under the Ministry of Home Affairs (MOHA) and by Seoul City. For all agencies, local capabilities to plan and develop the road network could be improved rapidly. As an initial step, a study for integrating national, provincial and county road programs has been agreed under the Bank's recently initiated Provincial and County Roads Project. The study will help to define technical criteria and institutional procedures to be applied in the future. As a second step, studies might be carried out to integrate also city and special cities road programs and to assess whether a unified budget allocation system would be helpful in planning. Would the introduction of such a system facilitate proper intramodal coordination of road development programs by instituting a systematic and equitable allocation of road user charges? Would maintenance recurrent expenditures be given the priority required in budget allocations? (ii) Port Planning. There is an urgent need first to ensure con- sistency and integrate investment plans prepared for general ports under the Korea Maritime and Port Administration (KMPA) and industrial ports under MOC. Later, coordination mechanisms could be introduced to integrate plans prepared for local ports by MOHA and fishing ports by the Ministry of Agriculture (MOA). Many alternative approaches to this problem would be worth considering. One could be to regroup port planning under a high-level body such as the Economic Planning Board (EPB), while the construction and operation of ports could be decentralized in autonomous ports. Another could be to unify all responsibilities including planning and construction under a single ministry while the operation of ports could be decentralized. Another, could be to regroup the planning and construction functions under MOC in a Bureau /1 The designated special cities under MOHA are Busan, Daegu, and Incheon while Seoul is under the direct jurisdiction of the Government. - viii - of Port Development while the management, operation and maintenance of all ports could be placed under MOT in a reorganized KMPA, the main objectives of this being to maximize the use of port investments and to ensure adequate cost recovery from users. A study is suggested to review alternative institutional arrangements and funding systems for the subsector. (c) Improving intermodal planning. There is a need to provide a framework conducive to identifying optimal transport programs. Ideally, all modal plans should be reviewed and integrated to ensure that the most cost-effective transport solutions are adopted, drawing on the complementarity of each mode based on its comparative advantages. Admittedly, very few countries have been able to institutionalize such coordination. If it is to be done, it does not appear, given Korea's institutional framework, that further strengthening of the MOT's planning function should be attempted. Instead, effective coordination in the long run could probably best be organized by the EPB because of its general planning responsibilities and level. The strengthening of EPB's Project Evaluation Bureau, which is already underway, therefore, could result in substantial improvements. In the short term, however, a more direct and practical approach to ensure integrated planning would be to focus on multimodal projects as the means to satisfy transport demand for specific commodities or in specific geographic areas. It was suggested that such multimodal transport projects be developed with the Bank's assistance for the Seoul- Busan Corridor,/1 the Seoul Regional Area and the Southeastern Industrial Belt. The institution of ad hoc multidisciplinary groups would put into practice the coordination concept and ultimately would give ideas on how this concept could be institutionalized. D. Regulation and Pricing Issues 20. Korea's passenger and freight transport services by common carriers are closely controlled by Government through regulations which (a) limit entry into the industry and the provision of services; and (b) set the prices that may be charged. The present system tends to limit competition in commercial road transport and coastal shipping since the restrictions on entering the industry have allowed the existing operators to share the market among themselves. As a result, the still unregulated private sector including individuals and companies transporting their own freight and personnel have become more active, but at a substantial economic cost since the privately- owned vehicles tend normally not to be well utilized. The main justification /1 In the meantime, the Government agreed to this suggestion and had the first two studies started known respectively as the Seoul-Busan Transport Cooridor and Highspeed Train Study; and the Kyeonggi Region Multi-Modal Transport Study. - ix - for the present regulation appears to be the average pricing system, imposed on conmmercial operators, which is uniformly applied for both high-cost or low-cost services. Loss-making services are balanced by surpluses earned on profitable ones. The system can function to the extent that the licensing authority assigns operators a "fair" mix of routes and precludes competition. If competition were allowed, operators would concentrate on the more profit- able routes, eroding profit margins and making it impossible for operators servicing unprofitable routes to stay in business. Thus, lifting restrictions on entry cannot be recommended if price controls remain in force and the removal of price controls cannot be recommended unless restrictions on entry are also lifted. Any relaxation in the system would necessarily require a step-by-step program whereby both pricing and entry regulations would be lifted. 21. Road Transport. The Government has embarked on a policy to encourage larger road transport firms that are believed to be more efficient. Existing bus firms are being consolidated into operating units of 300 buses, and further entry into the industry is being restricted. However, the advantage of large units in terms of improved services is not apparent. Further, the pricing of road transport and the present system of road user charges do not permit the system to meet the following commonly-accepted objectives that: (a) operators be allowed to charge higher fares for higher-cost services; (b) road users pay proportionately for road usage and damage - but in Korea commercial vehicles are virtually untaxed and, in particular, no axle-load tax exists; and (c) revenues from fuel taxes be sufficient for expanding the network and ensuring that road transport prices do not distort demand from other modes such as railways or coastal shipping - but in Korea the excise tax on diesel fuel is only 5% of the tax on gasoline. It would seem clear that road user charges should be revised, and it was suggested that Government sponsor an in-depth study to determine actual road costs, who pays for them, and how the contribution of each road user should be reapportioned to better reflect the damage inflicted on the road by the users. This recommendation has met the agreement of EPB and MOC,Terms of reference have been prepared and the study will be implemented in 1984 under the Highway Sector Loan just negotiated. 22. The present system with all these anomalies is not working to serve Korea's best economic interests. The regulations have not helped to give better service to transport users who increasingly avoid common carriers and the regulated system by operating their own vehicles. Since 1977, the growth of private trucks has been five times higher than for vehicles for hire. If left as it is the system will deteriorate further, leaving commercial oper- x ators with only the more difficult and costly jobs. The option for the authorities is either to prohibit private firms from operating their own vehicles - which is not feasible - or to relax gradually the regulatory and pricing system. 23. Suggestions to liberalize road transport regulations. There are a number of ways to improve the system. It might be desirable to first remove the obligation that commercial operators must serve unprofitable routes by allowing the introduction of other more appropriate forms of transport. Competition could then be opened up on profitable routes by withdrawing licensing and pricing regulations at least for intercity transport. It might be advisable to proceed as follows: (a) improve efficiency by relaxing the regulations governing the fleet size of commercial bus and truck operators and the type/size of vehicles that may be used; (b) promote earnings of buses by allowing them carrying other freight in addition to accompanying baggage, especially in rural areas; (c) remove requirements (and related operating subsidies) for buses in rural areas to operate on unprofitable routes by allowing local people to provide unscheduled transport services with smaller and cheaper vehicles; /l (d) reduce peak-hour loads on regular carriers in urban areas and related high capital cost by promoting wider use of informal passenger services (car and van pools, company-owned buses, etc.); and (e) adjust the level of the excise tax on diesel fuel relative to the tax on gasoline, with a view to reaching a reasonable level of cost recovery from road users. This would warrant a thorough road user charges study as suggested above. Government officials in MOT do not entirely concur with the principles set in the above analysis. They have problems with the immediate need to deregulate the road transport industry since it is believed that "a minimum of regula- tions would help operators to be more efficient and would avoid chaos due to free competition." MOT has stressed the need to proceed with caution to harmonize any relaxation effort with the overriding price stabilization policy and to avoid confrontation with the vested interest of operators. It is thus desirable to study carefully the economic costs associated with the present regulation system in the trucking industry in order to determine the most harmful and unnecessary rules that could be gradually removed through an A1 An experiment is now about to be conducted by MOHA for a two year period under agreement in the ongoing Provincial and County Roads Project. - xi - implementation program./I In the meantime, some of the measures suggested above could be introduced before completion of the study. 24. Other transport modes. A few operating restrictions, low tariffs, and uneconomic services are imposed on the railways. To allow them to perform better financially and to realize their full economic benefits, the following measures could be considered: (a) all shippers ought to have access to the railways services through any commercial road transport firms, rather than through the one shipping firm now so authorized; (b) Government ought to fully compensate the railways for uneconomic services which they are required by Government to perform; (c) tariffs for "ordinary" (i.e., short-distance) passenger trains ought to be set so as to cover total operating costs as all other traffic; and (d) preferential tariffs could be introduced to attract commuter passengers to off-peak hours, or a surcharge could be imposed to dissuade them from increasing congestion during peak hours. 25. Coastal shipping is more strictly regulated than land transport. Licensing and pricing are controlled to protect small operators. This is a commendable social goal, but it perpetuates inefficiencies in the sector. Subsidies are also given through low port user charges, tax concessions, low interest loans and direct compensation for services to remote islands. The present regulatory system appears to protect inefficient and outmoded opera- tions and to inhibit the introduction of larger and more efficient ships. To avoid regulations which are more likely to serve the interest of shipowners than the public, the following measures could be considered: (ia) increase port user charges to cover maintenance and operating costs for all ports and to cover part of the capital cost for Busan and Incheon, which could both be established as autonomous ports; (b) phase out the rules prohibiting the transport of freight at rates below those established by MOT; (c) progressively relax the rules preventing entry of new operators and setting maximum charge in coastal shipping; and /1 The study is to be conducted under MOT in 1984 as part of the Action Plan to be implemented under the Highway Sector Loan just negotiated. - xii - (d) introduce analytical cost accounting and routinely publish port revenues and expenditures. 26. Aviation is regulated through fares and the opening of new lines. Since air transport costs are not fully covered by users, the following measures could be considered: introduce variable air fares to ensure higher capacity utilization, and routinely publish airport revenues and expenditures. E. Transport Energy Issues 27. One of the objectives of the current 5-Year Transport Plan is to conserve energy, an objective which is supported by the Bank. As Korea's energy needs grew rapidly from 1962 onward, its dependence on imported oil increased dramatically to 60% of total energy consumption in the early 1980's. Crude oil represents about a third of all imports and costs US$6.2 billion p.a. or 11% of GNP. Due to its industrial structure, climate, and restric- tions on the motorized fleet, the transport sector consumes only about 20% of total petroleum consumption, much less than in most other countries. Road vehicles account for nearly 70% of this consumption and thus have the most potential for achieving savings. A caution is in order, however. Energy is only one of the resources used in transport, accounting for 15-30% of total costs, and the proper aim of energy conservation should be to minimize the cost of transport to the economy not simply to save energy. 28. In 1977 the Government established the Ministry of Energy and Resources (MOER) to develop, with other agencies, policies to cope with the energy needs for sustained economic growth. Focus was put on securing stable energy supplies, substituting less-costly fuels and establishing conservation programs and research for alternative resources. So far, most emphasis has been placed on the supply side. In the Fifth Plan, conservation efforts on the demand side center on the industrial and residential sectors where results could be obtained more rapidly. However, there are few concrete proposals to conserve energy in the transport sector, although studies have been recom- mended for the establishment of optimum modal travel distances, for the con- struction of 30 freight terminals, and the introduction of more fuel-efficient automobiles (i.e., 17 km/i compared to 12 km/i at present). 29. Further efforts to promote energy conservation in the transport sector are likely to be less obvious and more difficult to carry out. Trans- port, however, is one of the areas in which energy consumption is likely to increase very rapidly unless economic measures are introduced to encourage more efficient uses of fuels. It appears that the most effective tool to induce energy conservation in the transport sector would largely rely on market mechanisms, provided that fuel pricing reflects economic costs. At present, prices of petroleum products are controlled at both the producer (ex-refinery) and consumers levels and price deregulation would be required at both levels. Further, the present regulatory environment in the transport industry does not appear to be an ideal framework to encourage competition that would lead to more fuel efficiency in organizing shipments on appropriate - xiii - size trucks and avoiding empty back haul; it thus may be desirable to relax certain regulations. In addition, numerous other measures could be considered to strengthen the institutions involved and to alert road transport operators to the availability of fuel conserving devices and methods that may lead to large savings in fuel expenditures - on the order of US$150 to 200 million p.a. Suggestions on Fuel Pricing 30. It is suggested first that Government consider approaching the energy problem in transport by putting primary emphasis on charging consumers a price (net of tax) that fully reflects the scarcity value of energy to the economy. It is commonly agreed that the most satisfactory standard for setting relative prices is provided by the actual opportunities for buying goods and services in the world market. At the present time, Korea's domestic ex-refinery prices of gasoline and LPG are not closely geared to international prices and are on average higher, with marked difference between products reflecting past inefficiencies, import controls and past pricing interventions. It is clear also that the production decisions of refiners are affected by Korea's controlled prices (or by certain inequalities in the tax treatment of different fuels which entail substitutions that were not necessarily intended by the Government). Refiners as well as other producers in the country have probably made choices that are not in line with the comparative advantages of Korea. It is thus suggested that fuel prices be gradually geared to the CIF price of imported fuels, i.e., gasoline, diesel oil, and liquefied petroleum gas (LPG). Resolving this problem would require de-controlling petroleum prices, so as to prevent excessive market control over domestic prices by a small group of refiners. This recommendation is in line with the Government's ongoing dialogue with the Bank and a number of measures are being implemented under the Structural Adjustment Loans (SAL I and II). 31. It is suggested, second, that Government consider road infrastruc- ture cost recovery through a blend of user charges on fuels and other vehicle specific fees that relate to actual use of (or damage to) the roads (see para. 21). In most countries, fuel pricing is also set to allow raising revenues to meet the costs of building and maintaining roads and bridges. In a few instances costs are recovered through tolls where users are charged directly, but in most cases, they are recovered indirectly, either through various vehicle licensing fees and/or from user charges added to the cost of fuel, or from general taxes. Low fuel prices that do not recover costs are thus likely to result in inefficient resource allocations, through an uneconomic modal choice favoring artificially cheap road transport against more economical and energy-efficient transport like the railways, for example. Although expenditures on Korea's national roads are to increase only moderately in real terms during the Fifth Plan period, very substantial increases in expenditures on rural and urban roads are projected, requiring substantial increases in total real expenditures in the roads sector. Thus - xiv - the level and structure of road user charges would merit close study. While Government has accepted such a study it has indicated that the readjustment of gasoline and diesel prices towards a more economic relationship may be constrained by the possibility of substitution posed by the large volume of low-tax kerosene used by households. 32. Further, fuel pricing, besides meeting economic ex-refinery fuel and roads costs, generally includes a third element - taxes - that are levied on transport users. A tax is a charge that is not related to the cost of resources used by the person who pays the tax, but this is often not recog- nized and user charges are often misleadingly referred to as taxes. The tax level may of course influence consumer demand, including the demand for automobiles. The Bank does not have a firm view on an optimum rate of motorization for Korea; it has, however, urged the Government to study the costs as well as the benefits of a more rapid motorization than has so far been permitted. Excise taxes beyond the level required for road user charges could also be justified by distributional objectives. However, there are limits to the differential taxation of various fuels if one wants to avoid uneconomic substitutions or even fraud. Suggestions to Improve Fuel Efficiency in Transport 33. The regulation of the trucking industry strongly affects both the quality of services (para. 22) and the volume of fuel consumed in transport. For example, one third to one half of all truck trips consist of empty back-hauls due to trucking regulations that prohibit private trucks from carrying any cargo other than their own. Deregulating the trucking industry, in line with the Government's new philosophy of leaving more importance to market mechanisms to adjust supply and demand, would next to liberalizing trade in petroleum products, probably be the single most important energy conservation measure in the transport sector. It would, in addition, save a substantial amount of capital, as the utilization and efficiency of the existing vehicle fleet would increase. 34. A correct pricing system and a market orientation of the trucking industry do not exhaust the subject of energy use in transport, nor does this imply that everything can be left to the market. A case in point is the present situation in the domestic automobile industry which enjoys nearly complete protection against foreign competition. At the same time, Korean automobiles are significantly less energy-efficient than present world standards. If it is the policy of the Government to further protect the automobile industry from foreign competition for reasons of industrial policy, i.e., infant industry protection, then more thought needs to be given to the question of how world fuel efficiency standards could be achieved, and what the costs of the present policy are, if world standards are not to be reached rapidly by the domestic vehicle manufacturing industry. 35. A number of measures could also be considered concerning insti- tutional strengthening that will require more planning and time, while other -xv - measures resulting in immediate savings could be implemented very soon. With regard to the institutional framework for energy conservation, the now rather dispersed responsibilities for planning and management could be strengthened in many ways, for example: (a) MOER could take the lead in developing an energy management pro- gram comprising fuel consumption forecasts in the transport sector. It could fill the coordination function in this area which could be defined and organized through an inter-ministerial agreement. For example, it could direct, schedule and monitor all research, studies, and development efforts and action programs to increase fuel efficiency in the transport sector carried out by other agencies; (b) the preparation of short- and long-term transport energy conserva- tion studies, and necessary background studies, could be undertaken under the responsibility of the Ministry of Transport (MOT), while decisions for action programs should be taken jointly by MOER and MOT. Implementation could be organized through the Korea Energy Management Corporation (KEMCO), private operators, trade associa- tions, manufacturers and monitored by MOT, MCI and MOF according to their area of responsibility; (c) energy conservation criteria could be developed by MOER and be adopted by all agencies as standard elements of any evaluation procedure in preparing investment plans. Targets for conser- vation could be reviewed regularly and criteria adjusted as required; (d) research and studies should be carried out. In road transport, a study could focus on how to improve fuel efficiency through better truck utilization to avoid the present proliferation of private and small trucks (para. 33). The deregulation of commercial trucking appears to be one of the most needed measures; and (e) MOER ought to closely monitor the effect of alternative fuel pricing on consumption levels with a view to encourage savings and maintain neutral taxation. In particular, the rising marginal cost of producing diesel fuel should be closely monitored and be reflected in the pump price to avoid distortions from demand that does not reflect the cost of supply. 36. Many other areas have high potential for immediate energy savings. Polici.es focusing on operator education and promoting incentives are highly recommended, in particular to: (a) promote information campaigns to sensitize the general public, shippers and operators of the energy implications of travel decisions, product distribution and transport grouping; - xvi - (b) disseminate information on conservation devices produced overseas and encourage their local production; (c) develop driver training programs emphasizing fuel-efficient operating techniques and introduce driver motivation programs; (d) discourage individual utilization of cars and improve rail, bus and car pool alternatives; and (e) encourage truck and bus manufacturers to incorporate new engine technologies being developed overseas, or lift import restric- tions, and set minimum fuel-efficiency standards for new vehicles. F. The Bank's Future Role in the Sector 37. The Bank's involvement in Korea's transport sector has been substantial in the past and should remain so in the years to come. As significant progress has been made in project design and implementation, the Bank could now focus its assistance more on institutional and policy improvements, and such an emphasis would justify a continued role by the Bank in the transport sector. In particular, the sector's productivity could be considerably increased with the introduction of more effective policies in the areas discussed above, i.e., investment planning and coordination, regulation and pricing, and energy conservation. Such a shift in emphasis could be achieved by moving away from the past project approach to a sector approach. 38. A sector approach in transport means that a time-slice of a subsector investment program, such as road or maritime transport, could be partly financed by the Bank, contingent upon specific understandings with the Government concerning the development strategy and the broad outlines of the subsector program. In particular, it would require that various agencies implement a number of agreed institutional and policy measures designed to improve efficiency in the subsector. The main objective of the sector approach would be to improve the planning and policy framework to promote better utilization of transport facilities with a view to optimizing their efficiency. A sector approach could, in particular, help to focus on inter- and intra-modal pre-investment studies that are required to improve consistency among plans and to prepare multi-modal projects that ensure complementarity among modes. Also, it could help in introducing more rigorous economic principles in the review of transport policies. 39. The most important objectives that could be pursued in sector lending would be to: (a) improve intra-modal transport planning agencies for roads and ports to gear the development of major national facilities to rural and local requirements; - xvii - (b) encourage inter-modal planning coordination and enhance comple- mentarity of modes through the development of multi-modal regional transport projects; (c) integrate and coordinate investment programs through a more appropriate institutional framework; (d) gradually relax licensing regulations and controls on fares to allow free entry and encourage competition among transport operators to improve the quality of service, keep fares low, and reduce fuel consumption; (e) discourage the practice of subsidized services for rail, sea and road transport through the promotion of more cost-effective services; (f) adopt more realistic pricing levels by generalizing cost-based fares for the railways; (g) adjust user charges for roads and ports to more closely reflect actual use of (or damage to) the facilities; (h) adopt more realistic fuel pricing for transport by adjusting tax relationships on diesel, gasoline and LPG to encourage efficient energy use; (i) encourage the production of more fuel-efficient vehicles; (j) inform transport operators about fuel conservation techniques; (k) encourage selective shifts of traffic to more energy-efficient modes; and (1) consolidate the institutional functions and responsibilities relative to energy use in the transport sector. 40. Each of these main objectives corresponds to a set of specific measures recommended in the preceding pages. A comprehensive and policy oriented dialogue between the Government and the Bank will help to define how to gradually tackle selected groups of objectives in the course of carrying out the lending program. Some of them are being pursued already through earlier projects or through the Structural Adjustment Loans (SAL). To support the dialogue and delineate how the issues can be dealt with most effectively, a number of studies ought to be undertaken by the Government, with the assistance of consultants and Korean research institutes. 41. The Bank's current transport lending program for Korea includes four proposed projects. They are the Highway Subsector Project scheduled for FY84; a Ports Maritime Subsector Project for FY86, Kyeonggi Multimodal Transport - xviii - Project for FY86 or FY87, and a Second Highway Subsector Project for FY87 or FY88. However, only the first project is prepared and about to be presented to the Board; therefore, there is a need to agree with Government on a suitable and timely preparation for the remaining three projects so that the tentative schedule can be met. 42. Further, it is also timely to come to a clearer understanding of the Bank's role in the identification and preparation of future projects through the conduct of necessary studies. In particular, a study to improve transport systems in the Seoul-Busan Corridor has started with financing under the Seventh Railway Project and may lead to substantial investments to increase transport capacity in the cooridor. Another study for integrated transport in the Kyeonggi Province around Seoul City is about to start and may lead to important investments in suburban transport facilities comprising road, rail and terminals. A third study is highly recommended to address the transport needs of the Southeastern Coastal Industrial Belt from Pohang to Suncheon where coordinated investments in expressways, roads, railways, and related terminals could minimize total costs. With respect to urban transport, loans are currently planned in FY85 and FY87 or FY88. 43. In the highways subsector, loans would mainly assist in integrating road planning, introducing adequate road user charges and fuel prices, pro- moting efficient energy use, and liberalizing regulations to improve operators' efficiency (including services in rural areas). Financing could be directed to further improve road maintenance, pave and construct high priority roads, erect multimodal terminals, establish mapping facilities and automate vehicle licensing, etc. 44. In the maritime transport subsector, loans would mainly assist in integrating port planning, further promoting shipping for local bulk trans- port, liberalizing licensing of routes and pricing, speeding up port clearance and introducing cost-based port charges. Financing could be directed at port investment programs aimed at further developing growth poles in coastal areas, continue port containerization, and strengthen local shipping companies to better manage their fleet. 45. The new multi-modal transport projects are practical ways to deal with the planning and coordination issues, and to address transport needs within specific geographic areas. In addition, other objectives could be pursued such as local deregulation of transport, adequate user charges, utilization of the most energy-efficient modes, etc. Financing could cover broad investment packages, including road/rail/suburban trains/maritime facilities and equipment. 46. The preparation of any of the proposed subsector loans or multi- modal projects will require that essential preinvestment studies be carried out. The timing of project implementation within the 1980s makes it urgent that preparation and detailed engineering studies be agreed upon and carried out in a timely manner. The cost for such studies can easily be recovered - xix - from the identification of least-cost solutions to the benefit of both the Government and users. With a more efficient transport system, Korea would be better poised to continue its remarkable economic development, but this will happen only if supportive institutional measures and policies are implemented. 1. INTRODUCTION 1.01 Over the last two decades, Korea's economy has experienced fundamental changes that in turn have deeply affected the transport sector. Since 1963, the World Bank has assisted the Government in meeting these changing transport needs by providing 15 credits and loans totalling about US$1.2 billion. These investments have made major contributions to the expansion of transport infrastructure, the development of transport policies and the strenghtening of transport institutions. Mutual pride and satisfaction have resulted from this fruitful cooperative effort. 1.02 However, a less favorable worldwide economic environment has evolved which has made the solutions in meeting transport requirements both more costly and complex. The recent recession (1980-81) that slowed Korea's economic growth, reflected basic structural problems in the economy as well as temporary adverse circumstances. To overcome these problems, major adjust- ments in government development policies were required and implementation is in progress. Improvements in productivity are needed to match high salary and oil price increases; furthermore, increased research and vigorous quality control are necessary to restore Korea's trade growth. In the transport sector, more sophisticated development policies and investment strategies are needed to address the new and major difficulties now emerging which reflect the sector's more advanced stage of development. 1.03 It is in this context that this Transport Sector Issues Survey has been carried out. Its main objectives were to assess the past achievements in the sector and to evaluate the developmental needs that lie ahead. From this analysis of current strengths and weaknesses, the survey defines the issues areas where the Bank could provide Korea with meaningful support in strengthening its institutions and developing its policies. The timing of this survey coincided with the launching of the Fifth Five-Year Economic and Social Development Plan (1982-86), which constituted an appropriate base from which the lessons of past experience could be measured. From there, the perspective to provide a continuing support to the Government's Transport Plan could be outlined as a set of new objectives that would justify the Bank's future lending operations. 1.04 Since the Bank has a fairly good knowledge of Korea's transport sector from previous studies,/1 this report does not present a comprehensive review of the sector, but rather focuses on a few important issues. Those issues were identified during discussions with Government, and concern /1 Growth and Prospects of the Korean Economy: Transport, February 23, 1977, Report No. 1489-KO, World Bank. -2- investment planning, the regulatory system, and the energy efficiency of the sector. More specifically, after reviewing the recent transport developments in Chapter 2, the survey analyzes: (a) the government objectives and transport development strategy embodied in the investment program of the next Five-Year Development Plan (Chapter 3); (b) the need to strengthen the institutional framework and decision making process in the transport sector to ensure better planned and coordinated policy measures and investment programs (Chapter 4); (c) the scope for policy adjustments in the present transport regulatory and pricing systems, particularly those which could better promote intermodal competition, benefit transport users in rural areas, and allow improved cost recovery of public operators (Chapter 5); and (d) the present energy efficiency in the transport sector and the scope for conserving energy through pricing and other measures including the future role of different modes under the prevailing conditions of relative fuel scarcity (Chapter 6). 1.05 Through the evaluation of the proposed Development Plan, three main issues are identified and recommendations are made on how the Government might remove existing deficiencies. The first issue identified concerns the Government's approach to transport planning and the institutional limitations on the quality and effectiveness of transport coordination. The second issue concerns policies for deregulation and cost recovery in each mode and relates directly to the Korean transport users' need for lower transport costs and better services. The third issue concerns policies for energy conservation, with the aim of reducing operating costs and limiting the increasing foreign exchange requirement for imported petroleum. Chapter 7 of the report discusses how the Bank might help Government to solve these problems. The future role of the Bank in the transport sector is then redefined, and new projects are proposed for inclusion in the Bank's lending program. The rationale for the Bank's future involvement would no longer be to help Korea in increasing transport capacity, but rather to promote and implement desirable policy and institutional changes. 1.06 While this report can be used as a reference document for future Bank actions, it is principally intended to promote a policy dialogue between the Government of Korea and the Bank. Thus the rationale of some of the transport sector policies advocated by the Bank are explained and substantiated by the necessary analyses. The recommendations presented are geared to practicality and ease of implementation. - 3 - 2. THE DEVELOPMENT OF KOREA'S TRANSPORT SYSTEM 2.01 The remarkable economic progress made by Korea over the last two decades has been supported by an impressive development of its transport system. At the beginning of the 1960s, Korea was a poor, rural, developing country, dependent on agriculture as its main source of income. The main means of transporting goods and passengers were the railways which were built at the beginning of this century by the Japanese and rehabilitated following the Korean War. Today, with a GDP of over US$1,600 per capita, Korea is a semi-industrialized, middle-income country with 56% of its 40 million population living in urban areas and served by a modern transport network. The railways have continued to grow in absolute terms but are no longer the primary transport mode. A diversified road network has been developed, and paved national roads have more than tripled during the last decade. The share of coastal goods transport in total traffic has also increased marked:Ly, primarily due to the movement of oil products. The country's export drive and reliance on foreign trade have led since 1970 to a fourfold increase in the volume of port traffic and an over sixfold increase in Korea's international shipping fleet. A. Size, Growth Trends and Structure 2.02 The transport sector has an important place in the Korean economy. In 1980, nearly 26% of gross domestic capital formation went to transport compared to 24% in 1971, and its contribution to the Gross National Product (GNP) was 7% in 1980 compared to 5% in 1971 (Tables 1.1 and 1.2). Transport demand during the last two decades has generally exceeded the GNP growth rate. During 1961-78, real GNP grew by 10% p.a. and per capita income more than trebled in real terms, while domestic passenger traffic increased thirteen times and freight six times. Specifically, traffic grew very rapidly for road, aviation and express rail passenger traffic and for road and maritime freight. transport as shown in the table below. Table 2.1(T). AVERAGE ANNUAL DOMESTIC TRAFFIC GROWTH (%) (in Road Rail Sea Air pass-km Passen- Passen- Passen- Passen- & ton-km) ger Freight ger Freight ger Freight ger Freight 1962-66 19.9 11.6 10.0 9.3 7.6 36.7 25.0 - 1967-71 14.9 44.7 0.2 7.5 5.5 50.2 41.7 - 1972-76 13.6 13.1 10.3 4.4 (0.6)/a 3.5 (2.6) (2.5) 1977-81 9.2 9.1 8.5 2.2 14.0 7.5 15.1 26.5 /a Figures in brackets are negative growth rates. -4- 2.03 Since 1979, however, the growth in transport demand has declined due to a general economic recession in the country brought about by a variety of factors including: a transition in political leadership, sharp price increases of imported oil, high interest rates and difficulties in expanding the volume of exported manufactured products. As a consequence, traffic growth generally slowed down, particularly road freight to 9% p.a. during 1977-81 and railway freight to 2% p.a. over the same period. Passenger traffic was also affected on all modes except for sea and air transport. Some encouraging signs of resumed growth are being observed since 1983, par- ticularly with the high sales of automobiles. 2.04 During the period of intense economic growth, the structure of the transport system evolved rapidly and adjusted to the demand shifts among modes. This was made possible by a development strategy that rapidly increased and modernized system capacity through the allocation of large capital budgets in the development plans since 1967 (Table 1.3). As a result, the railway's predominant role in the past was replaced by a more balanced distribution of traffic among rail, roads and coastal shipping. Traffic statistics (Tables 1.4 and 1.5) summarized in the table below illustrate this evolution over the period 1961-81. Table 2.2(T): EVOLUTION IN DOMESTIC TRAFFIC DISTRIBUTION Passenger (pass-km) Freight (ton-km) Road Rail Sea Air Road Rail Sea Air 1961 45.5 53.0 1.3 0.2 8.2 88.2 3.6 - 1981 73.9 23.6 0.5 0.6 35.0 37.5 27.5 - 2.05 Nearly half of all road passenger traffic is within urban areas, but this share will be significantly reduced with the opening of the Seoul and Busan subways. International passenger traffic is almost entirely served by air transport and grew at over 30% p.a. during 1962-76, but slowed to 9% in 1977-81; international freight is almost entirely served by sea transport and grew at 18% to 32% p.a. during 1962-76 and 15% in 1977-81 (Table 1.6). 2.06 These structural changes reflect both the economic advantages of the various modes and the different growth rates experienced by the industries served. In general, rail and coastal shipping increasingly are concentrating on long distances and bulk commodities, while road transport handles short distance and more general cargo. Domestic freight by all modes in 1982 amounted to 430 million tons and 30 billion ton-km, compared to 32 million tons and 4 billion ton-km in 1961. Bulk commodities represented over 42% of the tonnage transported. Anthracite and cement with 28 and 20 million tons, respectively, are the main bulk commodities and are - 5 - chiefLy transported by the railways, which handle 70% and 48% of this traffic, respectively. Oil is the third largest bulk commodity with nearly 19 miLlion tons, 63.3% of which is transported by coastal shipping. Road transport carries mainly grains, fertilizer and lumber over relatively short distances (Table 1.7). B. Recent Transport Investment Strategy 2.07 The Government's basic strategy in the transport sector has been to increase the system's capacity fast enough to support economic growth and avoid bottlenecks. A large proportion, up to 23%, of planned capital expenditures was allocated to expand and modernize transport infrastructure from 1.967 to 1977 when it was tapered to around 15% in the Fourth and Fifth Plans. The investment allocations increased sharply in current prices from W 150 billion in the Second Plan to W 2,800 billion in the Fourth. Actual expenditures were even higher, at least in proportion to overall expendi- tures, as they ranged from 20% to 27% (Tables 1.8 and 1.9). Investments have been concentrated on the Seoul-Busan axis where most industrial develcipment has taken place and on corridors in the northeastern and southwestern parts of Korea. Policy Objectives 2.08 The investment strategy aimed at establishing a reasonably balanced system and limiting uneconomic allocation of traffic among the various modes. In addition to transportation objectives, these investments have been linked to broader concerns in Korea's spatial and economic planning. In particular, considerable efforts have been made to develop new industrial complexes in coastal areas to take advantage of Korea's natural potentials in harbors and to exploit low-cost coastal shipping while avoiding excessive congestion on road and rail. Moreover, to ensure that scarce transportation means appropriately meet development priorities, the Government has maintained fairly tight regulations on the sector. Strict licensing of operators in road transport and shipping, and administered pricing for all transport activities were introduced and are still enforced today. Korea discouraged motorization through a policy of high taxation of domestic cars and high prices for gasoline. 2.09 To complement the large investments made to develop a basic trans- port infrastructure, the Government made a considerable effort to improve the efficiency of institutions responsible to plan, construct, maintain and operate the new facilities and services. In the public sector, institutions such as the Korean National Railroad (KNR) have been strengthened and others established such as the Bureau of Public Roads (BPR) in the Ministry of Construction (MOC), the Korean Highway Corporation (KHC), and the Korean Maritime and Port Authority (KMPA). In many instances, their financial and - 6 - managerial responsibilities have been raised to allow them to operate as semi-autonomous public corporations. In the private sector, a highly efficient contractor system has evolved for civil works which reflects both the insistence on competitive bidding in the award of contracts as a matter of policy, and the large volume of construction work that has been carried out in Korea during the past 20 years. There are now some 500 firms capable of handling a broad range of public works. Furthermore, with government encouragement, the major construction firms have successfully expanded their construction activities overseas; in 1981, Korean contractors won overseas contracts valued at US$13.6 billion. The Past Investment Plans (1962-81) 2.10 The structural changes in the transport system have been brought about through the implementation of four plans from 1962-81. The First Plan (1962-66) devoted about half of transport investments to modernize and strengthen rail system capacity. Some 275 km of industrial track were built (Tonghae Puku line); the conversion from steam to diesel traction was started with large imports of locomotives and diesel rail cars; the fleet was modernized with large imports of passenger and freight cars while a large number were locally made. The Second Plan (1967-71), in contrast to the First, devoted about 60% of transport investments on highway improvement. Some 655 km of expressways were built (Seoul-Busan, Ulsan- Onyang, Seoul-Incheon and Daejon-Chonju) and the motor vehicles fleet increased by nearly 100,000 units. In the railway sector, 180 km of new tracks were constructed (Kyonggon line), and 50 km doubled-tracked (Honam line); the fleet continued to expand with very large imports of diesel locomotives, passenger and freight cars, while more were built locally and rehabilitated. In the maritime sector, 800,000 GT of ocean-going ships and 130,000 GT of coastal ships were added, while Busan port stevedoring facilites were expanded and Inchon and Ulsan ports were developed to accommodate foreign trade and to establish industrial coastal zones. 2.11 The Third Plan (1972-76) gave priority to the highway and maritime sectors which received 47% and 28%, respectively, of transport investments. Some 490 km of two-lane high-speed highways were built (Chonju-Busan, Wonju-Gangreung), a national road maintenance organization was established and the motor vehicles fleet expanded further by 210,000 units. In the maritime sector, expansion of Busan and Mukho ports was started, while Incheon port was developed further with the help of the Asian Development Bank (ADB); the fleet was increased by some 1.3 million GT. In the railway sector, the line capacity increase continued through electrification of 320 km of heavy traffic industrial lines (Chungang, Taebaek and Yongdong), and about 100 km of the Seoul Metropolitan System (SMESRS); about 90 km of new tracks were laid including 9.5 km of the first subway line in Seoul. In the aviation sector, the international airports of Seoul Kimpo, Busan-Kimhae and Cheju were expanded while ten jet liners were imported. 2.12 The Fourth Plan (1977-81) directed investments at the consolidation of the basic transport infrastructure developed over the previous decade by completing missing links, while also starting to promote better efficiency in the operation of the transport system. The emphasis was placed on expenditures for maintenance and renovations rather than on investments for new facilities, with the major exception being a large-scale subway construction program designed to alleviate urban transport congestion in Seoul City. The basic highway network was completed by widening to 4 lanes the Masan-Busan expressway and constructing the Daegu-Masan 85 km two-lane expressway. A largescale paving program for national roads was also started to bring the paved portion to 68%, a target that was not reached partly due to reclassification. In the railway sector, some 160 km of double tracking were completed (Chungbuk and Gyeongbu lines) while large numbers of electric cars, diesel locomotives, passenger and freight cars and workshops were added. In the maritime sector, the first Busan container port and Mukho coal port were completed; and a second expansion of the Busan container area was started. Incheon expansion, started in 1974, was completed in 1978 with the assistance of ADB, through the addition of 20 deep-water berths, including 5 container berths and 4 breakwaters. 2.13 The past achievements under development plans in the transport sector are very impressive and evidenced by large networks and fleet expansions as well as modernization (Tables 1.10 and 1.11). I-However, funds expended under the national plans reflect only part of total investments in the transport sector. Local government investments, including those of provinces, counties, cities and special cities, are not included in the plans unless they are funded at least in part by the central budget. Omitting to take them into account would considerably distort the assessment of the real magnitude of Korea's progress. In particular, the four Special Cities (Seoul, Busan, Daegu and Incheon) road investment programs were not shown in the Fourth Transport Plan although with over W 700 billion at current prices (nearly US$1 billion), 80% of which was in Seoul City, they represented 37% of the country's overall road investment (Table 2.14). In comparison, W 880 billion or 46% were spent on national and express highways and W 328 billion or 14% on provincial, county and city roads. Performance Assessment 2.14 Broadly, the basic objectives of the transport development plans were met as the network expanded fast enough to accommodate economic growth. The general approach that gave priority to large investments to increase system capacity was the most appropriate. The traffic grew so fast that halfway measures, such as rehabilitation and improvement of the deficient network of the 1960s, would have been insufficient and short-sighted. - 8 - 2.15 The highway development policy was geared to develop a network of roads to serve the short and medium distance traffic for which they have an economic advantage over the railways. The Road Plan developed in 1968 in consultation with the Bank proposed a very ambitious program consisting of (a) the development through 1986 of a network of about 4,000 km of trunk highways to form a grid of longitudinal and transversal axes linking the four major gate ports of Incheon, Busan, Mogpo and Mukho toward inland centers, and (b) the construction over a 10-year period of a 1,600 km two-lane expressway network designed on separate alignments from the old roads, that could be expanded when traffic volumes would require it. Tne program was 75% completed and was determinant in localizing industries around Seoul and in most provincial capitals, speeding the urbanization process as the population migrated more easily from rural areas. The voluntary delay in improving the secondary and tertiary networks was well founded in view of the highway requirements of the industrialization policy. 2.16 Similarly, the railway investment policy was directed at strengthening its transport capacity for bulk freight and long distance passenger traffic where the railways have a comparative advantage. Investment in modernization, double tracking and electrification of the most heavily used freight line (14 million tons p.a.) enabled the railway to perform more efficiently and to cope with demand. In particular, it helped increase express train traffic from 1 billion passenger-kn in 1971 to 9 mil- lion in 1981, to make large profits. However, to keep freight or recover local passenger traffic that would be better handled by road transport, the railway attempted to compete by investing in improvements that were economically not so justified and had to apply a fares policy for ordinary trains that could not cover operating costs. Also the Government forced the railways to invest in infrastructure for other than strictly economic reasons such as double-tracking of the Chung-Buk line. 2.17 Past investments geared to the development of ports, including those of Busan, Incheon and Ulsan, were necessary to cope with large increases of ocean-going freight and to attract heavy industries to coastal areas. Also, the Busan containerization program was effective in reducing handling costs and expediting flows of cargo, although custom clearances still impose lengthy transit delays. However, efforts were too restricted to the major ports. A national port development policy remains to be introduced to shape the future role, number and localization of lesser ports, particularly to support coastal shipping which has scope for much expansion, given the geography and political situation which make Korea a de facto island. Progress in the shipbuilding industry has been very instrumental in modernizing the domestic fleet, which has proven to be a source of foreign exchange earnings. An expansion of air transport was also timely in serving the many foreign and local businessmen who were the artisans of Korea's fantastic exports expansion that increased from 1962 to 1978 at an average rate of 27% p.a. 2.18 Some Misinvestments. The selection of investments was done by each modal agency in a rather independent and isolated manner. It was guided nevertheless by the objectives of the Ten-Year Physical Land Development Plan (1972-81) which called for balanced regional development and incorporated an a priori list of major projects called for by the Blue House. Despite the lack of coordination, very few investments proved to be superfluous or clearly overdesigned. There were, however, a few misinvestments such as the duplication of cement port facilities at Mukho and Bukpyeong, 10 km apart, which are now underused at Mukho. The oversized container port section of Incheon which is partly idle while Busan is overcrowded, is another. 2.19 In the road sector, the East-West Olympic express-highway between Gwangju and Daegu which was added for political reasons at the end of the Fourt!h Plan and started in late 1981, is not yet needed. The road crosses a remote mountainous and sparsely populated area that is bypassed by an excellent two-lane expressway via Masan. The funds might have been more effectively used in simply paving the existing road, and providing many other social investments in education, health, and other services to the Gwangju area that was in the past left somewhat behind other regions. Similarly, the double tracking of the Chung-Buk and Honam lines could have been better phased if the Government had only considered economic justifica- tions for this work. 2.20 The standards adopted for some special cities roads are another example of investments that may turn out to be grossly overdesigned and premature, as evidenced by the low traffic on newly built roads up to 14 lanes--wide in the south Seoul suburbs. The selection of Special Cities' large investments is done separately, and their consistency with other transport projects under the development plans are not checked. It would be useful if the economic justification of such investments were compared to ensure that the overall program was balanced and to avoid excessive diversion of funds from other needs. In particular, such investments appear to be not properly coordinated with the subways and the suburban railway (SMESRS) and other new developments in the area. The accumulation of investments in Seoul City seems to conflict with the recommended strategy in the Ten-Year Plan to organize new development around growth poles in the provinces to compensate for the overwhelming attraction of the capital. The land use plan had recommended control of Seoul's expansion by limiting its growth to 5% p.a. over the plan period and by promoting the transfer of industrial activities from the city to the suburbs or other regional centers. 2.21 All these misinvestments reflect planning deficiencies that are likely to become more numerous in the future as competing transport claims become more complex to resolve and cannot be adequately handled on an - 10 - individual basis. Mechanisms, including institutional changes and a new multimodal project approach, are urgently needed to remedy the situation and some suggestions are put forward in Chapter 4. The Bank's Involvement 2.22 The Bank has played an active role in advising and assisting the Korean authorities in pursuing their transport objectives. Since 1962, the Bank Group has assisted the KNR through eight railway projects amounting to US$546 million. The first six projects have been satisfactorily completed and a seventh is almost fully disbursed. Bank-supported investments have concentrated on improved rail capacity and service for long distance passenger and bulk cargo transport. The Bank has also maintained an active dialogue on the railway's financial situation, investment plans, level and structure of tariffs. After some deterioration in the 1970s, Government agreed to implement a financial recovery plan for KNR as part of the Seventh Railway Project. Discussions of a revised plan, following the severe downturn of the economy in the early 1980s, are continuing. Meanwhile, the eighth project, a Coal and Cement Distribution Project which was recently approved will strengthen the capacity of the railways, ports and inland terminals to cope with the expected increase in transport demand of these commodities, resulting partly from large coal imports substituting for oil. 2.23 Since 1969, the Bank has financed five highway projects and a preinvestment credit totalling US$465 million which have had a major impact in assisting Government with the improvement and expansion of the national, provincial and county road networks and with institution-building in the MOC and MOHA. Significant policy changes, relating to the highway subsector, which were effected through these highway projects include the adoption of more appropriate road standards, revisions of regulations governing vehicle weights and dimensions, and a modified government policy on toll roads. The MOC's organization to maintain the national road network was established and strengthened through the provision of technical assistance and road main- tenance equipment. Korean consulting firms have benefitted through their association with foreign consultants on the design of road projects. 2.24 Substantial assistance has also been extended for port development. In part related to Korea's export drive, ports are seriously congested, par- ticularly at Busan, the biggest port. Containerization was introduced in Busan with the assistance of the Bank under two port projects totalling US$147 million; the Saudi Fund for Development participated with the Bank in the financing of the first Busan Port Project. A third port project designed as a subsector loan is now being considered to further improve container handling capacity at Busan and for supporting other maritime plans. 2.25 The Bank has also, through these various projects, provided active support and finance for technical assistance for a range of feasibility and - 11 - planning studies relating to national transport development, urban transpor- tation needs, inter-modal alternatives along major traffic axes (such as the Seoul--Busan corridor) in addition to more conventional engineering design work for proposed projects. However, the record of accomplishment is patchy, with experience tending to show a pattern of relatively slow progress, reflecting in part the difficulties of sectoral planning and transport coordination in the Korean context. 2.26 Pricing policy and the regulatory framework have been a feature of Bank-Government dialogue for many years. In the 1970s, emphasis was given to supporting Government's efforts to establish agencies such as KNR and KMPA on a sound financial basis, with investment planning linked to appro- priate tariffs and charges in regard to rail transport and ports. The role of the Bank has been quite effective in this regard, although the priority given to reducing inflation in the past two years has led to some reluctance to raise tariffs - for example in rail transportation - in line with changes in costs, although some increases in real terms were achieved. The Bank has also assisted Government in the review of transport and traffic regulation, notabLy in regard to licensing of common carriers, road vehicle taxation, axle-loading and similar issues relating to road transport. 2.27 It is expected that the Bank's policy dialogue would be strength- ened in future years through the increasing emphasis being given to a sector and subsector approach in transport lending to Korea. A Provincial and County Roads Project approved in 1982 has deepened and broadened the Bank's involvement in the road subsector by extending assistance, for the first time, to the Ministry of Home Affairs (MOHA) which deals with the maintenance of provincial roads and the maintenance and improvement of county roads. This new involvement provides the Bank with an opportunity to help improving coordination of road planning between MOC and MOHA, and will strengthen the basis for possible highway subsector loans. Similarly, the recently completed ports study examined broadly which ports should be developed to handle the nation's traffic through the next decade and may lead to a port subsector loan. The Bank's proposed program is discussed in Chapter 7. 2.28 Bank transport projects also contain specific components to pro- mote the local transport consulting industry. A Korean Institute was the consultant responsible for both a Coal and Cement Distribution Study and a Comprehensive National Transport Study. Korean consultants are also closely associated with, and assuming an increasing share of the work and responsi- bilities for, studies under the Bank's railroad and port projects. The development of a competent consulting industry in the transport sector is likely to lead to significant import substitution and export of such services. - 12 - C. The Present Transport Systems Road Transport (a) Highway Network and Traffic 2.29 The present highway system is still inadequate to cope with the rapid growth of road transport, despite the Government's effort since 1968 to develop a modern network. As of 1982, only 64% of the national roads, 13% of the provincial roads, and 5% of the county roads were paved, and a high level of investment will continue to be required to provide an adequate level of service. The road network totals about 87,000 km comprising 13,500 km of national roads, 10,000 km of provincial roads, 11,500 km of county roads and 52,400 km of village access roads built by the Saemaul self-help community movement since 1971. In addition there are 11,200 km of city roads, mostly streets, about 7,900 km in the cities of Seoul, Busan, Daegu and Incheon and 3,300 km in the other cities. The national highways include 1,245 km of toll expressways of which 515 km are four-lane divided and 729 km are two-lane (Tables 2.1 and 2.2). 2.30 Despite the remarkable expansion in the road sector, helped through five Bank highway projects and two Asian Development Bank projects, much more remains to be done. The national network requires further improvements, and provincial gravel roads with high traffic volumes have to be paved. County roads urgently need to be improved and effectively maintained through the strengthening of the provincial and county maintenance organization, a task that has started under the Bank's Provincial and County Roads Project approved in 1982. Road density at 0.9 km/sq km is generally sufficient to serve transport needs, since about 70% of the total land area is mountainous. However, the condition of most of the road network is inadequate. In particular, unpaved roads, including some national and provincial roads carrying high traffic and almost all the county roads, are unsafe with no place for pedestrians and in poor to very bad condition that permits driving speeds of only 25 to 35 kph. The paved national road network is generally in adequate condition since maintenance was considerably improved through the establishment of a new, efficient maintenance organization financed by the Bank under the First and Second Highway Projects. 2.31 The planning of highway improvement is based on traffic counts that started in 1965 for the national highways and in 1981 on the provincial roads and are made regularly by MOC. The traffic data available show that annual growth rates of traffic volume were high during the First and Second Plans (1962-71), but fell off in the Third Plan with the first oil price shock (1972-76). Rapid growth of both traffic and fuel consumption resumed in 1976 and peaked in 1979 but decreased again in 1980. Gasoline consumption evolved - 13 - like traffic growth and but not a very good indicator of traffic variations due to more fuel efficient vehicles; however, the drop in 1975 fuel consump- tion which was one-third lower than in 1973 reflected major price increases (Table 2.3). (b) Motor Vehicles and Motorization 2.32 Korea's motor vehicle fleet is small compared with other countries of similar and even lower income levels. In 1982, the 630,000 four-wheel vehicles registered amounted to only 14 vehicles per 1,000 persons. The ratios are 20 in Thailand, 21 in the Philippines, and 48 in Malaysia, although Korea has a higher per capita income (Tables 2.4 and 2.5). The fleet, comprising 54% of trucks and buses, has been kept small for many reason3: high taxation on ownership and use of private cars, restrictive licensing of commercial vehicles, rather high costs of locally manufactured vehicles and the relatively underdeveloped road network. Only twenty years ago Korea had less than 1,500 km of paved roads. 2.33 The vehicle fleet has, however, been growing rapidly. Including motorcycles, growth averaged 10% p.a. during the First Plan (1962-66), and 19% p.a. during the Second Plan (1967-71). Growth slowed at the beginning of the Third Plan due to the economic stabilization policy in 1971/72 and the oil crisis in 1973/74. Since 1976, the growth accelerated again and averaged 25% p.a. from 1977 to 1981. Of all four-wheel vehicles, cars increased the fastest, doubling since 1977, but growth was irregular, with 31% in 1977 and only 3: in 1980. The small car fleet, which is 74% privately owned but mainly by comDanies, will probably increase rapidly as occurred in Japan which had only 200,000 cars or 2.8 per 1,000 persons in 1958 but 25 million in 1980 or about 217 per 1,000 inhabitants. The continued slow rate of motorization in Korea will depend upon the willingness or ability of the Government to keep the current high le-vel of taxation in line with increasing incomes. The combined pressure of the public and of car manufacturers reacting to declining exports may force Government to lower the taxation of private cars, leading to rapid mnotorization (para. 3.15). If not, and as an alternative, the demand may shift to motorcycles, the number of which has increased about 35 times from 1977 to 1982. 2.34 Local production of motor vehicles grew rapidly over the last decade from about 7,500 four-wheel vehicles in 1967 to a peak of 200,000 in 1979. However, it dropped to 120,000 in 1980 and climbed again to 164,000 in 1982 (Table 2.6). This growth was fostered by restrictive import licensing and high customs duties. Except for specialized heavy trucks, all motor vehicles are now locally manufactured or assembled under license from American, Japanese and Italian manufacturers and contain nearly all locally manufactured parts. In 1975, the first 100% Korean car was produced by Hyundai.. Exports did not grow as expected and present plans are to develop more efficient models and to boost exports of parts. Forecasts by EPB indicate that production would overtake present capacity of 225,000 vehicles per year in 1983 and reach 625,000 vehicles by 1986, with exports accounting for 20% of production. - 14 - Accordingly, large investments are now being considered to expand and re-tool the existing automobile plants. (c) Road Transport Industry 2.35 Road transport has grown rapidly over the last 15 years, not only in absolute terms but also in relation to other modes, particularly the railways. About 22% of freight traffic in ton-km was carried in 1971 on highways compared to only 8% in 1961. Road freight traffic grew twice as fast as all freight traffic, averaging in ton-km 45% p.a. in 1967-71 and 13.0% p.a. in 1972-76. The share of road freight traffic is expected to continue increasing in the long term although probably more gradually. Passenger traffic on highways also grew rapidly averaging in pass-km 13.1% p.a. in 1972-76, and 9.1% in 1977-81, and amounted in 1981 to over two thirds of the total with one third going by rail, a complete reversal of the situation in 1961. This trend is expected to stabilize as the railways concentrate more on mass transit in urban areas in addition to long distance express services. 2.36 In 1982, there are a total of 1,685 commercial trucking companies operating in Korea; 1,659 under "area" licenses and 26 under "route" licenses./1 Some 735 bus companies operate about 33,000 buses, about 60% in urban areas, and some 1,930 companies operate about 53,000 taxis while another 24,000 are operated by owner-drivers (Table 2.7). Commercial road transport in Korea is restricted through a licensing and tariff system, the merits of which are discussed in Chapter 5. The main problem with this system is that it tends to suppress effective competition in commercial road transport and neglects to serve adequately the needs of the users. Relax- ations of regulations were introduced recently but have not gone far enough. This is evidenced by the low growth of the common carrier fleet, which accounted in 1982 for only 63,000 trucks versus 200,000 in the private fleet, while in 1967 with 15,100 trucks, it was almost three times larger (Table 2.5, p. 3). A similar evolution is also noticeable for buses which are operated more and more by private enterprises, schools, and farmers' co- operatives. The limitations on entering particularily the "route" trucking business seem to have worked to the advantage of the existing operators who have shared the market among themselves, protected as they are from outside competition. Since transport users' needs are not fully served by commercial operators (despite subsidies offered by MOT for buses in remote rural areas), /1 An "area" license authorizes service within a limited area, generally the province, and a "route" license authorizes service along a given route between points A and B. - 15- private entities have more and more started to operate their own trucks and buses. MOT is currently reviewing the licensing system. Unfortunately, indications are that the Government may not opt to relax existing regulations further but rather encourage the consolidation of commercial operators, particularily for buses, in larger units which MOT believes are better able to compete with the fast growing private fleets. 2.37 Moreover, the Government, through MOT, is at present implementing a subsidized plan to improve public bus services in the remote rural areas for villages of over 100 households where their availability, frequency and quality are deficient because of poor road conditions and remoteness which make operations of standard buses unprofitable (Table 2.8). By contrast, under the Provincial and County Road Project, the Government is promoting through MOHA, an experiment to introduce unscheduled transport services for the rural population having no access to public road transportation that would operate without subsidy. Such unscheduled and shared transport services are allowed first on an experimental basis in selected areas, and will operate on demand as large taxis. The ownership will not be restricted by minimum fleet requirements and their modalities of operation, including the routes and fares, will be determined by market rules. 2.38 Road Safety. Any country that has a large number of road accidents has a serious problem. Commonly-used figures are sometimes cited in support of a conclusion that the problem is worse in Korea than in many other countries. For example, in 1978, with a vehicle ownership rate of 107 per 10,000 population, there were 129 fatalities per 10,000 vehicles. This compares with 48 fatalities per 10,000 vehicles in other developing countries with an ownership rate of 280 per 10,000 population. What these figures fail to show is the much higher annual mileage run up by Korean cars compared to those in other countries. The average Korean car runs about 30,000 km p.a., about double the world average. When expressed on a mileage instead of a vehicle basis, the Korean figures are probably no worse than other countries. Traffic control is relatively good and driver liability is unusually strict, putting a high premium on avoiding accidents. Despite this corrective to a frequently-held view on accident rates in Korea, there is much room for improvement. The Bank is assisting MOHA under the Provincial and County Roads Project, to improve road traffic safety which is the joint responsi- bility of three agencies. The Traffic Police, under MOHA, enforce safety- related regulations such as speed limits, etc. and collect and publish traffic accident statistics. The Transportation Safety Promotion Authority under the general control of MOT covers all modes but is responsible for the inspection of motor vehicles, railroad cars, ships, aircraft, rails and cables, from which activity some 90% of its revenues accrue. The Road Traffic Safety Association, a civilian non-profit corporation reporting to MOHA, analyzes traffic accident data, does research and studies on road safety, trains and educates drivers, and prepares and organizes propaganda related to road safety. - 16 - Rail Transport 2.39 As a result of the fast expansion of the road network over the last decade, the railways have lost their predominant position in the trans- port system which has now evolved into a more responsive and complementary multi-modal system. With the modernization of its network, which was assisted by the Bank through seven projects, the Korean National Railroad (KNR) remains the most economic means of land transport for moving bulk traffic over medium and long distance. In addition, KNR operates fast growing and very profitable long distance express passenger trains. It also plays a growing role in providing a self-paying rapid transit service for the Seoul suburban area which is linked with the first subway line. 2.40 In 1980, KNR operates a well maintained 3,100 route-km network of standard gauge including 610 km of double track and 47 km of narrow gauge. 2,368 km of single track industrial lines serving the northeast coal and cement producing areas are electrified, as well as about 100 km of the Seoul Metropolitan Electric Suburban Railway System (SMESRS) linking Incheon and Suweon. Staff comprises 38,000 people, with 33,500 permanent employees. Productivity is high in terms of traffic units (pass-km plus net ton-km), and was 800,000 per staff in 1981 compared to 500,000 for European railways: the dense urban and intercity passenger travel and heavy bulk commodity traffic contribute to this (Table 3.1). 2.41 KNR's fleet and facilities are modern and in good working condition. At the end of 1980, the traction fleet consisted of 425 diesel and 90 electric locomotives, 130 diesel rail cars and 286 electric railcars (for the SMESRS). The rolling stock consisted of 1,900 passenger cars and about 16,700 freight cars (including about 1,700 privately-owned cars). An additional 10 diesel locomotives, 12 diesel railcars, 146 electric railcars (of which 130 for SMESRS), 246 passenger cars and 100 freight cars included in the Seventh Railway Project were procured by end 1982 (Tables 3.2 and 3.3). A plan to improve the maintenance and utilization of locomotives and rolling stock was implemented in consultation with the Bank resulting in improved fleet availability. Main workshops are located in Seoul for electric locomotives, diesel and electric railcars, at Busan for diesel locomotives, and at Daejon where a new rolling stock workshop has been constructed for freight cars and passenger cars. New freight terminals are being developed in the Seoul region, south at Bugog and west at Susaeg, to relieve existing congested and obsolete stations in the city. 2.42 KNR's freight traffic is substantial and concentrated on a few bulk commodities. In 1981, it carried 48.8 million tons of freight, an 8% increase p.a. since 1966, on a 222 km average distance, amounting to 10.8 billion ton-km compared to 35 billion in Japan or 47 billion in France (Tables 3.4 and 3.5). Freight densities, which averaged 3 million tons net - 17 - per route-km in 1981, reached 14 million tons on the heaviest section of the northeast industrial line (Taebaek). The next heaviest used sections, the Jung-Ang line south of Jecheon and the Seoul-Busan line, carry around 4 million tons annually. The main commodities transported include coal with 21.4 million tons which doubled since 1966 and cement with 8.4 million tons, quadrupling since 1966. In addition, other bulk commodities (ore, oil, fertilizer, and grain) accounted for 78% of KNR's total freight ton-km in 1981, up from 66% in 1966. 2.43 KNR's main earnings come from passenger traffic but competition with road transport is severe. In 1981, it carried 471 million passengers on a 94 km average distance, achieving 23.4 billion passenger-km, an 8.6% increase p.a. since 1966 (Table 3.6). Significant changes, however, occurred in the last ten years that deeply affected passenger traffic. The opening of the Seoul-Busan and Daejon-Gwangju expressways in 1970-73 marked the beginning of intense road competition by long-distance bus transport. The rise in personal incomes increased people"s mobility, and their demand for greater comfort resulted in a shift to higher class trains. Also, with the opening in 1974 of KNR's electrified suburban lines connected to the first Seoul subway line, a new era of rapid transit started. After a serious decrease in the early 1970s, passenger traffic resumed a steady growth since 1973, reaching a rate of 7% p.a. from 1977 to 1979. The proportion of passengers riding lower class (ordinary) trains has been reduced to 35% while the balance was riding limited express and special express trains which increased over five-fold since 1972. In 1981, 153 million long-distance passengers were transported; passenger traffic on the SMESRS grew rapidly also, exceeding 268 million passengers that year (Table 3.7). These trends are indicative of areas where KNR should increase its services. 2.44 Operating efficiency remains high and in general continues to improve; some examples are given in the following Table. KNR earned positive returns until 1971; its financial situation then deteriorated as inflation increased costs faster than tariffs and required annual government subsidies. Historically, tariffs for freight and ordinary passenger trains were much below costs and were cross-subsidized by the profitable long distance passenger services. However, covenants in successive Bank railway projects emphasized the need to increase freight tariffs in real terms which were raised by 40% between 1975 and 1982 despite rapid inflation. Freight revenues now cover 105% of operating costs and 95% of total costs. The main losses are incurred from ordinary passenger trains which revenues cover less than 40% of operating costs. The SMESRS traffic revenues fully cover total costs, and express passenger train revenues cover 150% of total costs. Since 1978, passenger fares have been raised somewhat over the cost of living, with the exception of fares for ordinary trains which KNR intends to raise gradually to fully cover operating costs in 1985 (Tables 3.8 and 3.19). - 18 - Table 2.3(T): SUMMARY OF KNR's OPERATING STATISTICS Index 1979 1971 1979 (1971=100) Average number of passengers per passenger train 358 515 144 Average freight train load (tons) 441 491 111 Traffic units per employee (000) 379 808 213 Availability (%) Diesel locomotives 82.8 89.7 108 Passenger cars 85.0 91.1 107 Freight cars 89.5 94.0 105 Passenger-km per available passenger car ('000) 5,722 11,018 193 Net ton-km per available freight car ('000) 601 727 121 2.45 Further improvements are possible and have been recommended by the Bank in particular through: (a) increasing the length of trains which are limited to 10 cars for passengers and 20 for freight, (b) closing more uneconomic lines, and (c) terminating more rapidly the costly ordinary trains and closing many of the 600 lesser-used stations. Maritime Transport 2.46 The export-oriented industrialization policy coupled with the need to import raw materials for which Korea is poor'ly endowed put heavy pressure on maritime transport. The port infrastructure and the vessel fleet accordingly had to expand rapidly. Now Korea's port network comprises 43 general or commercial ports with 48.0 million tons of stevedoring capacity per year and 12 industrial ports with 40.8 million tons capacity. In addition, there are some 400 fishing ports and 1,400 other wharfs without basic facilities (Tables 4.1 and 4.2). 2.47 The total cargo movement, including seagoing and coastal freight, increased by 11.4% p.a. in the Third Plan (1972-76) and 8.4% in the Fourth Plan (1977-81). Seagoing freight traffic through Korean ports reached over 105 million revenue tons in 1981 compared to 8.5 million tons in 1966, while coastal freight reached 44 million tons compared to 4.6 million tons over the same period, increasing respectively at 18.3% and 16.2% p.a. These increases created serious port congestion (Table 4.3). Both Busan, the biggest port handling 30% of the country's external trade, and Incheon, the port nearest Seoul, required urgent expansion, and a large containerization program started. Industrial development on the southeastern coast prompted the creation of specialized ports at Bukpyeong for cement, Pohang - 19 - for steel mill input and output, Ulsan for refineries and petro-chemicals, Onsan for a refinery and nonferrous metal industry, Changweon for industrial machinery and Samil (Yeosu) for fertilizer and petrochemicals. 2.48 In spite of recent development, more efforts are required to further expand port capacities and to improve port handling operations that are costly for some cargo categories at certain ports. In 1981, the ports capacities, measured by the stevedoring throughput of each port, show an aggregate deficit of 10.2 million tons, comprising a 14.2 mnillion ton net deficit: for general ports and a 4 million surplus for industrial ports (Tables 4.4 and 4.5). About two thirds of the general ports' capacity shortage is concentrated in Busan. To make up the present deficit, lighter- ing and labor-intensive cargo handling methods are used. The situation will improve with the completion in 1982 of the Busan second phase expansion financed by the Bank under the Second Port Project and with the expansion of Incheon financed by the Asian Development Bank. 2.49 Korea-s vessel fleet expanded very fast and is becoming a high foreign exchange earner which the Government wants to develop further. In 1981 with a tonnage of 6.3 million GT, including 0.3 million GT of coastal vessels, the fleet ranks fifteenth in t'he world. The privately owned fleet increased by 3.3 million GT since 1976, with 1 million GT built in domestic shipyards while the rest was imported. Annual receipts of ocean freight also increased from US$425 million in 1976 to US$1.9 billion in 1980 (Table 4.6). Korea's flagships increased their share of ocean cargo from 39% in 1976 to 50% in 1980. In 1981, the coastal shipping fleet numbered 526 ships, totaling 290,000 GT, and varying in size from less than 100 CT to over 10,000 GT (Table 4.7). Except for tankers, ship size and cargo capacity are small; 91% are ships less than 1,000 GT and 78% less than 500 CT. The fleet is quite new with only 10% of the ships over 20 years of age (Table 4.8). 2.50 Coastal shipping has an important role to play as Korea's cheapest domestic transport. Formerly carrying small lots of passengers and goods between ports and small isolated coastal and island communities, it has become a competitor to road and rail for bulk transport. While roads improvement reduced the isolation of coastal villages and their marine dependency, coastal shipping increasingly serves the fast growth of urban and industrial centers located along the coast that have generated large bulk transport. In 1981, it moved 32% of this traffic compared to 10% in 1966. Cargo move- ment grew at 5% p.a. from 4.6 billion ton-km in 1971 to 7.9 in 1981. Coastal shipping expanded with the improvement of ports capacities and the buildup of cargo handling facilities. Coal, cement and oil amounted to about 91% of the traffic in 1981, a slight decrease from 97% in 1971 due to the stagnation of coal transport since 1975, that was balanced partly by increased ores trans- port (Table 4.9). - 20 - 2.51 Coastal shipping efficiency can be improved by faster and more appropriate vessels. It is operated exclusively by the private sector which is financially independent but is regulated through licensing and tariffs that are established by the Korea Maritime and Port Administration (KMPA). Through the licensing system, KMPA controls renovation of and additions to the fleet and occasionally assists operators requiring loans from financial institutions. The freight tariffs are determined according to the ship size, length of haul and specific type of cargo. This does not encourage rationalization of the fleet but enables traditional operators to remain in business. For coal transport, the Government pays a subsidy amounting to 90% of the average coastal shipping tariff to east coast mines which send 1.6 million of coal p.a. by sea. Air Transport 2.52 The role of aviation has been essential in supporting Korea's growing international trade. Its role needs to be expanded further, especially for air cargo and promotion of tourism. International passenger traffic is about twice as large as domestic and is growing very fast; it increased 10 times between 1966 and 1981 when 3 million passengers moved in and out of the country. Air freight is still small but growing even faster (Table 1.16). International and domestic traffic are handled at the airports of Seoul-Kimpo, Busan-Kimhae and Cheju Island, a major tourist center; there are in addition eight other local airports. Domestic air passenger traffic grew rapidly in the 1960s at rates 25-40% p.a. from 1962 until 1971, but growth rate decreased somewhat in the 1970s. It still amounts to less than 1% of total passenger-km, and domestic air freight is also negligible (Tables 1.4 and 1.5). There are twelve domestic routes served by the privately-owned Korean Airlines (KAL), which also operates internationally. The most intensely traveled domestic routes are Seoul-Busan with 13 round trips daily, Seoul-Cheju (12 round trips) and Busan-Cheju (7 round trips), all of which are profitable and are cross-subsidizing other loss-producing routes. - 21 - 3. THE FIFTH TRANSPORT PLAN AND CURRENT ISSUES 3.01 Transport development under the ongoing five-year plan will have to meet more difficult challenges than in the past due to a depressed economic environment. The period of rapid and sustained growth in the Korean economy came to an abrupt close in 1979, following the second major oil ptice increase, the subsequent worsening of the international economic environment, and political changes within Korea itself. Near economic stagnation, accompanied by severe inflation and balance of payments problems were experienced between 1979 and 1981. A recovery is now in progress, owing to Government's determined efforts to master inflation (which declined from 29% in 1980 and 12% in 1981 to about 5% in 1982), and to a remarkable improvement in the balance of trade (Table 1.12). Nevertheless, the medium-term prospects for a resumption of Korea's former rapid progress remain uncertain. The impact on the transportation sector is two-fold. On one side, the timing of investments needed to sustain further improvements in transport capacity and quality of service will be influenced by growth- induced traffic expansion. On the other side, the capacity of the public sector to finance the necessary upgrading and expansion of transport infra- structure and facilities may be sharply constrained by budgetary limitations. These factors will determine which of the investments proposed in the Transport Plan will be implemented. A. The Transport Sector Plan Objectives 3.02 The published Fifth Five-Year Economic and Social Development Plan (FFYP) forecast a GNP growth rate of 7.6% p.a. over the period 1982-86 (Table 1.13). In contrast to past transport policy that emphasized expanding capacity during periods of strong economic growth, the Government is now pursuing a recovery policy calling for significant adjustments in the sector. In this line, the Transportation Sector Plan prepared as part of the FFYP document by the Transport Affairs Planning Group gives the following priority objectives: (a) selectively increase transport capacity by modernizing equipment and optimizing investments in the sector; (b) enhance transport efficiency by improving intermodal traffic allocation and conserving energy; and (c) strengthen maintenance activities. 3.03 To meet these objectives, the Plan has earmarked for the transport sector W 9,940 billion or US$16.3 billion calculated at 1980 prices and exchange rate. This amount represents about 14% of total investment, and is a 45% increase over the W 6,900 billion (US$11.3 billion) allocated in the Fourth Plan (Table 1.14 and 1.15). About half of the expenditures are to be spent by the public sector for road, rail, sea and air port infrastructure and equipment, and the other half by the private sector for vehicles, ships and aircraft. However, investments in subways and aviation will absorb a - 22 - larger fraction of the total as will road vehicles and ships. Hence, real investment in the railway system, road and port infrastructure would increase by less than 20% above the Fourth Plan's outlays as shown in the following Table. Table 3.1(T): FOURTH AND FIFTH TRANSPORT INVESTMENT PLANS Fourth plan Fifth plan 1977-81 1982-86 Won Won Transport investment billions % billions % Railways 997.2 14.5 1,330.8 13.4 Road transport 3,093.5 44.0 3,718.8 37.4 Roads 1,135.3 (16.4) 1,309.7 (13.2) Vehicles 1,838.2 (26.6) 2,307.6 (23.2) Others 66.0 (1.0) 101.5 (1.0) Sea transport 2,465.4 35.7 2,655.1 26.7 Ships 1,818.6 (26.3) 2,061.4 (20.7) Ports and facilities 646.8 (9.4) 593.7 (6.0) Aviation 146.1 2.1 594.5 6.0 Subways 250.5 3.6 1,635.0 16.5 Waterways 4.7 0.1 5.0 - Total 6,903.3 100.0 9,939.7 100.0 Total capital expenditures 47,189.4 72,100.0 Total transport investments as % of total capital expenditures 14.6 13.8 All figures in 1980 prices. 3.04 The size of the investment program appears to respond well to the expected growth in demand which should increase by about 47 billion passenger-km and 10 billion ton-km or 50% and 37%, respectively, above the Fourth Plan period (Tables 1.16 and 1.17). Freight forecasts show some - 23 - increase in the relative share of road and coastal transport over the railways, while for passenger traffic an increase in the railways' share (mainly due to suburban traffic) is expected at the expense of road transport. However, it is uncertain whether other aspects of the new intermodal allocation of investment will be accompanied by a changing composition in demand (Table 1.18). In particular, the timeliness and phasing of the very large expenditures for the subways of Seoul and Busan (which are to exceed those for the road network) and the continued large investment for special cities' streets (mostly for Seoul) raise some questions. Proposed investments by subsectors and largest projects are discussed below on the basis of recent forecasts. However, in many cases it is difficult to say clearly whether the proposed investments will meet the planned objectives in the most cost-effective way, because detailed economic and technical studies are not yet available for many projects. B. Transport Subsector Programs Road Transport Programs 3.05 Demand for transport is strongly linked to economic development and is expected to grow further as population mobility increases due to higher personal income. The expected expansion of industrial and service activities would also sustain the flow of migration from rural to urban areas. In the road subsector, passenger transport is expected to grow at 6.4% p.a. from 64 to 93 billion passenger-km from 1982 to 1986, with an average trip distance of about 8 passenger-km. Freight transport is expected to grow faster at 7.5% p.a. from 4.9 to 7.5 billion ton-km over the same period, with an average distance of 47 km per ton (Table 2.19). Official growth forecasts appear reasonable, being comparatively much lower than earlier fast growth periods, but they fail to measure the overall growth of traffic as they apply only to common carriers, buses and trucks. If private transport owned by industries, groups and individuals had also been included, the forecasts would have been higher since the private fleet is growing faster than common carriers as noted in para. 2.36 (Table 2.5, p. 2 and 3). Further, the increase in motorization, particularly of cars, as anticipated in EPB's forecasts will add to the demand for road facilities. The registered fleet would double by 1986, reaching 1.2 million vehicles, of which over 50% would be cars (Table 2.10). Production of motor vehicles would increase from 165,000 in 1983 to 416,000 in 1986, with about 20% for export (Table 2.11). Whether these targets can be achieved depends to a large extent on Government's policy for lowering taxes on vehicles and gasoline. 3.06 Supporting the past growth of transport demand, the average traffic on expressways and national highways has increased by 2.1 and 2.3 times, respectively, in the last five years. Traffic congestion is thus anticipated in the future on some sections of this network and the proportion of heavy vehicles is expected to remain very high. The traffic - 24 - distribution on national highways indicates high densities for a large proportion of the network. In 1975, an aggregate length of 4,200 km or half of all national highways had an average daily traffic volume of over 500 vehicles per day (vpd); in 1980, this length reached 6,600 km or about 80% of the network. Average traffic density and composition on the national highway system in 1975 and 1980 are shown in the table below: Table 3.2(T): AVERAGE HIGHWAYS TRAFFIC VOLUMES (Vehicles/day) Expressways National roads 1975 1980 % 1975 1980 % Total 3,498 7,519 100 949 24177 100 Cars 607 1,350 (18) 242 573 (26) Buses 747 1,482 (20) 234 425 (20) Trucks 2,144 4,687 (62) 473 1,179 (54) 3.07 Discussing priorities, the Plan states rightly that, to provide a consistent level of transportation service, the protection of existing road facilities by providing adequate maintenance is now as important as building and improving new roads. It identifies the two major problems in the sector as insufficient road maintenance and the small size or pettiness of transport firms. It then gives policy directives for road transport emphasizing under the FFYP the need to: (a) expand and widen expressways which are near some major urban areas; (b) continue improving and paving national and major provincial roads and strengthen maintenance; (c) increase and modernize the vehicle fleet and develop safety measures; (d) improve the efficiency of road transport operators by expanding terminal facilities and inducing larger-scale transport firms; and (e) expand and improve the transportation network in remote areas to reach all villages with 100 or more households. 3.08 The FFYP's overall investment for road transport, comprising public and private programs, amounts to W 3,720 billion (Table 2.12). The - 25 - Plan includes expenditures for road works on the national network only, for new vehicles, terminals and warehouses. Total capital and recurrent expenditures planned for the national roads including expressways amount to w 1,235 billion at 1980 prices, or about US$2.1 billion. Compared to the Fourth Plan, expenditures would be 25% higher than the W 1,030 billion spent in 1977-81 (Tables 2.13 and 2.14). The actual expenditures during the first four plans are given in Table 2.15. As a whole, the FFYP national road invesitment program appears very reasonable given forecasted traffic increases of 40% and 27% in freight ton-km and passenger-km, respectively, over the period. Such increases imply significant productivity gains in road transport. A comparable increase in capacity was achieved during the Fourth Plan with expenditures that were about 20% higher than those of the Third Plan. 3.09 The maintenance budget for national roads has been increased further and represents 15% of total expenditures on those roads, compared to 11%, 6% and 2% spent, respectively, during the Fourth, Third and Second Plans. This additional provision of funds for maintenance is in line with Governments recognition of the importance of maintenance. Nevertheless, 57% of all maintenance expenditures in 1981 by MOC were spent by KHC on its network of 1,245 km, while the balance was spent on the 12,000 km national road network (Table 2.16). This imbalance can be explained partly by the higher traffic and standard of KHC expressways, but mainly reflects the freedom of KHC to dispose of funds collected through tolls. The problem of coordiLnating the level of expenditures with the actual needs of the various road networks is discussed in Chapter 4. 3.10 The Transportation Sector Plan does not mention the important road project funded by the Bank to assist MOHA in developing provincial and country roads (para. 3.14) nor construction and improvement programs by other local governments. Massive road investments are programmed in the four Special Cities; of Seoul, Busan, Daegu and Incheon. According to MOHA, this program under the FFYP amounts to W 1,220 billion at 1980 prices or US$2.0 billion, and is about equal to the national highways program (Table 2.17). This is a large increase over the Fourth Plan's W 835 billion at 1980 prices (nearly US$1.4 billion) spent for road construction by the Special Cities, mainly in Seoul City, which already represented 37% of the country's overall road investments (paras. 2.13 and 2.20). As noted earlier, no planning agency controls the magnitude and concentration of investments in the Special Cities which may not be fully economically justified and may limit funds available for other needs such as rural roads. Road expenditures of W 1,040 billion are proposed by other local governments including provinces, counties and cities and represent a very substantial increase from the W 330 billion (at current prices or W 385 billion at 1980 prices) spent in the Fourth Plan. In 1981, expenditures on the provincial, county and city roads were only 7%, 3%, and 4%, respectively, of the overall investment for roads. - 26 - (a) Proposed Road Projects 3.11 The new expressways to be completed include (a) the 175 km East- West Expressway between Daegu and Gwangju, the construction of which started in 1981 and is expected to be completed in 1984 and (b) the 8.2 km of expressway south of Seoul, between Songnam and Pangyo, scheduled for construction during 1985 and 1986 (Table 2.18). A feasibility study on the East-West Expressway done by a local consultant estimated an economic rate of return of 15% and the optimum opening year to be 1991 when only savings in vehicle operating and time costs are considered. It recommended that the opening year could be advanced by more than five years if unquantifiable benefits derived from regional development, increased equity among regions, improved safety and comfort were considered. The study also recommended an open toll system. A Bank review of the study indicates that this investment is premature since the area concerned is presently served by a good national road link (para. 2.19). The construction of the 8.2 km of expressway from Songnam to Pangyo, although not the subject of a feasibility study, is justified to accommodate high growth traffic in the southeastern Seoul suburbs. 3.12 In addition, four expressway sections will be widened, from 4 to 6 lanes between Seoul-Pupyong and Seoul-Suweon, and from 2 to 4 lanes between Daejeon-Jeonju and Masan-Jinju, totalling 172.8 km. The estimated cost is E 114.3 billion and will be funded by KHC from toll revenues. Decisions on widening expressways are based on capacity thresholds that are related to projected traffic volume and traffic mix; no economic or financial evaluation of the investments is available. However, these investments are probably premature given K11C's criteria which are quite low. A capacity limit of 9,000 vpd is used to widen a free flow 2-lane expressway to 4 lanes, and 30,000 vpd to widen from 4 to 6 lanes. Current practices in other countries allow much higher capacities. However, the BPR has undertaken to review the applica- bility to Korea of the 1965 Highway Capacity Manual's formula that was relevant at the time in the USA for a different mix of much larger cars and larger heavier trucks. The Bank has requested that the findings of this review be applied to the capacity analysis for the expressways proposed for widening. 3.13 Apart from the road lengths and related investments given for expressways and what is termed IBRD 4th and 5th and ADB 5th in Table 2.19, the specific roads to be constructed or improved under the FFYP have not yet been identified. The national and provincial road paving and improvement referred to as IBRD 4th are the balance of the road lengths financed under the Fourth Highway Project, Loan 1640-KO. Completion originally expected by June 1982 has been delayed to end June 1983 because of budget constraints and consequent lack of counterpart funds. The 282.8 km of national and provincial road paving and improvement referred to as IBRD 5th in the table are part of the - 27 - 1,200 km of roads, studied and designed under the Third Highway Project, Loan 1203--KO. These road sections to be constructed under the FFYP have been selected together with county roads identified from the County Road Development Program prepared by MOHA to form the base of the First Highway Sector Loan just negotiated. The Asian Development Bank (ADB) will assist during the Plan in financing the improvement of 402 km of national roads and construction of some 27 bridges of 8.8 km in total length in the country's southern part. Economic returns for all the selected road sections range from 20% to 60%. A further 765 km of national roads will be paved during the FFYP using domestic funds and are identified for the first two years. No economic evaluation is available, but the road selection will be based on existing and projected traffic volumes. The road paving program follows the FFYP policy directive to increase the paved national road ratio from 56% to 73% (Table 2.20). 3.14 A major investment not shown in the FFYP concerns MOHA's County Road Development Program and its Provincial and County Road Maintenance Program to be implemented during the plan period and already prepared by consultants for the MOHA and appraised by the World Bank. The estimated cost of the capital investment for the programs is about W 194 billion with a foreign exchange requirement of US$125 million at end 1982 prices. In addition, the recurrent local expenditures for the Provincial and County Road Maintenance Program are likely to be on the order of W 180 billion over the five-year period. These proposed expenditures are not shown in the FFYP since the MOF will not make specific budget allocations for the programs. The expenditures are being funded out of a block grant of domestic revenues which MOF allocates yearly to the MOHA (para 4.19). The FFYP Road Investment Plan also does not include an allocation for the Saemaul roads which capital costs are to be funded by MOHA, although the Plan has a policy directive for improving and developing remote roads in villages of 100 or more households. Since the development is to be done on a year-by-year basis, it must be assumed that no program exists at present. (b) Other Road Transport Development (i) Vehicle Fleet Growth and Safety Measures 3.15 The forecasted growth of transport needs will sharply increase the demand for vehicles. Forecasts show a net increase in the vehicle fleet of 567,000 units or by about 100% during the Plan. Some 71,000 vehicles are for commercial use, with about 496,000 for private use (Table 2.10). These increases will be brought about through guidance and encouragement. The Plan says that replacement of old vehicles to ensure safety and improve customer service will be promoted by applying age limits for commercial vehicles: 5 years for taxis, 7 for buses, 13 for trucks, and 10 for pick-ups. There are few if any other countries in the world that have a policy of "force scrapping." The rule is presumably motivated by safety considerations, although it also helps the auto manufacturing industry. One wonders how much needed maintenance is done by owners during the late period of a vehicle's life when he knows it must be scrapped at a certain date. The great drawback of the rule is that it partially restricts the re-allocation of used capital - 28 - (older vehicles) to less intensive use as its reliability decreases and its operating costs increase. The obvious alternative method of pursuing safety is to establish an inspection system (Korea already has one), although there are many shortcomings to these and experience has shown them to be less effective than one might expect. It is entirely possible that the best solution is to leave scrapping decisions to market forces, to pursue safety through strict owner liability laws (which Korea has), and to use selective inspections that avoid too elaborate a network and too many temptations to corruption. Further study of this problem seems needed. 3.16 To help administer the ever-increasing vehicle fleet, a computer- ized management system is recommended in the Plan but too costly to be implemented nationwide at once. Vehicles are now registered by each city and province, and management problems vary with the number involved. Computerization will be introduced in 1982 first for Seoul which manages over 200,000 vehicles, nearly half the country's fleet, and then for Busan, Daegu and Incheon, under the direct control of the central Government. For other cities and provinces, computerization will be introduced gradually and completed by 1986. This should be supported by the Bank. 3.17 To enforce safety standards and thereby prevent traffic accidents, the Plan calls for the provision of vehicle inspection stations with auto- mated equipment. The traditional manual facilities are now inadequate and unreliable with the increasing number and variety of vehicles. To imple- ment the program, responsibilities have been transferred from a civilian agency to the publicly-controlled Transportation Safety Promotion Corporation which will construct large inspection stations in Seoul, Busan, Daegu and Incheon, and will install automated equipment, phased on a yearly basis, in 66 of the country's 77 manual inspection facilities. In addition, under the Bank-financed Provincial and Country Roads Project, a safety promotion study is being carried out to help reduce Korea's high level of traffic accidents (para. 2.38). (ii) Construction of Freight Terminals and Warehouses 3.18 Freight terminals can contribute greatly to facilitate fast, reliable and low-cost transport of goods. They promote the rational utilization of transport vehicles and equipment and the integrated handling of shipping including multi-modal operation, cargo-handling, storage, packaging, and collection/delivery functions. They act for highway freight as inland ports, stimulating interregional transport while alleviating inner-city traffic congestion. At end 1980, 48 freight terminals nationwide were in operation (18-exclusive use; 30-common use) with a total acreage of 41,000 pyongs, most of them small with inadequate facilities. Under the Plan, modern large-unit freight terminals will be constructed in 34 major cities around the country including Seoul, Busan, Daegu, Incheon, Daejon and Gwangju, with a total acreage of 370,000 pyongs (see following table). Construction sites will be selected when drawing up specific implementation plans. The Bank should support this efficiency oriented program. - 29 - Table 3.3 (T): FREIGHT TERMINAL CONSTRUCTION PLAN 1982 1983 1984 1985 1986 Total Number of terminals (8) (8) (9) (11) (36) Lot acreage (pyong) 90,000 100,000 90,000 90,000 270,000 Constriction acreage - 13,500 15,000 13,500 13,500 55,500 (pyong) Funds required (in MDillion won) 10.00 13.63 15.45 14.18 7.79 61.05 Source: MOT. 3.19 At end 1980, 2,534 warehouse facilities were operated throughout the country, with a total floor space of 270,000 pyongs; most of them are small with decrepit facilities, and are barely profitable, making it difficult to induce new capital investment for improvement. Based on projections of regional warehouse requirements, 135,000 pyongs of additional warehouse space will be constructed under the plan concurrently with the freight terminals (see following table). A report by the Korea Institute of Science and Technology (KIST) on the service industry assumed the required warehouse space as one pyong for every 20 tons of goods. - 30 - Table 3.4(T): WAREHOUSE CONSTRUCTION PLAN 1982 1983 1984 1985 1986 Total Total volume of goods movement /a 127,000 138,700 150,500 163,300 177,200 757,600 Volume of goods for storage /a 7,674 8,322 9,030 9,798 10,632 45,456 Required warehouse /b space 28.2 32.4 35.4 38.4 41.7 176.1 Warehouse space to be constructed /b 20 25 30 30 30 135 Funds required (in billion won) 6.0 7.5 9.0 9.0 9.0 40.5 /a In thousand tons. /b In thousand pyongs. Source: MOT. 3.20 In addition, information regarding freight movements will be pro- vided systematically, punctually and accurately to both freight owners and shipping firms. This will help in better organizing freight dispatching and will reduce empty back hauls and unnecessary vehicles, thus alleviating traffic flows and conserving energy. Further, to improve service to customers, notification will be made of the estimated date of arrival when a consignment is expected, and by the forwarding company when and where the shipment has arrived. (iii) Encouraging Larger Road Transport Firms 3.21 In order to facilitate the growth of the road transport industry, the Plan prescribes changes in the licensing policy to promote savings in transport costs through better management, fare adjustment and improved services. Bus companies will be encouraged to move toward larger-scale operations to raise the average fleet size to around 300 buses. Trucking companies will be encouraged to consolidate their operations through direct management in 1982, with the objective of converting firms at the rate of 10% a year from the present fleet where 73% of the total is owned and operated by private owners. A "Guideline for Designation of Outstanding - 31 - Companies" will be adopted and implemented to provide support to outstanding companies and to develop the transport business into a sound enterprise. Under the Guidelines, outstanding companies will receive preferential consideration in matters such as increasing the number of vehicles, disposition of profits, and administrative and financial support. These measures may not, however, improve services to customers, and require more analysis before implementation as discussed in Chapter 5. 3.22 Also, in order to vitalize the existing road transport trade union, an effort will be made to bring the union and union membership into a closer relationship, and the concerned government agency will set in motion a regulatory mechanism which will demand that the union pursue certain activities designed to facilitate development of road transport trade and to actively promote profits among the fellow businesses in the same trade. The licensing requirement of minimum fleet size for "area" freight companies will gradually be lowered, and a move toward direct management and commer- cialization will be encouraged. All these measures are peculiar to Korea. The belief that big is better is not necessarily correct, and the Bank has many reservations on this matter. (iv) Improving Remote-Area and Inter-Regional Passenger Transport Services 3.23 The Plan's objective is to expand the one-day return-trip zones in consolidating the regional transportation system throughout the country. Existing services will be improved including (a) express and inter-city non-stop buses which handle inter-city long-distance demand, (b) intra- district or county buses which serve medium and small cities and (c) new bus lines in remote areas that will be developed progressively each year to reach the 35,500 farming and fishing villages nationwide now without bus services. 3.24 Under the Plan, three types of improvements will be made. First, MOT has a program to introduce new bus services for all villages with 100 or more households. The number of remote-area bus lines will be increased from 804 lines in 1980 to 1,215 lines by 1986, and subsidies to compensate for operating losses of the remote-area bus lines will be increased as a means of preventing cancellations of scheduled runs (Table 2.21). Further, in isolated areas and islands, the use of "saemaul" or cooperative buses and locally-managed buses will be encouraged; in villages (myons), which are without taxi services, taxis will be supplied to take care of emergency patients and other urgent transportation needs. Second, MOT will encourage better inter-city transportation together with expanding road facilities, and will liberalize licensing to offer more variety of buses (express, non-stop, local) to suit the preferences of customers. Comfort inside buses will be improved with heating systems on local buses, air conditioning systems on non-stop buses, and widening the space between seats. Third, - 32 - emphasis will also be placed on improving bus-stop facilities through wider enforcement of a standard model bus-stop structure. Railway Programs 3.25 A very elaborate program was proposed under the FFYP for the rail- way which was expected to expand further with the growth of the economy. Much has been trimmed in the meantime. Nevertheless, the general objective is to cope with more specialized demands, to meet long distance passenger and bulk freight transport, and to respond to the new demand of suburban commuters in the Seoul Metropolitan Area. The role of the railway which has expanded its operations very substantially in the past will continue to grow. KNR's efficiency is an asset to the country. It was able to satisfy almost five-fold increases in passenger traffic and nearly three-fold in freight over the last 20 years, by raising its staff only by about 20% to the present level of 33,500. Staff productivity is one of the highest in the world. The past traffic growth is summarized in the table below. Table 3.5(T): RAIL TRAFFIC VOLUMES Average annual rate of 1961 1966 1971 1976 1980 increase Passengers (million) 88 138 128 249 444 8.9 Passenger-km (million) 5,372 8,665 8,750 14,305 21,528 7.6 Average distance (km) 60.8 62.7 68.0 83.7 93.0 - Tonnage (million tons) 15 24 32 44 49 6.4 Ton-km (million) 3,486 5,450 7)841 9,728 10,815 6.1 Average distance (km) 226 226 245 245 220 - 3.26 The magnitude of investments required in the FFYP depends on the demand for more railway services and the need to replace worn-out facilities and equipment to maintain existing levels of service. Contrary to freight, KNR's passenger forecasts have systematically been exceeded by actual traffic, probably due to improved service (Table 1.16). Growth rate estimates used for the Fifth Plan range from 6% to 14% p.a. in passenger volumes and 8% to 14% in passenger-km for intercity and SMESRS traffic respectively, assuming GNP growth at 7.6% p.a. and no change in restriction on ownership and use of private cars. Detailed forecasts by types of service are given in Tables 3.6 and 3.7 and reflect adjustments by the - 33 - mission allowing 3.5% growth in intercity passenger traffic and 5.2% in passenger-km. In 1986, intercity passengers would reach 223 million with about 23 billion passenger-km compared to KNR's estimates of 257 million and 27 billion respectively (Table 3.10). In the absence of a comprehensive urban transport study covering the entire metropolitan area, forecasts of Seoul suburban traffic are difficult. KNR's forecast of over 525 million passengers on its suburban lines in 1986 appears reasonable. 3.27 KNR's freight traffic forecasts have generally been too optimistic in the past and the Bank advised using more conservative figures. Forecasts prepared in 1981 for the 1982-86 Five-Year Plan are running in the first year about 9% above actual traffic in tons and 10% in ton-km (Table 1.17). The major shortfall is due to coal, as the ambitious production target set earlier by Government has not been met. More conservative growth estimates, between 3% and 4% p.a. in ton-km, have been assumed by the Bank and agreed with KNR during the appraisal of the Coal and Cement Distribution Project. Detailed forecasts are given in Tables 3.4 and 3.5. Freight traffic would reach 57 million tons and 13 billion ton-km by 1986, with no change in traffic composition, except for container traffic. 3.28 Among the difficulties identified in the Plan to keep up with the demand for railway transport are (a) trunk lines reaching capacity limits; (b) aging of facilities and equipment; (c) backwardness of signal and control systems; and (d) financial deficits in railroad operations. The policy directives for the FFYP emphasize the need to: (a) increase trunk lines transport capacity to accommodate long- distance passenger and bulk freight transport by constructing a new line between Seoul and Daejon, by double-tracking a few other lines and by improving existing lines; (b) expand the suburban rail system to cope with the demand for speedy, mass transit and integrated transport in the Seoul Metropolitan Area; (c) improve the quality of rail services by modernizing and renewing obsolete or worn-out tracks, signals, communications and rolling stock; and (d) provide better financial management of the rail system by reducing uneconomic services, adjusting fares, adopting a commercial business-like attitude, and motivating employees to achieve targets. 3.29 The original investment proposed for the railways amounts to W 1,330 billion at 1980 prices or US$2.2 billion. About 33% is for increased line and station capacity; 28% for new and improved motive power, rolling stock and equipment; 16% for new line construction; 14% for - 34 - improvement of tracks and structures, and the balance for telecommunications (4%), electrification (3%) and workshops (9%) (Table 3.11 and 3.12). This tentative distribution of investment is likely to be modified subject to detailed analyses that will be carried out to assess the economic viability of each project. However, the Plan indicates that despite unfavorable economic returns a few projects may be selected for national policy reasons such as balanced regional development. The Bank considers that the most urgent priority is to improve KNR's financial performance. Tariff increases to cover at least operating costs on all traffic should be made without delay; elimination of high-loss ordinary trains and some deferment of new investments will also be required in addition to an increased temporary operating subsidy from Government. (a) Main Railway Projects 3.30 An analysis of capacity requirements per line carried out by KNR indicates that there is a need for increases in many areas. Many alternatives have been considered either as intermediate measures or more permanent solutions depending on the constraints identified, and an improvement plan has been adopted (Tables 3.13 and 3.14). On a number of lines capacity increases will be achieved by improving signaling, passing loops, curves and gradients to accommodate both longer and a greater number of trains. In fewer cases, largescale expansions are proposed such as double-tracking, electrification, standardization to normal gauge, and new track construction. 3.31 The single largest investment proposed is the construction of a new high-speed line from Seoul to Daejon dedicated to passenger transport. This would be the first link in a future Seoul-Busan line that would accommodate traffic in the next century. The present capacity (133 train runs a day) has been exceeded between Seoul-Suweon, while that of 103 between Suweon-Jochiweon will be exceeded by end-1982 and that of 95 between Jochiweon-Daejon will be reached by end-1984. From 1980 to 1991, the corridor transport demand is expected to increase sharply by 3.6 times for passengers and by 3.7 times for freight. Figures are as follows and do not appear to be realistic, in particular for freight, unless traffic is systematically reassigned from road to rail. - 35 - Table 3.6 (T): SEOUL-DAEJON ANNUAL TRANSPORT DEMAND Rate of increase in '000 1981 1986 1991 1991/80 % p.a. Seoul-Suweon Passengers 16,080 29,120 55,089 3.4 13 Freight (tons) 2,981 3,865 4,893 1.6 5 Suweon-Daejon Passengers 17,840 32,200 60,186 3.4 13 Freight (tons) 3,685 10,859 13,782 3.7 14 As an interim measure, central train control (CTC) and automatic braking signal (ABS) systems are being considered to increase capacity and safety standards until 1986. However, a long-term solution will be required and a new 160-200 km high-speed line is envisaged. Total investment would be in the order of W 1,050 billion over a construction period from 1986-1989, with W 200 billion spent under the FFYP. The project has merit as a measure to resolve a capacity problem, but mainly as a step to stabilize the growth of Seoul by decentralizing many activities to the Daejon area which would be reached in less than an hour. A preinvestment study of the Seoul-Busan corridor transport needs and a feasibility study of this high- speed line is ongoing with funds provided under the Bank's Seventh Railway Project. The Bank, however, had doubts about the need for the proposed interim measures (CTC and ABS) since they would not be required for freight operations on the old line, and the Government agreed to delay this invest- ment by one year pending the results of the study. 3.32 Three other major projects have been planned: (a) double-tracking of the Honam line from Iri to Songjongri (102 km); (b) improvement of the Cholla line from Iri to Yosu (199 km); and (c) improvement of the Changhang line from Chonan to Changhang (143 km). The first project was started in 1981 and will be completed in 1985 at a cost of W 127 billion. It would increase capacity from 33 to 72 train runs a day, reduce travel time by one hour and have a favorable impact on the regional development of the Gwangju area. The second project would be started in 1985 for completion in 1989 at a cost of W 150 billion, with 18% expended under the FFYP; track capacity is limited by severe curves and inclines, and operating costs are high, but after improvement, distance would be reduced by 23 km and trip time by more than one hour or 25%. The third project would be started in 1986 for completion in 1989 at a cost of W 72 billion with 6% expended under the plan; here also track capacity is limited by the terrain, and after improvement the distance would be reduced by 10 km and travel time by half an hour. The last two lines improvement have been postponed at the 1982 mid-year review by the Government. - 36 - (b) Other Projects 3.33 To improve bulk transport of coal and cement from the east to the Seoul area, a Bank project will provide for: (a) electrifying 64 km of the Jung Ang line between Chechon and Yongju; (b) providing CTC on 127 km of the Jechon-Cholan line; (c) widening of 53 km of the Suwon-Incheon line to standard gauge and (d) acquiring 261 coal and 320 cement tank cars. The total investment is estimated at W 90 billion and construction is to start in 1983 for completion in 1986 but delays are possible due to the stabiliza- tion of fuel prices. In addition, port investments, including coal terminals and handling equipment are proposed for Incheon and Ulsan. 3.34 To meet the demand for suburban rail transport in the northern Seoul Metropolitan Area, a 13 km double-tracking and electrification project between Songbuk and Euijongbu was started in 1982 for completion in 1984 at a cost of W 23 billion. 3.35 To improve freight movement through faster trains and to handle more container traffic, new freight terminals are being built in the Seoul area, one in the south at Bugog for 10 million tons annual capacity and one in the east at Songbuk for 2 million tons. Costs are estimated at W 50 billion, with 90% to be expended under the FFYP. 3.36 The reinforcement of rolling stock was also a major program of the original FFYP and aimed at the modernization of aging units in the fleet including locomotives, coaches, and freight cars. Some W 374 billion (US$613 million) would be spent for this purpose, of which US$247 million would have been for imports. However, the mid-year review also cancelled this program in an effort to consolidate KNR's financial position. Nevertheless, many other measures will be introduced to improve the quality of service in order to keep and attract rail customers. The number of higher class trains such as the limited express will be increased further from 900 in 1980 to 1,670 in 1986. Air conditioned systems will be expanded to raise 50% of limited express trains to express class by 1986. Also, 300 automatic ticket distributors will be imported, and computerized seat reservations will be introduced for all limited express and higher class trains by 1986. KNR's original financial plan (Table 3.15) has accordingly been substantially modified (Table 3.16). (c) Management Improvements 3.37 To reduce chronic financial deficits, revenue increases and cost reductions will be sought through aggressive business initiatives. Also a concerted effort will be made to develop mid- and long-distance passenger transport, bulk special freight transport and other areas of specialized rail services. The objective is to build a self-supporting railway before 1986. Accordingly, rail fares will be increased gradually to meet costs. - 37 - For passengers, a flexible fare system based on rail lines, seasons and days of the week, will be put into effect. For freight, a contractual fare system and express system will be introduced to induce more transport demand. 3.38 To reduce costs, personnel recruitment will be frozen until 1986, certain functions will be consolidated or abolished, and the bureaucratic structure will be reshaped in line with private business organizations. The personnel cost will be reduced by manpower readjustment through automation and by other measures to streamline manpower management. Deficit lines and stations will be phased out gradually. Specifically, seven lines including the Ansong Line will be either abolished or converted for specialized use only, and the frequency on money-losing lines will also be reduced (Table 3.17). All measures will help to eliminate factors contributing to chronic deficits. This approach is highly supported by the Bank. Maritime Transport Programs 3.39 The continuing expansion of Korea's foreign trade and coastal shipping will require major increases in the vessel fleet, port facilities and trained seamen. Forecasts prepared by KMPA for seagoing traffic assume an 8.9% p.a. growth over the Fifth Plan period, only slightly higher than the 7.6% expected GNP growth. This compares to the 12% to 18% p.a. growth rates recorded in the 1970s. The largest share of the seagoing traffic, about 35%, will transit through Busan and Incheon Ports (Tabie 4.10). Among major commodities transported, oil movements will remain the most important, followred by coal, containerized and breakbulk cargoes. The impact of the recent: economic recession is noticeable on the volumes recorded in 1981 which are less than forecasted for most cargo movements except for grain, iron and steel, and containerized cargo (Table 4.11). As the recession is expected to be temporary, no changes have been made to the 1986 cargo forecast. Growth of petroleum transport is about 5% p.a. compared to 18.6% for coal, and reflects the government strategy to shift from oil to coal. Growth of container traffic forecasted at 11.2% p.a. is modest compared to higher past forecasts that were exceeded by actual movements, largely as more general cargo was containerized. Coastal shipping is expected to grow at 6.7% p.a. in ton-km (Table 4.12). 3.40 The problem areas identified in the Plan to cope with the expected growth of traffic are: (a) the small size and limited financial capacity of national shipping companies to compete internationally; (b) the relatively limited importance of Korean regular container lines serving only 30% of this traffic; (c) the backlog in expansion of port facilities and equipment and (d) the inefficiencies in port management and fleet operation. Accord- ingly,, the policy directives under the FFYP emphasize the need to: - 38 - (a) increase the fleet size and strengthen Korean shipping businesses to maintain or raise the 50% local transport share of the market for exported goods worth over US$50 billion; (b) intensify cooperation with other major world shipping lines to develop new routes, particularly container service; (c) promote coastal shipping to improve access to isolated islands and to increase coastal freight transport; (d) modernize and expand port facilities and promote operational efficiency; and (e) develop training to raise the quality and availability of seamen. 3.41 To support these objectives, an investment program of W 2,655 bil- lion (US$4.3 billion) is recommended under the FFYP, including US$1.6 billion in foreign currency. Some W 2,080 billion or 80% is to be invested by the private sector, primarily for ships, and W 578 billion by the Government, mainly for port construction and improvement, maintenance and dredging, and training institutes (Table 4.13). As ports' capacity will reach their maxi- mum limits at the beginning of the Sixth Five-Year Plan, some W 2.5 billion have been earmarked to prepare a basic plan identifying new port development and assessing port demand traffic that is expected to intensify as trade with mainland China expands in the 1990s. (a) Vessel Fleet Growth 3.42 An increase in shipping tonnage is the largest component of the program. The target is to accommodate an increase of overseas traffic of about 50 million metric tons from 1982 to 1986, reaching by then about 165 million tons while maintaining the 50% share carried by Korean ships (Table 1.9). The required fleet tonnage will have to rise from 6.3 million gross tons (GT) to 9.4 million GT or a gross increase of 5 million GT, including the replacement of some 2 million tons of aging vessels. The fleet is expected to rise to the tenth rank among shipping nations and should yield receipts of US$5 billion in 1986. About 1.5 million GT will be produced in Korean shipyards while 3.5 million GT will have to be imported or chartered. This program is very ambitious; the objective of maintaining 50% of overseas shipping under the national flag is questionable as it will require substan- tial funding which might have better use for more pressing needs such as roll-on/roll-off ships to reach isolated islands or rural roads. Also, the under-utilization of the world fleet might favor the chartering of vessels at lower cost than acquiring new ones. For the coastal fleet, an increase of 142,000 GT to meet an expansion of about 50% of the coastal traffic from 1982 to 1986 appears justified (Table 4.14). There seems to be scope to increase even further the high efficiency of the ocean-going fleet and to rationalize the coastal fleet. Large savings in foreign exchange could be - 39 - made i' moderating the expansion of the fleet and focusing on management improvement. The Bank should support any effort to raise the fleet's efficiency. 3.43 The opening of new services will follow the tonnage increases. Six new container lines will be opened to supplement the four already in oper- ation, and the number of full container ships will be doubled to 28 units by 1986. Coastal shipping passenger services will be intensified and four additional islands will be linked, assuring regular sea service to 385 of the 577 inhabited islands in the country. Five more car ferries will be added to the three already in operation and six high-speed vessels will be added to the 15 already operating. Coastal freight will be developed further by constructing general storage facilities for 185,000 tons and cement silos for 20,000 tons by 1986. The development of coastal shipping is desirable as one of the most economic transport mode for bulk but also as a tool to promote new decentralized poles of economic activity. Such effort should be supported by the Bank. (b) Port Expansions 3.44 The overall ports capacity will be increased according to the Plan from 82 million tons in 1980 to about 134 by end 1986 (Table 4.15). Port facilities will be improved in Busan, Incheon, Mokpo, Cheju and Ulsan using some W 380 billion of the W 500 billion allocated for the construction improvement program. However, the concentration of port development in a few areas near Seoul and Busan may be a factor in the over-development of these two megapolises. A more balanced program seeking the improvement of less efficient regional ports might be more cost-effective and a good way to promote regional development. 3.45 In Busan, some W 192 billion, including U$147 million in foreign cost at 1980 prices, are to be spent during the FFYP to help the port's handling of over 50% of the country's general export-import freight and 90% of the containerized cargo. Some W 49 billion will be invested to complete, by end 1982, the second phase expansion of the container program, including a new pier and equipment. According to the Plan, the berthing capacity will increase from 52 to 70 ships, the stevedoring capacity from 19.6 million MT a year in. 1982 to 30 million by 1986 or by 11.5 million revenue tons (Table 4.16). The container capacity will increase in 1982 to a half million Twenty Foot Equivalent Units (TEU). A further third phase expansion is planned in Busan to bring container capacity to nearly 1 million TEU by 1986 or 75% of the national traffic which is expected to nearly double between 1980 and 1986. However, the timing of the W 109 billion investment which includes a 1.6 km long breakwater to develop the outer harbor has been postponed from 1984 to the latter part of the FFYP, due both to a budget shortage and the under-utilization of the container pier at Incheon. The Bank supports a delay by one to two years as it will provide an opportunity - 40 - to remove a number of obstacles preventing the full use of Incheon. It will also allow the expedition of lengthy custom procedures at Busan that limit overall capacity. However, a further delay would be detrimental to foreign trade and is not encouraged. W 34 billion were sought from Saudi funds for the construction of a 1 km long breakwater for the development of Kamcheon Bay, just west of Busan. 3.46 The next largest investment proposed is for Incheon port amounting to W 107 billion, including US$64 million in foreign exchange part to be financed by ADB. The completion of the ongoing second phase expansion for additional piers and lock-gate guidance facilities will require W 52 billion, while W 43 billion are earmarked to construct a coal pier in the south harbor and W 12 billion to build a reserve lock-gate and piers five and six, completing the inner harbor. These investments will raise Incheon stevedoring capacity to 18.7 million tons by 1986, berthing capacity from 29 to 36 ships and increase the maximum ship size to 100,000 DWT. Incheon is expected to handle more container traffic as capacity at Busan will be fully used. 3.47 The investments for Mokpo, Cheju and Ulsan earmarked under the Plan amount respectively to W 11, W 28 and W 32 billion. Stevedoring capacities will increase in these ports to 2.4, 1.3 and 6.7 million tons, respectively, by 1986. In line with government policies to diversify energy sources, piers for coal imports will be built at Mokpo and Ulsan to supply local and industrial users (Table 4.17). A number of small projects amounting to W 27 billion are proposed for construction of breakwaters, piers, terminals, and access roads for Gunsan, Wando and Sokcho while expansion of 16 other ports will amount to W 43 billion. Navigation aid facilities, dredging and maintenance investment worth another W 50 billion are included under the Plan. No economic studies of these investments were carried out and they are required to know whether these investments would yield positive returns. (c) Management Support for Shipping and Ports 3.48 A number of programs will be developed to improve the financial strength and efficiency of maritime activities. First, the establishment of a Shipping Development Fund is being considered to help shipping companies to expand their fleet. Some W 50 billion should be mobilized by 1985 and W 100 billion by 1990. To secure these funds, the Government intends to attract cofinancing from private sources to supplement public funds and to lay the basis for a shipping bank. Assistance from international organiz- ations including the Bank is expected. Second, port management will be improved through measures to secure more land area around ports, to unify the operation of ground storage facilities, to increase mechanized steve- doring equipment and to improve the labor hiring system. Third, the training of seamen and officers will be systematized to increase the skill and - 41 - availability required for a larger and more modern fleet. Training insti- tutes will be expanded to train 4,500 officers during the plan. Short-term training and retraining programs will be organized for 13,000 sailors and 10,600 mechanics and port workers to bring Korean labor at par with inter- national standards. Some 9,700 seamen are expected to find employment as crewmen on foreign ships adding to the 21,000 already employed in 1980 who earned about US$170 million. 3.49 In addition, industrial ports under the MOC will also be developed under the Plan, but those investments have not been included in the Fifth Plan document. The main capacity expansions planned include Pohang port (13 additional berths), Bukpyong (a coal berth), Changweon (4 new berths) and Kwangyang Bay for a new iron ore port. Apparently there is no coordination between KMPA and MOC concerning the programs for these ports. The investment costs for those works are not known. Air Transport Programs 3.50 Aviation is essential in supporting the development of Korean overseas trade. Its growth has been fast since the seventies, though in absolute terms it is comparatively small (Table 5.1). Local traffic will remain modest except for a potential large movement of passengers between the capital and Cheju and Busan. International passenger traffic to and from Korea is expected to double by 1986 while freight should triple (Table 1.19). Traffic volumes are as follows: Table 3.7 (T): FORECAST OF INTERNATIONAL AIR TRAFFIC IN SEOUL (1979-2001) (in thousands) Present Actual Forecast capacity 1979 1981 1985 1986 1991 2001 Passenger (unit) 4,800 2,518 2,606 5,020 5,642 8,964 19,174 Cargo (tons) 280 156 190 379 447 712 1,537 Source: MOT. 3.51 The problem areas identified in the Plan to cope with future growth are (a) KAL's deficit position since 1980, provoked by a combin- ation of rising operating costs, a low fares policy due to harsh international competition, and a low occupancy ratio (about 40% of seats) resulting from world economic depression and a somewhat excessive acquisition of aircraft; (b) the capacity limitation of airport facilities to handle increasing traffic and (c) imperfect aviation safety systems and a shortage of specialized staff. Accordingly, the policy directives under the FFYP emphasize the need to: - 42 - (a) develop airport facilities in the Seoul Metropolitan Area by expanding the existing airport and by preparing for the development of a new airport; (b) improve and expand other airports, principally at Busan and Cheju; (c) extend the international routes including a round the world service, while improving the quality of service; (d) modernize and standardize the fleet as well as expand its capacity; and (e) improve aviation safety facilities through modernization of guidance equipment. 3.52 To meet those objectives, an investment program of W 595 billion (US$1 billion) including US$687 million in foreign currency at 1980 prices, is recommended under the FFYP. Some W 431 billion or 72% is to be invested by KAL, primarily for aircraft, and W 164 billion by the Government, about 70% for Seoul airport expansion and the balance for other airports and safety facilities (Table 5.2). Development funds for a new international airport are earmarked under the Plan amounting to W 17 billion or about US$28 million for a preinvestment study, subsequent detailed engineering and land acquisition. Construction would start under the Sixth Plan. (a) Aircraft and Routes 3.53 The procurement of new aircraft is the largest investment in the program, although ranked as having third priority after the expansion of airports and development of new routes. KAL's fleet will decrease from 41 planes in 1982 to 39 by 1986, but its seating capacity will increase by 2,000 to 9,800 and air cargo capacity by 420 ton to 800 ton. New acquisitions during the FFYP will include 8 B-747s and 7 unspecified new jet planes for passenger/freight transport. In the meantime, KAL will sell 17 aircraft including B-707s, B-727s, DC-10s, and F-27s to standardize the fleet which will consist by 1986 of 20 B-747s, 8 A-300s and 7 new planes (Tables 5.3). While the objectives of standardization and fuel efficiency have merit, the fleet's capacity net expansion, especially for passenger planes which have a low occupancy ratio, is less justified and some postponement should be advised particularly at a time when KAL is accumulating deficits. 3.54 Opening of New International Air Routes. KAL's world network will be expanded by 12 additional routes to reach 45 routes servicing 32 cities in 19 countries by end 1986. Four new routes will be opened to Japan adding to - 43 - the 1L existing routes, and 8 other routes will be opened, 2 each respectively to Southeast Asia, the Middle East and Africa, Europe and America, adding to the 22 existing routes. Aviation agreements and revisions will be made with 9 countries. The opening of the New York-London and Chicago-Rome routes due in 1985 will extend KAL's network around the world (Table 5.4). The timing may not however be very suitable in view of the world's present recession. (b) Airports and Facilities Expansions 3.55 The largest investment is for the Seoul-Kimpo airport at an overall cost of W 164 billion, with W 97 billion programmed to be spent in 1984-86 (Table 5.3). A second runway will be constructed as an intermediate measure to accommodate traffic between 1985 and 1991 when the new international airport will open. Annual passenger capacity will be nearly doubled to 9 million passengers and air cargo increased by 50% to 180,000 tons p.a. Ground capacity will accommodate up to 70 B-747 size aircraft. But is; the time for such investment appropriate when traffic has slackened? Cheju and Busanr-Kimhae international airports will also be expanded. The objective for Cheju is to support the government program to develop the island as an international tourist resort. An investment of W 14 billion for a new passenger terminal to open in 1983 will complement a newly built runway and security facilities, increasing annual capacity from 0.6 to 2.6 million passengers. The objective for Busan is to give the largest widebodied aircraft access to this high growth area and to provide an alternative landing port to Seoul in case of bad weather. W 21 billion will be invested to extend the runway and improve facilities. 3.56 Aviation safety facilities and staff training. Remote control systems will be installed in five locations together with improved airport lighting to allow safer air navigation, effective aerial zone control and management and viable flight intelligence. A training institute will be established to provide electronic specialists and technicians to maintain, repair and control the high technology equipment. Urban Transport Programs 3.57 The past growth of urbanized areas has severely constrainted the large-city transport systems. Seoul's residential population grew at 4.4% p.a. i,n the 1970s, reaching 8.3 million in 1980, while the daily movement of people increased at 8.3% p.a. and was estimated at 13.3 million in 1980. The concentration of the city's functions in the central area has generated excessively heavy traffic at rush hours between the north and south of the Han River which offered the main expansion area given the geographic and strategic situation of the city. High-rise office construction that was not matched with adequate road and parking infrastructure has created serious congestion. Despite a heavy reliance on city bus transport, a high - 44 - taxation lid on private motorization, and the multiplication of elevated streets, the downtown areas are clogged with traffic most of the day. 3.58 In 1981, 66% of the people in Seoul used city buses, 7% the subway and suburban rail systems and 27% other modes. Half of the nation's city buses were concentrated in Seoul and about 45% of all taxis. Busan had 20% of the buses and 10% of the taxis of the country. In addition to stop-gap measures which have added over 1,000 nonstop buses in Seoul and 200 in Busan and have encouraged the use of chartered buses, a large program of subway construction was started in 1974. A first 8 km section of line No. 1 was opened in 1976, followed by a 14 km section of line No. 2 in October 1980. Traffic congestion was greatly relieved for residents of Seoul's eastern sector. However, Seoul and Busan continue to grow despite a government policy to stabilize growth by offering better opportunities in secondary cities. In 1981, some 2,100 people moved daily to Seoul City while 1,860 moved out, adding yearly about 90,000 newcomers or about 1%. The Seoul Metropolitan Area is expected to have a population of 15.3 million in 1991 from 13.5 million in 1980. The Seoul City population should increase to 9.6 million from 8.5 million over the same period assuming managed growth, but 11.9 million if the trend is unchecked. Thus, transport problems will worsen as nearly 3 million people move to the Seoul area and 1.8 million to the Busan region even under controlled growth. The outer areas of those cities will grow faster due to (a) the availability of land there and its scarcity in the cities; (b) government incentives to develop outer areas, and (c) superior accessibility that is associated with high speed traffic. 3.59 The transport problems identified in the Plan are: (a) the worsening of downtown traffic congestion caused partly by a lower road ratio of 15% in Seoul and 10% in Busan than current ratios in other larger cities such as New York (35%), London (25%) or Paris (23%), (b) the imperfections of traffic management and signalling, and (c) the operation by private business of city buses resulting in poor services. Accordingly, the policy directives to improve urban transport in the FFYP recommend to: (a) expand the subway and suburban rail transport systems as the main passenger transport mode in Seoul and Busan; (b) further increase the capacity and quality of city bus services until the completion of the subways and develop systematic linkage points between the systems to ensure their complementarity; (c) promote taxis as a semi-mass transport mode by improving the management and operation of company-owned taxis, accelerating the licensing of private taxis and introducing a fare system based on distance and time; - 45 - (d) improve traffic management and expand road and parking capacities; and (e) promote urban transport through appropriate measures to be developed from surveys and research for Seoul, Busan, Daegu, Daejon and Gwangju. 3.60 To achieve these objectives, the Plan includes an explicit invest- ment program only for the subway expansion. A total of W 1,635 billion has been earmarked under the FFYP for the completion of Seoul subway lines Nos. 2, 3 and 4, totaling 107 kin, and 25 km of line No. 1 in Busan, for which work started in the Fourth Plan. Busan line No. 2, for 21 km, will be started in 1985 for completion in 1989 (Tables 3.18 and 3.19). Upon completiLon of the program by 1986, some 40% of Seoul traffic will use the subway system and some 17% of Busan traffic will use its line No. 1. As mentioned, KNR in the meantime will further develop the suburban rail system with the electrification of the 13 km Seongbug-Euijonbu north line and the increase of electric power cars from 426 in 1980 to 1,587 in 1986. 3.61 Although the Bank was never directly associated with the subway program a number of remarks can he made concerning the lack of adequate studies, and deficiencies of its financing and cost recovery system. In particular, the location of the lines (route/commuter density), the design of underground stations and lines (at alternatives depths and related gradients), the intersections and transfer stations do not appear to have been analyzed thoroughly as part of a transport system network to define (a) priority routes; (b) linkages with other surface transport; (c) effects on urbaniza- tion; (d) trade-offs between investments and operating costs; and (e) economic and financial viability. The studies that were carried out concentrated on detailed engineering for the lines that were selected in an arbitrary manner. In particular, it is doubtful that the Seoul ring line No. 2 should he a top priority since it adds considerable travel distance for most of the likely users who are essentially commuters between the city center and the new suburbs south of the Han River. A direct route such as line No. 3 would probably have a higher occupancy. The funding system which forces motor vehicle owners in Seoul and Busan to help pay for subway construction in those cities by purchasing an interest-bearing bond (W 300,000 for private cars, with company cars and commercial vehicles paying only about 10% of this amount) is both practical and sound. Vehicle owners are major contributors to urban congestion and are major beneficiaries of decongestion; it is therefore reasonable to ask them to help pay for the costs they impose on others and the benefits that accrue to themselves. 3.62 The plan gives some details of the proposed measures to improve the management and operation of buses and taxis in larger cities. Other measures such as traffic management facilities and the establishment of passenger-car- restricted-zones in downtown Seoul are mentioned, but no investment figure is given. No particular program is proposed for the city street expansion program for the four special cities. This program, as noted, is very large, reaching W 1,220 billion, about equal to the subway development program (para. 3.10). - 46 - C. Evaluation of the Plan's Transport Policies 3.63 The Five-Year Plan is an indicative document. Its approval by the Parliament endorses the Government's priority objectives, but it does not give budgetary authority for the proposed projects and policies. Except for ongoing projects and those for implementation in the earlier Plan years, and for which detailed studies are available, all other Plan components will normally be studied, with few exceptions, before their inclusion in annual budgets. In preparing the Plan, the Transport Planning Task Force had to include projects proposed by the various modal agencies based on studies which varied widely in completeness and quality. Accepting this as inherent to any planning process, the Transport Plan shows a number of strengths and weaknesses. The following detailed analysis of the Plan will help to define areas where the Government should focus its attention in the immediate future. Strengths of the Plan 3.64 The Transportation Sector Plan clearly analyzes problem areas in each sector. Past development strategies and future traffic demands are generally well documented. Specifically, the Plan identifies capacity bottlenecks due to shortages in facilities and equipment, inefficiencies in operation and management, inadequate tariffs and unavailability of skilled staff. It acknowledges the importance of maintenance and energy conservation. The policy directives defining the objectives for each sector are clear. A balanced emphasis is put on investments for new construction and improvements, on policy measures to improve productivity through better management, and on regulatory changes to ensure adequate service to users. Further, the Plan clearly indicates the financial needs of the public and private sectors and assesses the funds needed from local and foreign sources. 3.65 The policy directives re-emphasize Korea's transport strategy based on comparative modal advantage in terms of economic cost and energy conservation. Rail is given preference for long distance and commuter passenger traffic and for bulk freight; roads are to serve short- and medium-distance inland transport; and coastal shipping is to handle bulk freight. Further, the Transport Plan supports the spatial development strategy proposed in the Tenr-Year Second Land Development Plan (1982-91). It seeks the infrastructure expansion necessary to develop secondary cities that are to attract a larger share of the urban migration that would otherwise concentrate in Seoul and Busan. With the mechanization of agriculture, some 10 million people are expected to move over this period from rural to urbanized areas. Disincentives and restrictive measures adopted will help to limit their concentration to some 3 million in the Seoul and Busan metropolitan areas. - 47 - Weaknesses and Major Issues 3.66 Several deficiencies in the Plan relative to coordination, regu- lation, and energy reflect long-standing and new problems that are difficult to resolve. Furthermore, possible budget limitations may result in substan- tial investment cuts. The first mid-year budget reviews have resulted in large cuts of the railways and ports programs. EPB Budget Bureau and Project Evaluation Bureau have responsibilities to review these investment programs and have among others, taken into consideration the Bank's views to limit capacity increase investments. The budget reviewers control expendi- tures in relation to government revenues, while the project evaluation officers attempt to minimize foreign borrowings by allowing only high return, foreign exchange earning projects. 3.67 The Plan is unsatisfactory in three areas. First, it is not comprehensive. It does not include major road investment programs by local governments, including special cities, or port investments by industrial complexes and by local governments. These components would increase the public transport investment program by over W 2,000 billion or about 40%. Since little information could be gathered on these investments, it is thus difficult to assess whether they tie in with the Plan's objectives, whether they complement or duplicate each other, are overdesigned or premature. For example, it is proposed to develop the Seoul subway system and a massive road network, yet it is unclear whether these projects will be reviewed between the agencies concerned and in conjunction with other modal agencies progrEams. This illustrates a major institutional weakness of the transport sector: investment planning and coordination have remained isolated and fragmented. Each modal agency continues to develop its plan without considering the inter-dependencies of the various modes. The Plan itself suffers from a lack of integration both at the intra- and inter-modal levels. The funding mechanisms, in particular, appear to give various degrees of freedom to agencies such as KHC or the Special Cities which do not seem to imply adequate checks and balances. In addition, the single mode project investment criteria used are not conducive to effective inter-modal analysis. Given the frequency in Korea of investment proposals involving competing modes, it is necessary to develop a better approach for the selection of optimal investments. This issue is discussed and specific recommendations are made in Chapter 4. 3.68 The second problem concerns proposed changes in the regulatory and pricing systems. While the Plan's goals are satisfactory, the actions proposed may not, in some cases, be very effective or may even be counter- productive. Measures seeking to increase the size of transport operators are more likely to result in oligopolies imposing their rules on the market rather than in reducing prices and improving the quality of service. This area is very sensitive due to political and social pressures, and it is understood that solutions are generally compromises that do not fully - 48 - reflect sound economic principles. However, as discussed in Chapter 5, the Bank can be instrumental in gradually guiding government policy toward a somewhat less regulated system, providing strong incentives for more efficient operations. The ultimate goal would be to provide the conditions for a dynamic and equitable competition within and between modes that could supply services effectively and adjust promptly to changing transport needs. 3.69 Third, there are apparent inconsistencies between the policy directives and the action programs proposed. Improved maintenance and energy conservation have been rightly identified as priorities. However, the measures proposed are not explicit and in many subsectors are even lacking. Maintenance activities are generally funded by recurrent annual budgets and therefore may not be adequately dealt with in the Plan except when capital expenditures are recommended. This inconsistency is very apparent. On the energy issue where this conservation objective in transport is not properly articulated in action programs of line ministries, some guidance is needed, and this report therefore addresses the problem in Chapter 6 which provides a basis for strengthening the government program. The magnitude of present and future fuel consumption has been analyzed and recommendations are made on conservation measures and potential savings that can be achieved. - 49 - 4. INSTITUTIONAL PLANNING ISSUES 4.01 The analyses of Korea's recent transport development and of its FFYP in the first chapters have identified several weaknesses in planning. A few misinvestments have occurred, in some instances programs have been developed in parallel by different modal agencies pursuing similar objectives, and often programs have been prepared in each subsector independently without any attempt at integrating them. This approach has caused minimal problems so far but is potentially harmful. Indeed, no major misallocation of resources resulted in the past, mainly because transport demand grew very fast allowing otherwise premature investments to soon be fully used. The Seoul-Busan expressway is such a case where a phased investment might have been preferable, building first a two-lane facility and several years later, an additional two-lanes. But it turned out that high traffic growth on most sections justified four-lanes much earlier. A. The Need for Improved Planning 4.02 Under present conditions of slow economic growth and budget limitations, coupled with increasingly more complex traffic patterns, there is an urgent need for a rational planning process to improve the transport network., This would allow the identification of projects and programs that are economically sound and avoid a potential waste of resources. To date, Korea has not realized, at least in the transport sector, that planning is an essential step in government management that cannot be disregarded or dealt wJith by shortcuts for the sake of satisfying other, possibly more pressing, political objectives. The decision-making process requires efficient planning. It has to be worked out through three levels: (a) within each transport agency to integrate its projects into meaningful and cost-effective programs; (b) between the various agencies responsible for investments in the same mode to ensure that programs are consistent and complementary; and (c) among the agencies responsible for investment in different modes to optimize transport programs by organizing interdependences and reducing overall costs. These three levels of action call for: (a) better unit or agency planning; (b) better intra-modal planning; and (c) better inter-modal planning. 4.03 Thus far, the planning process does not seem to have worked properly for four main reasons. First, little attention has been attached - 50 - to planning, which reflects a specific political attitude. Second, responsi- bilities have been fragmented which is exacerbated by a tendency for bureaucratic domination. Third, different funding mechanisms exist, which give relative freedom to revenue-earning agencies compared to those which receive funds from the central budget. Fourth, no operational coordinating agency exists, largely due to the reluctance of agencies to abandon certain practices or institutional privileges. Before suggesting what can be done, further analysis of the barriers to better planning is necessary. B. Obstacles Hindering Planning (a) Planning Limitations 4.04 Under past Korean Governments, strategic decision-making rarely relied on planning at the agency level. The main decisions were taken in a very centralized manner, at the highest level by the Blue House. To some extent the role of the agencies was to dress up those decisions into a rational strategy but mainly to implement the various projects in accordance with prescribed standards and very strict completion dates. 4.05 Accordingly, the planners had little freedom to propose variations to the investments prescribed. This has not been conducive to imaginative efforts by government staff or local consulting firms to find least-cost designs, as standards were applied to the rule. Projects have often been designed with higher standards than necessary, resulting in larger capital expenditures than required and in fewer projects. The Olympic Highway, for example, represents a case of over-investment which is absorbing large resources that were not available for other projects. The use of high design standards for provincial and county roads is another example of over-investment and a precedent that the Bank has tried to discourage by introducing, for example, good but cheaper type pavements such as double bituminous surface treatment (DBST) instead of premixed asphalt concrete (AC). 4.06 As investment decisions were based more on political than economic considerations, there was little desire to carry out economic feasibility studies, the cost effectiveness of which was misunderstood. When studies have been carried out, there was a tendency to alter their results when they were not in line with policy instructions. There were exceptions, however, such as the preinvestment studies-that led to projects financed by the World Bank and the Asian Development Bank. 4.07 It is thus not surprising that Korea's civil service has not yet developed a very satisfactory planning capability. By contrast, over the past decade the private sector has demonstrated at home and overseas how a new generation of Korean entrepreneurs, through their dynamism and - 51 - ingenuity, managed successfully to undertake civil works for transport projects, and to build transport equipment including motor vehicles and ships. Nevertheless, the exposure of government transport agencies to projects prepared under the Bank's guidance gave them a good grasp of how to carry out preinvestment studies, including feasibility and economic evalua- tion, detail engineering, contracting documents for international competitive bidding (ICB) and monitoring of project implementation. Large inputs of foreign technical assistance have helped, particularly at the project level, to transfer technology and have succeeded in improving the quality of appraisal techniques. In a few instances such as the KNR and KHC, it even helped to develop in-house project preparation capabilities. In most cases, however, a heavy reliance was placed on consultants, foreign and local, to study projects. The Bureau of Public Roads, the KMPA, and the Transport Coordination Bureau do not have the staff to carry out studies themselves. Their role at best is to commission and supervise studies. 4.08 Although efforts have been made to strengthen capacities and build institutional mechanisms to promote coordination in planning, little came out of this mainly because of a political attitude that perceived such efforts as potentially restricting the freedom of high authorities in making decisions. With the new Government which has increased the delegation of responsibilities, more initiative is left to the modal planning agencies which now have better opportunities to strengthen their capability and may develop new skills to optimize investments. The preparation of the Fifth Transport Plan, which is far superior to any previous plans in quality and depth, iis an example of this new determination. The Bank should therefore intensify its assistance to the transport agencies to continue to update their p:Lanning techniques, including the training of staff in the required specialties. (b) Fragmentation of Transport Responsibilities 4.09 A main feature of the institutional organization of the sector is the partitioning of responsibilities which may result in fragmented and inconsistent development of facilities and policies. It is unavoidable and to some extent desirable to have numerous agencies involved, in particular decentralized units that are better suited to respond to local needs. However, it is indispensable to have a coordinating mechanism to adequately plan and develop the transport system. In the absence of such a mechanism, the present setup is likely to yield competing and redundant investments. Also, the financial independence of different agencies may lead to the development of low priority facilities while other urgently needed investments are delayed due to a shortage of budgetary resources. The problem for the road and port subsectors is particularly serious and is analyzed below and suggestions for improvements given in paras. 4.26 to 4.32. For the other transport modes (railways, aviation and inland waterways), the Ministry of Transportation (MOT) is responsible to plan, develop and operate these modes through the KNR, the Civil Aviation Bureau, and the Waterways Bureau, respectively. Intramodal coordination is not a - 52 - problem since each of these agencies is fully in charge of its mode; however, the inter-modal coordination of their development plans with others agencies outside MOT is deficient. 4.10 Highways. Responsibility for the administration and development of the road network is shared by three ministries - Construction (MOC), Home Affairs (MOHA) and Transportation (MOT). MOC has responsibility over the expressways through a public corporation, the Korean Highway Corporation (KHC), and for the national roads through its own Bureau of Public Roads (BPR). MOHA is responsible for provincial and county roads. MOT is responsible for the management of land transport, establishing terminals and overall transport coordination. The organizational and functional responsibilities and relationships among agencies are shown in Table 2.8. As a consequence of the present organization, the plans prepared by these agencies are not integrated since no mechanism exists to ensure their consistency and complementarity. 4.11 Under MOC, KHC was established in 1969 as a semi-autonomous, self-accounting corporation. It is active in developing expressways to be funded by its own revenues, and has a capability to design, construct, maintain and operate the expressway system. KHC's planning function is shared with the BPR. The KHC is technically fully competent, and is able to maintain the expressways adequately as it has ample resources of staff, equipment and funds from the tolls collected. BPR is in charge of planning, constructing, maintaining and administering the national roads. The BPR organization has evolved with the aid of technical assistance and training provided by the Bank under four previous highways projects. MOC's present organization is shown in Chart 1 and KHC's in Chart 2. 4.12 Under MOHA, the Local Administration Bureau, through a road section set up in September 1979, is responsible to prepare and monitor programs for provincial and county roads maintenance and to develop the county roads network. With the help of consultants, it prepared a first project approved in 1982 by the Bank, for implementation during 1983-87 and under which the section will be strengthened and upgraded to division level. At the local level, the nine provinces are responsible through provincial road divisions to plan, construct (often with BPR technical help) and maintain the provincial roads. In addition, the Special Cities, the cities and the villages have responsibility under MOHA to develop their own road networks. A Saemaul division in MOHA assists the villages in this task. The present organization of the MOHA is shown in Chart 3. 4.13 While MOT has no authority to build roads, it has a significant responsibility as manager of the road fleet and coordinator of the development of the various transport networks. The Land Transport Bureau (LTB) organizes and controls commercial road transport operators through a - 53 - strict regulatory system. Licensing quotas, route permits, pricing of services and vehicle safety are enforced by the provinces' Transport and Commerce Divisions. In theory, MOT is responsible for coordinating all transport investment programs within and among subsectors. This function is supposed to be carried out by the Transport Coordination Bureau (TCB) which was established for this purpose. But, as discussed in para. 4.21, this is facing a lot of resistance and has not been effective so far. Nevertheless, TCB performs a useful role in collecting and analyzing transport statistics, with a particular emphasis on roads, and its efforts appear to merit expansion. MOT's present organization is shown in Chart 4 and KNR's in Chart 5. 4.14 Ports. Responsibility for the administration and development of ports is shared among four ministries - MOT, MOC, MOHA and the Ministry of Agriculture (MOA). Here again, no exchange takes place among these agencies to integrate their plans. As a result, a number of inconsistencies exist, the most disturbing being the tension that arose between KMPA and MOC's Industrial Port Division subsequent to a Bank-recommended reorganization in 1976. MOT's Korea Maritime and Port Administration (KMPA), created in March 1976, is responsible for administering the construction and operation of Korea's 20 first-class commercial ports through ten District Port Authorities. KMPA is also responsible to plan and develop the 23 second-class commercial ports but their operation and maintenance as well as that of numerous other small local ports are handled by provincial governments under MOHA. The Korea Dredging Corporation has been transferred from MOC to MOT, and KMPA contrcols the dredging of first-class ports. KMPA's organization is shown in Chart 6. 4.15 The planning and construction of "industrial ports," defined as being part of industrial complexes, continue to be the responsibility of MOC, which also handled the commercial ports before the 1976 reorganization. Once built, industrial ports are turned over to KMPA, but only for maintenance and partial operation, since the management and cargo handling generally remains with the administrators of the complex. This division of responsibilities may have appeared reasonable at the time of the reorganiza- tion, but it tends in practice to conflict with KMPA's responsibility for overall planning of Korean ports. The Government tried to avoid this conflict by agreeing to establish an Inter-Ministerial Committee under the chairmanship of the Vice-Minister of EPB to review MOC's proposals for industrial port development, and to take action as required. However, this committee has apparently not functioned, and MOC and KMPA programs for port expansions are prepared independently and the new industrial ports are not included under the FFY transport Plan. 4.16 The development, construction and operation of the first- and the third-class fishing ports fall under the jurisdiction of the Office of Fisheries under MOA, but the second-class fishing ports are the responsibility of provincial governors under MOHA. Planned investments for those ports are not included in the Plan either. - 54 - (c) Differences in Funding Mechanisms 4.17 The lack of an integrated planning system is also due to the existence of two funding mechanisms - one through the central budget and one through funds that have been earmarked for specific purposes and are used at the discretion of their respective agencies. This means that agencies which rely for funds on the overstretched central budget are at a disadvantage compared to the independently funded agencies. 4.18 Funding of the various modes is organized as follows: for the national roads, main ports and airports, the general budget is the sole source to fund expenditures related to their development and maintenance. User charges on fuels, fleet ownership and utilization of facilities, collected through fees and taxes, accrue to the general budget. By contrast, KHC is financially independent, getting its revenues from tolls collected, and is not required to pay all the capital costs of its roads. The revenues from tolls amounted to W 60 billion in 1981, and two thirds were from the Seoul-Busan Expressway. Nearly 80% were collected from buses and trucks which represented 70% of the traffic (Tables 2.23 and 2.24). About 50% of the toll revenues were spent on maintenance (Table 2.25). The level of toll is subject to review by the Economic Planning Board (EPB) and approval by Government. KMPA for the time being depends on the central budget but in the future will become financially self-supporting. KNR is also a financially independent semi-public corporation receiving its revenues from tariffs. However, a deficit situation since the early 1970s has necessitated substantial subsidies from the central budget. 4.19 The local governments also have a separate financing system for local roads and ports. The county and provincial roads programs are funded through a block grant of 13.3% of local taxes which is allocated yearly by MOF to MOHA which can allocate funds as seen fit. No review is done to adjust these programs to others prepared by BPR or KHC, or with those prepared by the cities. 4.20 The problem inherent in this varied funding system is that all agencies are not treated equally, namely that KHC, KNR, and MOHA's local administrations have a financial independence that is not given to the BPR or, for the time being, to KMPA. It makes the coordination of planning very difficult because the legal framework prevents the budgeting institutions under the EPB from addressing the country's real priorities. The EPB exercises, through its Budget Bureau, a budgetary control on transport investments proposed by each ministry, except by MOHA and the semi-public corporations mentioned above, and has the authority to cut or defer projects due to financial constraints. Also, a Bureau of Project Evaluation, established in 1976 in EPB, reviews the economic justification of individual major investment proposals on a piecemeal basis. It has shown an interest - 55 - in transport coordination, spurred by the necessity of cutting back the public sector investment program, and its capability in project analysis is being strengthened under the Bank's 1981 Structural Adjustment Loan. (d) Deficiencies in the Existing Coordinating Setup 4.21 Planning by different agencies cannot be satisfactory unless their plans are integrated by a coordinating body. Such coordination is necessary both within and between modes. However, both intra- and inter-modal planning coordination are deficient. No mechanism exists between MOC and MOHA to integrate road plans, and the coordinating committee to integrate ports plans prepared by MOT and MOC is not working adequately. The intermodal coordination function, which has by nature to be centralized and is currently the responsibility of MOT, is not carried out. Thus, transport investment alternatives proposed by various modes are not systematically compared before being adopted. The new TCB has only in theory the responsibility to handle this task, with its three divisions: Coordination, Transport Management and Survey/Statistics. Their functions, as evidenced by the list of responsibilities and prerogatives shown in Annex 1, are broad and clearly designed to embrace all aspects of coordination. But it cannot exercise this function effectively not only because it still lacks the resources and staff (although substantial efforts were made recently to train staff), but mainly as the legal framework does not allow such a control function by a ministry over its peers. The transport agencies in charge are too eager to implement their projects and do not easily accept rational challenge except due to funding constraints. In the past, some sort of coordination of investment did take place through the First National Land Development Plan (1972-81), prepared by MOC's Bureau of Physical Planning and embodying directions set at the Blue House. At present, MOC still has a determining role in indicating basic transport infrastructure investments as part of the land use and regional development strategies that are outlined for the future in the Second National Land Development Plan (1982-91) which was prepared with assistance from the Korea Research Institute for Human Settlement (KRIHS). 4.22 Government's past efforts to establish the coordination function started in 1970 when it made MOT responsible for this task, although the Bank had suggested EPB, based on recommendations of a consultants' study financed under an IDA Technical Assistance Transport Credit. Since then, with Bank support, many efforts were deployed to strengthen the Transport Planning Office (TPO) and make it work. Loan agreements under the Bank's First Highway and Third Railway Projects helped to define further its functions. In 1975 the Government established a Transport Coordination Committee (TCC) that consisted of nine directors, representing the ministriLes most directly concerned, and an implementation body in MOT, the Transport Coordination Office (TCO), that replaced TPO. TCC's responsibilities included the coordination of intermodal transport investments, but was not able to exercise its function effectively, possibly because key decisions were imposed from higher up. The TCO, headed by an assistant minister, was responsible for the review of transport investment - 56 - plans and policies, but after being downgraded to the Bureau level in November 1981 as part of an overall government reorganization, became the present TCB. C. Suggestions to Strengthen Transport Planning 4.23 The problems analyzed above are complex, and vested interests are everywhere. The merits of better planning are, however, obvious and in the best interest of Korea. Our recommendations are to work on three fronts by: (a) improving the quality of planning within agencies; (b) improving intra-modal planning for roads and ports by introducing new mechanisms and by implementing a few important institutional changes; and (c) improving inter-modal planning by limiting coordination efforts to a few multi-modal projects, expecting that a better understanding of the necessity of coordination will later result in institutionalized solutions. (a) Improving Planning Within Transport Agencies 4.24 The first condition to be met is a basic change in the Government's attitude in favor of sound planning. The present Government has given clear indications that it attaches great importance to the delegation of responsi- bilities and the decentralization of the decision-making process. This may augur substantial changes in the quality and depth of planning by the transport agencies concerned. A second condition is that more emphasis be placed on the value of studies. The returns of such activities are generally extremely high and justify the limited investment required. In particular, budget considerations should not systematically eliminate studies as they now tend to do. This approach is in fact counter-productive and very short sighted. 4.25 Given acceptance of these conditions, there are many ways to improve planning within agencies. Work should be encouraged on a number of current issues, some of which are identified in this report. For example, the comparative advantage of modes or the need to improve modal complementarities should be analyzed further to guide future transport development strategy effectively. Bank sector work, which is an attempt to improve this knowledge, should be continued and pursued through Korean research institutes, whose development would also have a major impact on the quality of work of government departments which must rely on the institutes due to the limited number of Civil Service positions under the present Korean administrative system. However, the best staffed institutes such as KRIHS have only a dozen of experts and are overly committed to a fast - 57 - increaLsing number of studies. Hence, the urgent need to upgrade the skills of present government staff and to recruit others with skills that are generally lacking, such as planners, transport economists, intermodal analysts, transport operation specialists, etc. (b) Improving Intra-modal Planning 4.26 The problem area here is restricted to roads and ports. Internal mechanisms and procedures are required to ensure that the investments proposed by all road or port agencies are internally fully consistent at the subsector level. In the case of ports, there is good reason to reconsider the suitability of the present distribution of responsibilities between MOT and MOC. For its part, the Bank intends to support such an improved intra-modal planning effort through a shift from the past project approach to a subsector approach. Subsector lending includes not only support to investments in a given period, but also to policy and institutional changes that would be in the best interest of the country. Specific recommendations follow on how intra-modal planning can be integrated respectively for the roads and ports subsectors. 4.27 Road Planning. In order to better integrate road plans prepared by MOC (KHC and BPR) and MOHA (Provinces, Counties, Cities and Special Cities), it is first recommended that local capabilities to plan and develop their road network be improved urgently. Second, a mechanism is required to coordinate all road development programs. As an initial practical step, a study for integrating the national, provincial and county road programs is beiing conducted as a component under the Bank's Provincial and County Roads Project. This provides for a network analysis study to review the FFYP road investment program to ensure its intramodal consistency and to define technical criteria and institutional procedures to be applied in the future. As a second step, another study is recommended to consider whether a unified budget allocation system could be a tool to integrate road funding. Such a system could facilitate proper coordination of the overall road development program by instituting a more systematic and equitable allocation of road user charges. For example, a given proportion of the funds could be allocated, on one hand, to the maintenance of different classes of roads in relation to their traffic volumes while, and on the other hand, funds for improvement, paving and new construction could be appropriated on the basis of proper economic justification. The proposed increase in the diesel fuel tax discussed in Chapter 5 could well be the opportunity to recentralize the funding of road transport (para. 5.14). /1 Under the recently negotiated Highway Sector Loan, the Government has agreed under the Action Program to establish such annual review function. - 58 - 4.28 Port Planning. The funding of port maintenance and improvement expenditures could also be rearranged through a unified budget allocation system. This would resolve part of the potentially negative effects of the rather awkward delimitation of responsibilities and lack of coordination between MOC and MOT for port developments. However, such an approach may be too complex at this stage, and it might be easier to consider different ways to rearrange institutional responsibilities. 4.29 There is an urgent need to first ensure consistency and to this end, integrate investment plans already prepared for general ports under the Korea Maritime and Port Administration (KMPA) and industrial ports under MOC. Later, a coordination mechanism could be introduced to integrate future plans and those prepared for local ports by MOHA and fishing ports by the Ministry of Agriculture. Many alternative approaches to this problem would be worth considering. One could be to regroup port planning under a high-level body such as the EPB, while the construction and operation of ports could be decentralized in autonomous ports. Another could be to unify all responsibilities including planning and construction under a single ministry while the operation of ports could be decentralized. The planning and construction functions could also be regrouped under MOC in a Bureau of Port Development while the management, operation and maintenance of all ports could be placed under MOT in a reorganized KMPA, the main objectives of this being to maximize the use of port investments and to ensure adequate cost recovery from users. A study is suggested to review alternative institutional arrangements and funding systems for the subsector. (c) Improving Inter-modal Planning 4.30 This task is the most difficult and only very few countries have been able to institutionalize such coordination among agencies responsible for various, often competing transport modes. In Korea the problem is that only one agency at EPB's level can realistically fulfill such a function. It seems vain at this stage to recommend any further attempt at strengthening MOT's coordination function. Our recommendation is rather to gradually refine the crude coordinating mechanisms set up in EPB's Project Evaluation Bureau. In particular, as a preliminary measure, it would be desirable to attempt strengthening the Bureau's capability with staff training and a new approach to move from ex-post type evaluation reviews to ex-ante coordination of the plans and programs formulated by the transport agencies concerned./l The long-term objective would be to integrate the various modal investment plans so that each proposal would be optimized. Such capability would mean, however, a much larger number of staff. An alternative which is already in practice is to rely more on consulting services and research institutes. /1 Under the recently negotiated Highway Sector Loan, the Government has agreed under an Action program to establish by mid-1986 procedures for comparing investment alternatives between modes. - 59 - 4.31 In the meantime very useful progress can be achieved in this direction by working at the project level to resolve transport needs of either a given commodity or geographic area. An emphasis on what has to be moved would naturally require consideration of all likely modes would require to address not only their comparative advantages. The focus of such a study would seek to optimalize services at least cost. Hence, the complementarity of the modes would require to address not only the necessary supporting policies such as freedom of pricing, but also the necessary investments such as intermodal terminals and transit facilities. It is thereEore recommended that project preparation be shifted from an isolated approach pre-supposing the need for a given mode to the specificity of the transport demand, and instead of looking at single mode solutions to seek multi-modal integrated solutions. 4.32 The Bank has already advocated such a shift in emphasis and the Government has responded by preparing the first project of this kind: the Coal and Cement Distribution Project. More multi-modal transport projects are recommended in three geographic areas: the Seoul-Busan Corridor, the Kyeonggi Province (Seoul Metropolitan Area) and the Southeastern Industrial Belt. By developing such projects, the coordination process will take place naturally, and will be adapted to the Korean situation. It will later be much easier to learn from such experience how inter-modal planning could be institutionalized. - 60 - 5. TRANSPORT REGULATION AND PRICING ISSUES A. Overview 5.01 The Korean society is highly disciplined and regulated, and its transport system is no exception. Carriers are expected to perform the duties assigned to them not because they may be profitable, but to meet legitimate needs identified by the authorities. The need for carriers to be reimbursed is recognized by the Government, but the right to negotiate charges is not. It is for the designated government officials to determine who may, and who may not, enter the industry; the tasks to be performed; and the prices that may be charged. 5.02 Thus, the provision of transport services in Korea is closely controlled by government officials. Even transport operators within the industry need government permission to increase services, or to reduce them. Regulation of this kind tends to introduce inefficiencies, and as a result private commercial and industrial companies that transport their own people and goods and that are still unregulated have become more active. However, it is not easy to devise practical proposals to change the system without upsetting some existing users and operator overly protected by the present system. Nevertheless, several changes should be considered. Relationship between Pricing and Regulation 5.03 The essential point about pricing regulation in Korea is that it is based on a system of average prices. In many important respects, opera- tors are required to charge the same prices for high-cost as for low-cost services. For example, bus fares in Seoul are the same, irrespective of distance. Passenger fares between cities - by road, rail and air - vary with the distance, but may not vary with other important determinants of costs, such as route density, time of day or day of the week. Inevitably, some services make profits and others losses. Under the present system, land or sea transport operators are required to support loss-making services out of the surpluses earned on profitable ones. Indeed, one of the objectives of the licensing system is to ensure that each operator has a "fair" mix of routes. Such a system can only work in the absence of competition, for competitors would inevitably concentrate their efforts on the more profitable routes, and undermine the efforts of the licensed operators to serve the unprofitable. Therefore the authorities are perfectly logical to restrict competition, and the lifting of restrictions on entry cannot be recommended if the existing price controls are to remain in force. Conversely, the removal of price controls cannot be recommended unless restrictions on entry are also lifted. If it is decided to relax the rules governing transport, it will be necessary to devise a program involving a step by step lifting of both pricing and entry regulations. - 61 - 5.04 The starting point in all cases might be an examination of the package of services provided by each licensed carrier, with the objective of identifying services considered unprofitable by them. For example, it is reported that many of the services in low-density rural areas are not attrac- tive to the licensed operators, who run them only at the insistence of the licensiLng authorities and against subsidies (1,062 such unprofitable routes were opened by licensed bus operators from 1976 to 1982). However, such services may well be attractive to local people, particularly those operating just one vehicle either for passengers, goods, or both. If licensed opera- tors were to be allowed to drop services they considered to be unprofitable, it would no longer be necessary to protect their profitable services from competition. It should then be possible to relax all the regulations on entry and, subsequently, the regulations fixing transport tariffs. 5.05 A further general point that should be made is that the licensing authorities appear to work very closely with associations of transporters - whether truckers, bus operators, or coastal shipping operators. When the authorities investigate the need for additional services, the existing operators are consulted and, if a need is established, are generally invited to provide the added services. In practice, the transporters' associations are thus in a position to prevent newcomers from entering the transport market. This cannot be a healthy situation and, indeed, does not seem to be a legal requirement. Even if it were accepted that entry into the transport industries in Korea should be controlled, it does not follow that the control should be exercised by the existing operators. B. Road Transport Regulation and Pricing 5.06 The economic regulations governing road transport can be summarized as follows: (a) licenses for all bus operations and trucking "routes'/1 are issued only to enterprises having a minimum of 30 vehicles in cities and in rural counties; (b) quotas are imposed on the total number of vehicles in each province as well as service "areas" or "routes"; and (c) rates and fares are regulated for freight and passenger traffic. Some partial relaxations have been introduced subsequent to Agreements under the Bank's Second Highway Project: the number of vehicles needed by an enterprise to obtain "farea"i trucking and taxi licenses in counties was reduced from 10 to 5; the minimum vehicles requirement can be waived where deemed necessary for particular areas and was removed for pick-up truck services; and the /1 An "area" license authorizes service within a limited area, generally a province, and a "route" license authorizes service along a given route between points A and B. - 62 - operation by owner-operators of taxis and "area" trucks was allowed. More details are given in Annex 2./i 5.07 In addition to license and fleet restrictions, there are many other regulations on the industry. For example, on every route exceeding 100 km, bus operators are required to employ attendants to travel in the bus, whose duties are similar to those of flight attendants on commercial air flights. To the outsider, it would seem that the Ministry of Transport has a legitimate interest in the training and working conditions of the bus drivers, whose skills (or weaknesses) directly affect the safety of passengers. But it is difficult to see why it could not be left to the bus companies themselves to decide on the employment of non-drivers. 5.08 Probably the most damaging regulations are those requiring a fleet of 30 vehicles minimum in urban and rural areas for both trucking "routes" and most busing operations. That these regulations serve no useful purpose is illustrated by the fact that, in the Daejeon area, after an exception was made to the law by reducing the minimum required size of intracity bus fleet from 30 to 10, some of the larger fleets split up. The resulting reduction in the size of operating units, which presumably benefited the operators, was also accompanied by an improvement in the service to the public. No evidence has been found that transport services in Korea improve with the size of operating units, and the existing regulations have the additional damaging effect of making it more difficult for newcomers to enter the industry. However, the Plan calls for further consolidation of passenger operating companies, up to 300 buses per unit (para 3.21). It is our view that larger firms should not result from government mandate but rather from the industry's adaptation to market forces. In any case, the entry of new and small companies is necessary to insure, through competition, that best services are offered at most competitive prices./2 Furthermore, there are other regulations that prevent operators from adjusting bus size to actual demand and which result in full-size buses being used in rural areas; this is reflected in the very small number of minibuses seen on the roads. Regu- lations also do not provide for the use of dual-purpose vehicles for both passengers and goods, a class of vehicle usefully employed in many countries, including Switzerland and Scotland. It is difficult to see any advantages in the regulations governing the sizes of vehicles other than those relating only to considerations of safety, road capacity, etc. /1 Annex 2 deals with road transport licensing procedures and provides relevant excerpts from the 1961 Road Transport Business Act. /2 A study on Public Urban Transport Operations, about to start under MOT and financed by the Bank, is to review the desirable extent of Government regulations for urban buses and taxis. - 63 - 5.09 The pricing of road transport services should be considered in light of the following objectives: (a) to cover the operators' costs in providing the services; (b) to ensure that the costs of using the existing roads are paid for by the road users; (c) to provide revenue for expanding the road system; and (d) to ensure that the costs of road transport do not distort the demand for road use, in relation to the use of competing transport modes, such as railways or coastal shipping. 5.10 The current system of road user charges in Korea (Table 2.26) which is detailed in Annex 3, fulfills none of these objectives. First, the system of cross-subsidization referred to earlier does not allow operators to recover expenditures sustained in high-cost operations, nor to expand their low-cost operations. The second objective, to meet the costs of road use, is generally met in the case of private cars, but not in the case of commercial vehicles, which are virtually untaxed. This is because the Special Excise Tax on diesel oil (exclusive of VAT) is only 23 won a liter (compared to 310 won on a liter of gasoline) and many of the annual licensing fees do not apply to commercial vehicles (Table 1.20). Therefore, objectives (c) and (d) are not met either, and the use of roads for goods transport is stimulated at the expense of rail and coastal shipping. 5.11 Commercial vehicles do, however, pay for the use of toll express- ways, though the payment is proportional to vehicle weight rather than to axle l.oad which is regarded as the main factor in damaging road pavements. Thus the present system also encourages goods vehicles to use, and severely damage, the overloaded but untolled national roads, and to avoid the faster and safer expressways. Does the Present System "Work"? 5.12 Despite the anomalies mentioned above, the present system might be defensible if it were shown to "work." But the evidence is that it is not working; the transport demand, both for people and goods is, to an ever increasing extent met by private groups and firms that avoid the regulations by operating their own vehicles. While the growth in the number of "for hire" vehicles is only 6% per year, the number of privately owned goods trucks has been increasing since 1977 at the rate of 32% per year (para. 2.36). For example, the National Agricultural Cooperative Agency Federation has financed over 2,000 commercial vehicles to enable its members to carry agricultural inputs and produce in rural areas, even though the vehic:Les cannot be used efficiently because the regulations prohibit them from carrying the goods of non-members. In the case of passenger services, an increasing number of firms buy buses and minibuses to take their employees to and from work. 5.13 If left unchanged, the existing situation may be expected to deteriorate, with more and more traffic - for example, regular consigments on main roads - being taken from the commercial operators, who would be left with the more difficult and costly jobs. Therefore, it would seem that the - 64 - options facing the authorities in Korea are either to prohibit private firms from using their own vehicles, which would involve much more regulations, and a reduction in freedom and mobility that would probably be unacceptable, or to relax the regulations and allow more of Korea's transport services to be carried out on the basis of commercial considerations, subject to the appro- priate road costs being covered, and to safety and environmental standards being met. Suggested Changes Towards Deregulation 5.14 There are a number of ways to improve the system by liberalizing road transport regulations and pricing. It might be desirable to first remove the obligation that commercial operators must serve unprofitable routes by allowing introduction of other more appropriate forms of trans- port. Competition could then be opened up on profitable routes by with- drawing licensing and pricing regulations at least for intercity transport. This process might proceed as follows: (a) Relax the regulations governing the sizes of bus and truck fleets and the minimum sizes of vehicles that may by used. This would give road transport operators more freedom in the choice of equipment and organization. Efficiency would probably not be reduced, as operators would still have the freedom to be organized in large units, or to use full-size vehicles should they choose to do so. (b) Permit and encourage buses to carry freight in addition to passengers. This could increase the utilization of vehicles, and raise earnings, especially in rural areas where loadings are light. (c) Remove licensing requirements for bus transport in rural areas. The carriage of passengers and goods in rural areas is considered to be a high-cost, unprofitable operation which carriers are required to provide as a condition for obtaining licenses for profitable operations. The relaxation of the licensing require- ments would allow carriers to confine themselves to profitable routes, and would enable local people to provide local services with appropriate equipment such as unscheduled transport services /1 or cooperative buses owned either by individuals or by associations of farmers. Article 15 of the Road Transport Business Act (Annex 2) already allows qualified owner-drivers to obtain "farea" licenses, but limited use seems to be made of this exemption. /1 A first step in this direction is being made by introducing on an experimental basis unscheduled transport services in rural areas under the Provincial and County Roads Project. - 65 - (d) Permit owners or companies of private fleets of trucks and/or buses to purchase licenses directly from existing commercial operators. This would increase the utilization of such private fleets and would facilitate entry into commercial operations. (e) Encourage in urban areas further use of "informal" passenger services in peak periods so as to reduce the peakhour loads on the conventional carriers. The provision of peak period transport services is exceptionally costly, because of the need to use equipment and staff that are idle for most of the day. Therefore, any additional capacity that can be used in the peak period will not only ease traveling conditions on trains and conventional buses, but is also likely to reduce their operating costs. The authorities should therefore encourage even more the use of car pools, van pools, company-owned buses and other means of shared travel. (f) Introduce an annual axle load tax for heavy trucks and buses to contribute for their actual damages to the road network. This would assist in making fares and tariffs for road services reflect the actual economic cost incurred by the road system which is otherwise paid, not by the direct users, but by the general budget, and constitutes a subsidy to road transport. (g) Adjust gradually the level of excise tax on diesel fuel for road transport to the gasoline tax to improve cost recovery from road users. The Special Excise Tax (SET) on diesel fuel (excluding the VAT) was, in 1983, 23 won per liter, resulting in a retail price of 283 won per liter. Regular gasoline, on the other hand, carried a SET of 310 won per liter (US$1.50 per US gallon) and was sold at 660 won (US$3.67 per gallon). To the extent that a tax on fuel can be regarded as payment for use of the roads, the tax on diesel oil should be higher than on gasoline because of the superior miles per gallon delivered by diesel engines. There may be a case for taxing personal travel at a higher rate than commercial travel, but it would be more effective to do this by means of duties on vehicles, rather than on fuel. As commercial transport contributes a negligible amount in road use taxation, its use is excessively stimulated at the expense of rail and coastal shipping. Consequently there is a strong case for substantially raising the user-charge element in the pump price of diesel fuel. This charge should not aim at simple equality in the amount of gasoline and diesel user-charges but should reflect the much higher costs which the heavier diesel-powered commercial vehicle fleet imposes on the road system (differences among different types of commercial vehicles can best be recovered through vehicle-specific purchase taxes and/or license fees). If, for instance the tax were equal, users of diesel fuel would still obtain the benefit from its lower production cost and from its higher efficiency in terms of mileage per liter. (see paras. 6.49 to 6.53 for a more detailed discussion of fuel pricing). - 66 - 5.15 The main objectives pursued by deregulating licensing are (a) to increase the pay load and occupancy ratios of road transport; (b) promote the selection of more efficient size of vehicle; and (c) save substantial amounts of fuel. Large cost savings would accrue that could be passed on to consumers if real competition existed, contributing also to Government's policy of price stabilization. However, fair competition has to be based on a neutral taxation system and appropriate charges for the cost of inputs such as the road infrastructure. Hence, there is a need to ensure that operators pay their fair share of road costs to avoid cross or direct sub- sidies that distort competition by favoring services which are artifically cheaper as they do not cover economic costs and result in misallocation of resources. It is thus suggested that two separate studies be carried out. One to measure the economic impact of existing regulations on the road transport industry and to implement the phasing out of road transport licensing and administered fares; the other to analyze road costs on the country's networks, the level of user charges that ought to be raised and the taxation system best suited to recover those costs. The Government sees the merits of such a Road Transport Deregulation Study and a Road UJser Charges Study and has agreed to initiate them in 1984. Revenue Implications of Raising Diesel Fuel Tax 5.16 Had the SET on diesel oil been the same as on gasoline in 1981 /1 the additional revenue collected could have been about W 1,036 billion, about double the total (W 523.6 billion) actually collected in 1980 in road user charges from all vehicle classes. (The calculation of additional revenue assumes that the increase in the price of diesel oil would raise vehicle operating costs by 20% and reduce diesel oil consumption by 10%.) These additional revenues would have equaled about twice the total amounts spent on the roads in 1981 by government agencies (W 561.5 billion). 5.17 The extra W 1,000 billion generated from fuel taxes could be used in several ways, it could be (a) incorporated in general revenues; (b) spent partly on safeguarding or expanding supplies of petroleum fuels; or (c) allocated partly - say one half - to an "earmarked" fund for the maintenance and/or construction of roads. Such a fund could be the basis for a unified budget allocation system that would allocate funds within the country por- portionaly to the traffic using the roads, as ascertained from regular traffic counts. Funds could be payable to provincial or county authorities, or indeed to any entity, public or private, that provides public roads. In particular, the KHC could be paid in this manner, in place of its toll collection system. Payment to the KHC out of an earmarked fund on the basis of traffic counts would save the considerable costs of toll collection (about 10% of total revenues) and, more importantly, would improve the /1 The year 1981 is used as it is the latest for which road expenditure figures are available. IJse of 1983 data would not affect the proposal. - 67 - utilizatzion of the road system by removing the financial penalty for using high-quality, uncongested roads. Allocation of a proportion of highway revenues by a predetermined formula would also ease the work of transport planners and enable them to devote more efforts to non-routine problems. Such a road unified budget allocation system ought to be studied in the proposed road user charges study (para. 5.15). 5.18 Fuel tax revenues increase with vehicle weight and with distance traveled, and can reasonably be used to levy a payment for the cost of maintaining and running the road system, in the same way that the charge for each unit of electricity used by a household is imposed to reflect the cost of prov-iding additional units of electricity. The main disadvantages of fuel taxes as a means of paying for roads are that they are generally too low to reflect the costs imposed under conditions of severe congestion (which can exceed 300 won per vehicle-km), and that, if applied equally on a per liter basis to all fuels, they undercharge vehicles using diesel fuel, compare(d to those using gasoline, because of the better mileage per liter of diesel. The former disadvantage can be partly overcome by having higher fuel taxes, and vehicle fees, in the Seoul area. The latter could only be overcome by taxing diesel fuel used for road travel at a higher rate than gasoline, but in Korea the situation is now perverse, with diesel fuel being taxed at a much lower rate than gasoline. 5.19 If an earmarked road fund were set up in Korea, it could also receive revenues from annual taxes including a new axle-load tax, on vehicles that impose particularly high costs on the road network, for example, trucks with heavy axle loads. As such vehicles tend to be heavily utilized, annual taxes are not inappropriate to recover from their owners the extra costs they impose on the road system. They would correspond to the periodic 'standing charges' or 'rentals' levied for the use of telephone, electricity and water services and could be distributed in proportion to the incidence of heavy vehicle use over the highway network. 5.20 On transport and environmental grounds, there would seem to be a strong case for improving Korea's road network, as many of its segments are inadequate. Many rural roads have exceedingly poor surfaces, and others are heavily overcrowded. Facilities for pedestrians and cyclists do not exist on many main roads. There are good reasons for improving the road network as soon as possible, to prepare for the higher levels of motorization that are bound to come. 5.21 The Government and the Bank have agreed that the pump price of automotive diesel fuel should be raised to a level two-thirds that of gasoline by 1986. Clearly a number of price adjustments could contribute to this result, e.g. some reduction in the gasoline tax has already occurred, some increase in the diesel tax has also occurred, and some increase in the ex-refinery price of diesel seems likely in the future. Many well- established public and private interests have a stake in how the agreed result is to be achieved. Apart from wanting to see greater recognition of - 68 - user-costs in diesel pricing, the Bank has no strong ideas on what solution would be best. It does hope, however, that the Government retains its ad valorem approach to fuel taxation (define to include user-charges), since this system permits easy, automatic adjustments in tax yields in response to changes in the absolute cost elements in the pump price (mainly the ex-refinery price and distribution margins). C. Other Transport Modes Railways 5.22 Economic regulations do not constrain the railways in their internal operations. They can carry any commodity and in any quantity. They are however required by Government to comply with tariffs set by the Economic Planning Board, and to keep open some branch lines that they would rather close. They are also reported to be pressured to invest more in expanding high-speed passenger services than they believe to be justified. Government regulations, with the exception noted below, do not seem to inhibit the operations of the railways: they do however force them to provide services that are not commercially justified. 5.23 The main economic regulations affecting the railways are the con- straints imposed by Government on road carriers to enter the railway yards. This privilege is confined to one firm - Korea Express Company - for general traffic, and to four firms for container traffic. All other carriers have to transship their goods to the railways through one of the five designated firms. 5.24 Railway tariffs have to be approved by Government. Freight tariffs are kept low, but are high enough to cover the variable costs. As the railways have spare capacity, and as trucks are not required to pay for the road infrastructure (except on the toll expressway) the freight tariffs may be considered reasonable (Table 3.20). However, the spare capacity that justified low tariffs also indicates that some of the proposed investment to expand capacity may be premature. As regards passenger tariffs, the authorities require the railways to charge low rates for the ordinary trains, too low even to cover variable costs. The railways are allowed to charge higher fares for their express services, the costs of which are lower and, as a result, these services cover all costs and earn profits (Table 3.21). 5.25 Mention may also be made of the charges to "commuters" on the Seoul urban railways. Travelers who buy monthly season tickets get their fares commuted to the extent of 30% (hence the name "commuters") and, if they are students, the fares are commuted by 50%. While these concessions are understandable on political grounds, they do not make economic sense: most commuters travel in the peak periods and therefore impose extra costs on the system. If the fares were determined by criteria of efficiency, the concessions would be offered not to peak users, but to off-peak users (Table 3.22). - 69 - 5.26 It is recommended (a) that the railway terminals be opened to all shippers and commercial transport firms wishing to deliver goods to, or collect goods from, the railways rather that the few firms now so authorized; (b) that the railways should be compensated for operating in a non-commercial manner in compliance with governmental instruction; (c) that the railways should be allowed to raise passenger fares on the "ordinary trains" or (preferably) to close down poorly supported services where buses are avail- able or could be made available; and (d) that the commuters' tariffs be raised in gradual stages, so as to bring them at least to the level of the daily tariffs, and that concessions in the prices of tickets be confined to off-peak services, subject to variable costs being covered at all times. Coastal Shipping and Ports 5.27 Despite the length of journeys by sea, coastal shipping carries a substantial proportion of Korea's domestic freight transport - 26.8% of total ton/km in 1980. The main items carried are coal, cement, steel and petroleum products. Passenger transport is, however, negligible - less than 1/2% of total passenger-km. 5.28 Coastal shipping regulations are stricter than for land transport. It is generally illegal to carry goods even at less than the charges speci- fied by the Ministry of Transport. The reason given for this is the need to protec:t small operators from the bankruptcy that could result from price cutting. Entry into the industry is also strictly controlled. Licensing regulations are administered by the Korea Maritime and Port Administration, working closely with the Korea Shipping Association, which represents the coastal shippers. 5.29 With regard to port tariffs, the charges at Busan and Incheon cover maintenance and operating costs but not capital costs. The other ports do not even cover maintenance and operating costs. Statistics on port revenues and costs do not seem to be available. In any event, as coastal shipping comprises only a small fraction of total shipping, the port charges it would pay would have a negligible effect on port finances. 5.30 It is government policy to subsidize coastal shipping by: (a) tax concessions; (b) low-interest loans; and (c) coverage of deficits incurred on services to "remote islands." Ocean shipping is also subsidized, but in a different way. The existence of different subsidies for different classes of shipping means that (for example) a ship financed for coastal shipping cannot easily be used for ocean shipping, e.g., for trade with Japan. - 70 - 5.31 A Shipping Association spokesman reported that there was severe over-capacity in coastal shipping and that rates quoted were often 40% below those permitted. 5.32 It is difficult for outsiders to judge the extent to which the industry is encouraged or discouraged by the present combination of subsidies and regulations. The rules that protect the operators of small vessels from competition are also likely to protect the inefficient and the outmoded. The regulation that allows a small vessel (200-ton capacity) to charge more than a large one (800 tons) for similar loads, is likely to inhibit the introduction of larger, more cost-effective vehicles. If there is indeed over-capacity in the industry (and the mission received evidence that some shipowners were adding capacity), the existing regulations are more likely to serve the interests of the shipowners than the public. 5.33 It is suggested that (a) cost-based port tariffs should be applied to cover at least maintenance and operating costs for all ports as well as capital costs for Busan and Incheon, whch both could be established as autonomous ports; (b) the rule prohibiting the carriage of goods at less than the MOT rates should be abolished and, in regulating coastal shipping, the authorities should concentrate on safety factors; (c) the rules govern- ing entry and maximum charges in costal shipping should be progressively relaxed; and (d) analytical cost accounting should be introduced, and infor- mation on expenditures and revenues relating to each port should be routinely published. Air Transport 5.34 Korean Air Lines (KAL) is the only domestic operator in Korea, though it does not appear to have an official monopoly. In view of the small size of the country, air transport accounts for only 0.6% of total passenger- km, and a negligible percentage of domestic freight transport. KAL lost money on its domestic operations in 1980 and 1981, but there were substantial variations in the profitability of different services. Total costs were covered on the Seoul-Busan and Seoul-Cheju routes but losses were incurred on the other sections. KAL pays for landing and air traffic control at the same rate as the other (international) airlines operating in Korea. 5.35 Fares are fixed by Government and are the same for all routes at all times. Planes tend to be full for holiday and weekend travel and less full on weekdays, but KAL is not allowed to vary its fares to take account of differences in demand for air travel. The fares are kept low by government order ("to keep down inflation") and also by competition from other modes. Permission from the Civil Aviation Bureau is needed to start a new route, but the necessary permits are always given when requested by KAL. - 71 - 5.36 The Seoul-Busan route, a distance of about 400 km (slightly longer than Washington, D.C. - New York) is a significant one, as it is also served by road and by rail. However, as in the case of Washington New York, only air travel enables residents of one city to transact business in the other and return to their homes on the same day. It is therefore to be expected that, as living standards rise, the amount of air travel between Seoul and Busan will increase, both absolutely and in relation to other modes. This factor has an important bearing on the proposed new high-speed Seoul-Busan rail link. The Seoul-Cheju traffic is mainly touristic. It, also, may be expected to increase as incomes rise. 5.37 It is suggested that to better use its capacity, KAL should be encouraged to vary fares to take account of variations in demand, both by route and by day-of-week, season, etc. It is also suggested that the Civil Aviation authorities publish financial accounts relating to airports and air traffic control, to ensure that the full costs of air transport infrastruc- ture are made known and, in general, charged to the users. - 72 - 6. TRANSPORT ENERGY ISSUES A. Overview of Current Transport Energy Consumption and Related Policies Energy Intensity in the Economy and in Transport 6.01 The steep rise in energy prices during the 'seventies' had led the Korean Government, like most others, to give much more attention to energy problems than it had done in the years when energy was cheap. Because of its climate and industrial structure Korea is relatively energy-intensive, and the dramatic growth in the economy during the past two decades has required equally dramatic increases in energy use, especially in the use of petroleum. Between 1966 and 1979 GNP growth averaged 9.8% p.a., total energy use grew at 8.2% p.a., while petroleum use grew 20.8% p.a. Since all petroleum and gas must be imported, the growth of the import bill has been huge. in 1973, crude oil imports cost Korea US$0.3 billion, or 2.3% of GNP. By 1980 the oil bill had risen to US$6.2 billion (a twenty-fold increase) and accounted for 10.8% of GNP. As Table 6.1 shows, this was higher than in any of the three comparator countries. By 1981 oil imports were costing about one-third of total exports. While the 1983 declines in world oil prices will mean big savings, no one knows how long these declines will last. It seems extremely unlikely that oil will ever again become cheap enough so that Governments - or private operators - can relax their efforts to economize on its use. Table 6.1 (T): PETROLEUM IIPORT BILL FOR SELECTED COUNTRIES Crude oil imports (billion US$) Petroleum imports as % GNP 1973 1975 1978 1980 1973 1975 1978 1980 Korea /a 0.3 1.5 2.3 6.2 2.3 6.8 5.1 10.8 Taiwan /b 0.1 0.6 1.6 4.1 1.0 4.3 6.6 10.4 Japan 6.7 19.6 23.4 52.7 1.6 4.2 2.7 5.6 US /a 8.3 26.6 42.9 80.2 0.6 1.7 2.0 3.1 /a Crude oil and petroleum products. /b Crude oil only. Source: Data Resources, Inc. - 73 - 6.02 The proportion of energy used in the transport sector is consid- erably smaller in Korea than in most other countries of similar income levels. The entire transport sector uses only 18-20% of national petroleum consumption, a figure well below that for most other comparable countries (by contrast, the industrial and electricity sectors consume 38.5% and 27.9%). The main reason for the sector's low consumption is the policy of controlling the growth of private passenger cars, which today account for only 3.3% of total petroleum consumption. This situation is not expected to last, however. Projections of final energy and petroleum demand for 1982-86 indicate that transport use is expected to grow more rapidly than any other sector. Part of the reason for this outlook is that opportunities for substituting nonoil energy sources are far fewer in transport than in other sectors. Another reason is that the Government has so far paid much less attention to energy conservation in transport than in industry, power gener- ation, and buildings. More important than either of these reasons, however, is the prospect of a very large increase in the number of automotive vehicles, particularly passenger cars, which today number about 305,000 compared to 263,000 trucks, 66,000 buses, and 410,000 motorcycles (Table 2.5). The continuing, and probably accelerating, growth of the vehicle fleet means that the sector's energy consumption is bound to increase rapidly. This prospect underlines the importance of energy conservation for the sector. Saving energy is not an absolute goal, however. Governments and private owners should not reduce energy consumption below the point where the benefits exceed the costs. This point can be found only by careful and continuing study. 6.03 It is important to understand the relative importance of energy in the total costs of transport, particularly road transport, which accounts for two-thirds of total transport energy use. Broadly speaking, fuel accounts for 15-30% of the total economic costs of operating an automotive vehicle, with the lower figure being more representative for most types of commercial vehicles. By "economic costs" are meant the costs (including depreciation) of buying the resources needed to provide transport services. This means excluding all tax costs whether on fuel, on vehicle purchase, or annual licensing fees. When costs are taken net of taxes, one finds that fuel costs are of the same general order-of-magnitude as labor and maintenance (all around 20-25% of total resource costs). These are not, of course, the costs experienced by vehicle owners and shippers, for whom taxes are a very important financial cost, often so important that they influence the demand for vehicles, for sizes and types of engines, for types and amounts of fuel, and the choice of mode for passenger or goods transport. The private interest which vehicle owners have in minimizing their transport costs are different from - but re-inforce - the interest Governments have in minimizing the demand which the transport sector puts on a country's fuel requirements. The latter is overwhelmingly a balance of payments concern, although minimizing energy use in transport also influences the number of vehicles needed to provide transport services in the economy and the amount of environmental problems created by fuel emissions and vehicle congestion. - 74 - Neither vehicle owners nor the Government should approach the problem of energy use by assuming that they should aim at achieving maximum energy efficiency (defined as minimizing fuel consumption per passenger-km or per ton-km of freight. That would be a purely technical or engineering approach and could lead to heavy investments in infrastructure and vehicle technology that would cost much more than the value of the energy saved. The proper objective must be economic rather than technical and must aim at combining all resources in such proportions that the total cost of providing transport services is held to a minimum. The world's present interest in "energy efficiency" is directed to re-examining how total costs can be reduced after one of its major components, energy, has suddenly become much more expensive. It should not be directed at "minimizing energy use." Economizing Energy in the Transport Sector /1 6.04 The response of the road transport sector to higher energy prices will depend on the scope which exists for responding; this is limited by what is technically feasible. It depends further on the incentives for using this scope and this is a matter of government policy. Road users, acting on their own, can and will vary the method of operating their vehicles but there are other potential sources of economy which require supplementary action by government, local transport or highway authority, whether by way of changing regulations, altering taxes and duties, controlling congestion, or investing in infrastructure. 6.05 Economical driving and operating methods. Experiments in the USA and Europe show that energy saving of the order of 20% should be attainable by appropriate changes in driving and operating methods. The saving is ob- tained by keeping engine speed below 2,000 revolutions per minute, main- taining a constant highway speed around 55 miles per hour, minimizing gear shifts, and turning off engines whenever possible. It requires further that engines are maintained through regular air filter changes, competent and timely tuning, and the use of high quality lubricants. 6.06 Reducing traffic congestion. Congestion affects fuel consumption by forcing down the speed of traffic flow and by requiring frequent changes in speed and associated gear changes. Recent research suggests that conges- tion on freeways in developed countries is capable of raising fuel consump- tion by as much as 50%. The control of congestion has been pursued with suc- cess by a variety of policies: simple lane markings on roads, reserved lanes for buses, zoning combined with pricing, the introduction of parking lots, parking meters, improved traffic light systems, and other measures of traffic management. In Manila, urban traffic speeds rose from 19 to 23 miles per hour in consequence of a traffic management program. /1 This section is taken, with few changes, from the World Bank publication, Energy and Transport in Developing Countries: Towards Achieving Greater Energy Efficiency (February 22, 1983, 89 pp.) - 75 - 6.07 Intensifying fleet use. Savings of energy of the order of 5% or more appear possible through measures which raise the load factor of trucks. This tends to occur, for instance, when common carrier services, which have been hampered by the taxation and licensing system of many developing coun- tries, are enabled to take over more traffic from own-account transport. The construction of terminals and the extension of telecommunications can also contribute by permitting improved scheduling. Some of these measures will induce not merely increase in average vehicle loads, but also increases in the size and weights of trucks and buses. Energy is saved by performing a given volume of haulage by larger vehicles because the fuel requirement rises proportionally less than weight. 6.08 Energy-efficient vehicles. Cars of the latest available technology are some 30% more energy-efficient than the vehicles they replace in devel- oped countries. The difference in energy efficiency in trucks is of the order of 10-20% and more progress is expected. The new generation of vehi- cles saves energy by reductions in weight, better aerodynamics and more efficient engines. The average age of the fleets in most developing countries is greater than in developed countries. The scope for saving energy through fleet renewal is therefore greater. 6.09 Infrastructure improvement. No quantitatively strong relationship has been established between variations in road roughness and fuel consump- tion. However, the rehabilitation and paving of roads and corrections of road alignment and bends permit driving closer to least-energy speed. 6.10 LPG as an Alternative Automotive Fuel. Liquid Petroleum Gas (LPG) can substitute for both gasoline and diesel fuels with relatively modest costs for vehicle adaptation. Although the present tax structure makes it much cheaper for owners, the fuel is only marginally cheaper for the economy than gasoline and diesel; it is, however, considerably less polluting. The handling and distribution of LPG presently involves more inconvenience than the other fuels, which have well-developed distribution systems; consequently in Korea, LPG use has been confined to taxi fleets that can be fueled at a few central locations. The extension of LPG use to buses deserves investigation on both economic and environmental grounds (a similar study is already being conducted in Bangkok. Significantly, perhaps, Japanese urban buses do not use LPG). 6.11 In conclusion, an improvement of energy efficiency in road trans- port of the order of 30% over the next five years lies not merely in the range of what is technically feasible but should also be economically feasi- ble in many developing countries, including Korea. The chief sources of improvement will be the use of more energy-efficient vehicles, and adapta- tions in the methods of driving, maintaining and managing vehicles. 6.12 There are no official statistics on energy consumption by transport mode. However, using reported modal activity levels, estimated vehicle utilization rates, and fuel sales, an approximate breakdown of modal consumption may be obtained. The results are summarized in Table - 76 - 6.2(T) below. Despite its lack of precision, such a breakdown shows that road transport, as noted, accounts for about two-thirds of all energy consumption in the transport sector. Trucks account for about 29%, buses for 20%, and private cars and taxis for about 18%. The remaining third of sector use is dominated by maritime transport (19%), followed by air (8%) and rail (5%). These proportions are likely to change substantially during the next decade, with road transport - already much the largest component expanding considerably faster than any of the others. For this reason, efforts to increase transport energy efficiency - or, more accurately, to minimize transport costs - should concentrate on road transport. Table 6.2(T): ESTIMATED ENERGY DEMAND BY MODE /a (% of total sector use - 1980) Road Maritime 18.8 Automobiles 18.6 67.3 Coastal 2.1 Buses 19.5 Foreign trade 14.3 Trucks 29.2 Bunkering 2.4 Railway Air Freight 2.0 5.2 Domestic 6.4 8.4 Passenger 3.2 Foreign 2.0 Subway 0.3 Total 100.0% /a For more detail, see Table 1.24 in Annex. 6.13 Although purely technical measures of energy efficiency are incon- clusive until converted into economic costs, they provide an indispensable starting-point for identifying problem-areas that deserve attention. Energy efficiencies can be estimated on a macro level for each transport mode by constructing ratios of fuel consumption to modal activity. When compared with other countries, these values suggest that Korean transport, especially rail and coastal shipping, is relatively energy efficient (Table 1.25). However, because cross-country comparisons do not control such variables as load factors or the quality of service, and because some estimates are based on macro data while others are based on micro or engineering analyses, they should be interpreted cautiously. For example, on a passenger-km basis, Korean automobiles and buses appear relatively energy efficient, but not on a vehicle-km basis. The passenger-efficiency stems primarily from compara- tively high load factors. Technically, the fuel performance of Korean vehicles is less efficient than most other vehicles produced by major world manufacturers. From the viewpoint of fuel economy, vehicle-km is a far better test. - 77 - Energy Planning and Management Institutions 6.14 The Korean Government was quick to respond to the "energy crisis" of the 'seventies. It established, in December 1977, a Ministry of Energy and Resources (MOER). It created an energy research institute, the Korea Institu.te for Energy and Resources. It established the Korea Energy Manage- ment Corporation (KEMCO), which has developed effective energy-conservation programs in the industrial and residential and commercial building sectors. A huge effort has been made to convert the electric power industry from its past high dependence on oil to nuclear and coal fuels. The present structure of government agencies with major responsibilities in energy is shown in the diagram next page. 6.15 The MOER is of course the key agency for dealing with the Govern- ment's energy problems (Chart 7). It relies on its affiliated research institutes to compile data, identify and develop energy strategies, and conduct technical analyses as inputs to the Ministry's planning and decision-making functions. The resulting plan and programs are then imple- mented through MOER's affiliated executing agencies. Most of these affil- iates focus on the energy supply side, as does most of MOER's recently released Five Year Plan for the Energy and Resources Sector. The electric power industry occupies a particularly prominent role in the Plan and in MOER's activities to date. The Plan's principal demand-side component is conservation, focused heavily on industry and, less so, on commercial and residential buildings. 6.16 The amount of attention so far given to conservation in transport has been quite small. The Plan mentions only three actions that might be taken: (a) improvements to electric railway substations to reduce losses; (b) construction of 36 freight terminals; and (c) a study to establish the optimum travel distance for each transport mode. The first of these is not likely to achieve significant energy savings./l While the second may save some energy, much of that depends on the layout and operation of the proposed freight terminals and how much current practices can be improved. Likewise, the third item has an unknown energy savings potential. The Plan also recommends the development of automobiles with greater fuel economy (i.e., 17 km/l as compared with the present 12 km/l). This is likely to result in substantial fuel savings. However, MOER appears to be more of an interested observer than an active force in this /1 Because electricity consumption by the railways represents less than 6% of total sectoral consumption, even major efficiency improvements in this area would have a negligible impact on sectoral consumption. -78 - KOREA TRANSPORT SECTOR Internal Linkages Among Government Energy Organizations R & O DECISION-MAKING IMPLEMENTING FUNCTIONS FUNCTIONS FUNCTIONS r- - ---------- - -------------- KI ER KEMCO MOER KAIST K KEPCO MOST KAERI KMPC - : Strong formal linkages …___ No or weak iinkages Source: Based on Ho Tak Kim and Atul Wad. Organizational Issues in Energy Policy and Management. Proceedings of the South-Eat Asian Workshop on Energy Policy and Management, October 27- November 1, 1980, World Bank. Updated to reflect recent reorganizations. Acronyms: MOER Ministry of Energy and Resources MOST Ministry of Science and Technology KIER Korea Institute of Energy and Resources KAERI Korea Advanced Energy Research Institute KAIST Korea Advanced Institute of Science and Technology KEMCO Korea Energy Management Corporation PEDCO Petroleum Development Corporation KEPCO Korea Electric Power Company KMPC Korea Mining Promotion Corporation World Bank-24396 March 1982 - 79 - program, for which MCI and MOST are the responsible ministries. This may be why automobile fuel economy improvement is not listed as a separate element in the conservation program. 6.17 In addition to the 5-year program, MOER also develops an annual conservation program. For 1982 the principal element in this program was a rationalization of petroleum product distribution. Korea has five refin- eries, owned by different oil companies, each maintaining their own nation- wide terminal and distribution system. By coordinating their distribution systems MOER hopes to reduce transport movement /1 and save about 250 million liters per year or over 3% of the energy consumed by the transport sector. B. Major Issues and Energy Inefficiencies 6.18 The major energy-related problems in the transport sector involve the following: the dispersion of institutional responsibility for energy planning and management; the high motorization trend projected for the coming decade; inefficiencies in road transport operations and to a lesser extent in rail and maritime services; and the need to rationalize fuel pricing. These issues are discussed below. Institutional Dispersion of Responsibilities 6.19 There are three major institutional problems which limit the effec- tiveness of Korean energy planning and management in general and specifically in relation to the transport sector: MOER's loose organizational structure, the dispersion of responsibility among six different ministries, and the weak demand-side orientation. 6.20 MOER. MOER's research and development, decision-making and executing functions are divided among itself and its affiliated research and implementing agencies. Prior to the January 1982 reorganization, MOER had strong organizational linkages with its affiliates, although they had weak or nonexistent linkages with one another./2 While strengthening MOER's control, it made the research institutes increasingly theoretical (by divorcing them from implementation issues) and the executing agencies less aware of current research developments. Counteracting this increased specialization, the reorganization has weakened MOER's linkage with KIER and KAIST and increased MOST's role in energy planning and management. While it is too soon to assess the impact, this new structure obviously requires close coordination between MOER and MOST. At this time, it appears that MOER and MOST are not closely linked. /1 The refinery at Incheon, for example, will deliver products to all terminals in the Seoul area, including those belonging to the oil companies whose refineries are located in the south. /1 There is no evidence that the linkages between KIER and KEMCO, the agencies with primary responsibility for energy conservation, have been strengthened by the reorganization. - 80 - 6.21 The number of separate agencies within MOER also ensures a certain degree of redundancy. This is particularly disturbing as the field is relatively new and thus there is a limited supply of skilled manpower. When this manpower is distributed across a large bureaucratic structure, expertise tends to become confined to the upper levels with little depth at the working level. The Government recognizes the potential for inefficiency and duplication inherent in the proliferation of special-purpose research institutes, and has adopted a policy of consolidating them. KAIST, for example, was formed by merging the Korea Institute of Science and Technology and the Korea Advanced Institute of Science. 6.22 Inter-ministerial Responsibilities. At least six different ministries (viz., MOT, MOC, MOHA, MCI, MOST and MOER) are involved in improving the energy efficiency of the transport sector. MOER is responsible for defining general policies and strategies, MOST is responsible for the development of advanced technologies for automotive and other applications, and each individual ministry is responsible for actions within its sphere of authority. While there is a coordinating committee composed of the various ministers, major industries and energy producers, it is not clear how active a role the committee plays. 6.23 MOER requested the other ministries to propose their own conservation programs for inclusion in the Five-Year Plan. Although MOT's proposal was extremely limited, MOER had neither the capability nor the authority to develop an alternative program either internally or through its affiliated agencies. Further, as MOER's implementation authority extends only to its executing agencies, it must rely on the cooperation and support of other ministries to implement conservation actions. The ministerial-level coordinating committee does give energy management national prominence, but without working level linkages the conservation proposals that are implemented tend to be done for some other reason which reflects the primary institutional responsibility of the proposing ministry. 6.24 Supply-Side Orientation. MOER's original mandate was largely supply-side activities that were given priority in reducing Korea's energy dependence; MOER then broadened its interest to the demand side, including energy conservation. However, organizational constraints have limited MOER's ability to implement demand-side policies, and the nature of the issues involved are outside of MOER's knowledge. This applies especially to the transport sector where many of the basic analytical techniques and conservation strategies developed for other demand sectors are not adaptable. Thus, much of MOER's expertise in energy conservation is of limited value in developing a transport energy conservation program. Likewise, MOT's experience in transport analysis does not extend to energy aspects, and it has little knowledge of how to improve energy efficiency in the sector. 6.25 This lack of involvement on the demand-side policies applies mainly to the technical know-how of energy conservation. However, pricing, - 81 - which is a major policy tool for encouraging conservation has also not been considered to the extent desirable, particularly for heavy vehicles. The role of MOF and EPB may have overshadowed MOER, but it is not too late to move more agressively in this direction. Some very encouraging steps were taken under the Bank's Structural Adjustment Loans to raise diesel prices pending more in-depth studies (para. 6.52). In this line, a very commendable joint effort under the auspices of EPB is the study issued in December 1982 by KIER on The Improvement of Energy Price Structure in Korea, which provides an excellent backdrop for developing a pricing strategy oriented to conservation in the transport sector. Some suggestions are made on this in paras. 6.49 to 6.53. Road Vehicle Fuel Inefficiencies 6.26 Automobiles. The Korean motorization rate is far below that in most other countries at comparable levels of income and development (Table 2.4); due to high fees to acquire and operate vehicles and high gasoline prices. This partly reflects the high cost of buying and operating private cars. Nevertheless, as Korean incomes rise the motorization rate is likely to increase dramatically over the next decade (para. 2.34). EPB forecasts indicate that domestic new car sales should grow from 55,000 in 1981 to 355,000 by 1988, an increase of nearly 550%. This increase is a cause for concern, not only as it may result in a substantial increase in energy consumption, but also because it would divert personal savings from invest- ment into vehicle ownership and will put much higher traffic and parking pressure on the streets of high-density urban areas. Energy consumption will depend on average utilization, now approximately 100 km/day (30,000 km/year), which is about double the world average for private cars. As the high fixed cost of owning a private car is reduced, more middle-income persons may be expected to purchase cars. Government planners expect many of these vehicles to sit idle during the day, thereby reducing average utilization. If private car utilization drops to the world average, total motor vehicle energy consumption could be about 1.1 million TOE (tons of oil equivalent) in 1986 (about 23% above 1980 estimates) /1; if utilization remains at current levels, consumption could be 50% higher (1.7 million TOE). The difference, over 570,000 tons, could cost Korea US$120-130 million p.a. at current prices. 6.27 In order to compete on the world market, Korean automobiles will have to become more fuel efficient. The two most popular models, the Gemini /1 Based on EPB total registrations of about 1.2 million vehicles, assuming 560,000 trucks and buses and 600,000 cars, a 30% improvement in fuel efficiency and a utilization rate of 15,000 km/year for cars, and 120,000 km/year for taxis. Without fuel economy improvement, consumption would be 2.5 million tons TOE. - 82 - and the Pony, now average about 12 km/1 (28 mpg) in intercity operation./1 By 1984/85, both Hyundai and Saehan plan to produce cars averaging 17 km/i (40 mpg), i.e., an improvement of 30%. Hyundai has entered into an agreement with Mitsubishi of Japan, to produce this new model. Saehan, its main partner GM, and the Korean Government are also discussing the possibility of assembling the "world car" in Korea. By 1985, this car may have a fuel economy of nearly 21 km/i (50 mpg). It may be argued that the Korean car produced by 1984 could be obsolete when compared with other cars then available on the world market. However, this new vehicle will represent a substantial improvement over currently available vehicles and, even with a more than doubling of the automobile fleet, the growth in demand for gasoline could be negligible compared to that for diesel and heavy fuel. 6.28 Trucks and Buses. At present only one group, Daewoo Heavy Industries, Ltd., produces large 100-285 hp diesel engines under a licensing agreement with MAN of West Germany. These engines are durable and their energy efficiency is acceptable. Daewoo claims that the fuel consumption rate of the 285 hp engines is 1.58 grams per hp per hour, only 5% below the most fuel-efficient diesel engine of that size currently available on the world market (viz., 1.50 grams/hp-hour). Both US and European manufacturers expect to achieve a 10% improvement in the energy efficiency of their large diesel engines by 1984/85./2 If no improvements are made to the locally produced engine, it will be 10-15% less energy efficient than similar engines then available on the world market. 6.29 The Daewoo group maintains a research and development center, but because the group has a monopoly on the large diesel market, it has little incentive to improve its product. Hyundai and Saehan, the two companies producing heavy trucks and buses, are required to use the Daewoo engine. Both they and Daewoo are protected from outside competition by regulations which restrict imports to only those types of vehicles not produced locally. Thus, if the Government does not provide some kind of outside motivation (through regulation, agreement or by easing the restrictions on imports), the trucks and buses produced in 1985 will be little different from those on the road today. /1 It is worth noting that improvements in vehicle fuel consumption that are occurring throughout the world today are considerably stronger for intercity or open-road driving than for city driving. Since more mileage is driven in and around cities than under open-road conditions, Korean vehicle technology may not carry as large a penalty as the open-road figures may suggest. /2 This applies only to the engine. Additional efficiency improvements are likely to be made to the drivetrain, vehicle aerodynamics, tires, etc. - 83 - Inefficiencies in Road Transport 6.30 The large and growing fleet of private or own account trucks and the increased use of small trucks are also of concern from an energy stand- point (para. 2.36). Between 1975 and 1980 the private fleet grew at 32% p.a. while the commercial fleet grew by only 6%. The fleet of less than 2 T trucks more than doubled over the 1976-80 period while its utilization rose dramatically (by a factor of 10 based on expressway traffic counts). Small trucks are increasingly being used for long distance transport./1 Both trends have obvious energy implications. A fully loaded small truck with a 1.5 T payload consumes about twice the energy per ton-km of a fully loaded 12 T truck. Likewise, since private trucks are permitted to carry only their own goods, their empty load ratio tends to be much higher than that for commercial trucks, thereby increasing their energy consumption per net ton-km by a comparable margin. 6.31 Trucking companies are keen to reduce operating expenses, but are generally unaware of the existence of fuel-conserving devices which, with the exceptiLon of radial tires,/2 are not marketed in Korea (Annex 4 provides a summary of these devices and other techniques). Even turbochargers, now standard equipment on most new trucks sold in developed countries, are rare in Korea. Individual trucking companies, the trucking associations, KEMCO and MOER all want to know more on how to improve truck fuel efficiency and have requested further assistance. 6.32 Trucking companies also tend to be unaware of the energy implica- tions of their current operating procedures. According to several studies carried out during the past decade, commercial trucks seem to be poorly utilized. Their average load factor was only about 50% in 1975 and it appears to have dropped since the 1980 recession. For small trucks less than 2 T the average load factor is only 30%. 6.33 MOT, in association with the local trucking associations, is planning to develop freight terminals in the largest cities to improve vehicle utilization and save energy, among other objectives. However, larger savings may be possible by reducing the size of the private fleet, limiting the use of small trucks for long hauls, and increasing the average load factor of large trucks. The potential for such improvements should be evaluated in the context of a thorough analysis of the existing situation, its underlying causes and energy implications. MOT should be responsible for such a study. /1 Pickups are also used for passenger travel. The taxes on small trucks, being less than on sedans, give an incentive to purchase these vehicles in lieu of passenger cars. /2 Since radials provide additional advantages (viz., longer tread life, resistance to puncture, and the ability to be recapped more often) their use may be unrelated to improving fuel economy. - 84 - 6.34 In the US, Europe and Japan, increasing attention is being directed to the driver's role in energy efficiency. Fuel consumption can vary by as much as 15% between comparably loaded and equipped vehicles traveling over the same route under the same conditions, solely as a result of driving practices. Considerable work has been done in the area of identifying fuel- efficient driving techniques and developing training programs to teach them. MOER, with the assistance of MOT, KEMCO and the trucking associations, should review available material and develop an information and training program using specialized foreign consultants. 6.35 Several trucking companies interviewed during the field visit indicated that they keep a log of fuel use by trip for each vehicle in their fleet. Apparently this information is used primarily to monitor expenses and perhaps to deter pilferage from fuel tanks and siphoning from individual trucks. These firms should be encouraged to use these data for scheduling vehicle maintenance and monitoring driver performance as part of a fuel economy improvement program. Modal Shares and Other Transport Modes 6.36 Modal Shares. The relative economic cost of a transport mode should be computed on a door-to-door basis, including pickup and delivery. For each transport demand there is a combination of modes which minimizes total cost. However, because the modal choice of travelers and shippers is generally based on such factors as travel time and cost, safety and security and schedule reliability, the mode with the lowest cost to the economy may not be the most attractive alternative to shippers. While the financial attractiveness of economically more efficient modes can be increased by service improvements, a policy developing terminal and transfer points to encourage inter-modal complementarity is at least as effective. It is this approach that the Bank intends to support further. 6.37 On the passenger side, the relatively high efficiency of buses which satisfy over 60% of travel demand indicates that the present modal split is quite good. On the freight side, MOT statistics on traffic volume by commodity type indicate that the existing modal split is reasonably good for most of the reported commodities. The exceptions are containers and steel products where rail carries only 7% and 4% of the traffic, respectively. 6.38 The low level of containerized traffic going by rail is caused by many factors, the most significant being that: (a) only four trucking companies are authorized to handle containers in the railway yards where they have been assigned storage space; (b) KNR deals with neither the customers nor the shipping companies - it only provides the flat cars; and (c) only 30 trucking companies are licenced for inland container transport. These companies have to store inbound containers in special container yards outside Busan port while awaiting customs clearance. When they want to utilize the railway, the containers must be trucked in bond to the railway terminal and trucked again at the destination terminal to the final consignee adding excessive handling costs (Table 3.20). - 85 - 6.39 There are many ways to improve rail container service. Containers could be moved directly from the port to the railway terminal, then trans- ported to a container yard in the Seoul area where they could await customs clearance. Alternatively, the railway could be permitted to act as a trans- port company, dealing directly with its customers and subcontracting to trucking companies for pickup and delivery. In any case, MOT should permit all trucking companies to use the railway facilities. Assuming that one third of all containers move between Seoul and Busan (about 150,000 per year) and that the rail share could be increased to 50%, about 11,000 TOE of diesel oil (US$2-3 million) could be saved each year. 6.40 Several factors also discourage rail shipment of steel. Customers usually must deal with the Korea Express Company, the only trucking company authorized to load or unload freight at the railway stations. Thus, a steel shipment on any other carrier cannot be moved by rail unless the customer specifically indicates a preference for rail. For its part, Korea Express chooses the mode of transport that suits them best. To increase the attrac- tiveness of rail shipment, all trucking companies should be permitted to deal with the railway, and the railway should be permitted to either own its own trucks or subcontract with trucking companies of its choice for pickup and delivery. 6.41 Rail and water transport are fairly energy efficient, but there is scope for improvement. The typical locomotive is a 3,000 hp unit, quite powerful by world standards and possibly underutilized given the average 10-12 car Korean trains. As with trucks and buses, a prime area for efficiency improvement is in operating procedures, particularly train dynamics./I The coastal shipping fleet is more diverse, with vessel sizes ranging from less than 500 dwt to over 10,000 dwt. Here, potential efficiency improvements (described in detail in Annex 4) include various self-polishing hull coatings to retard the growth of marine organisms, a shift from steam turbines to slow- and medium-speed diesel engines (already the norm in the Korean merchant fleet), and speed reduction. 6.42 As with road transport, programs to improve rail and maritime fuel efficiency require the involvement and cooperation of equipment operators and maintenance personnel. While studies have not quantified the "human factors," US rail and shipping companies and trade associations believe that crew motivation is one of the most promising (and lowest cost) areas for fuel efficiency improvement. MOER (through KEMCO) should work with KMPA, KNR, the trade associations and the individual shipping companies (perhaps with the assistance of foreign consultants) to monitor current practices and develop appropriate conservation programs. Crew motivation and the /1 "Train dynamics" refers to the throttling and braking procedures employed to control the speed of individual locomotives and railcars while the train is in motion. Individual US railroads have reported fuel savings of as much as 13% by maximizing the use of such equipment as dynamic braking and multiple throttle control. - 86 - development of a sense of professionalism should be a prime focus of these programs. Magnitude of Potential Energy Savings 6.43 The magnitude of energy inefficiency and potential savings in the transport sector may be gauged by a few simple calculations. Assuming 1980 activity and consumption levels, current prices and a fairly conservative set of efficiency improvements which could be largely in place by 1985, potential energy savings may be estimated as follows: Table 6.3 (T): MAGNITUDE OF POTENTIAL FUEL SAVINGS IN TRANSPORT Annual savings TOE million Measures /a ('000) US$ Raising average new car fuel economy from 12 km/l to 17 km/l (i.e., 20% efficiency improvement) } 210 45-50 Improving truck and bus fuel economy by 20% } 400 85-90 Reducing the average utilization of private cars to 15,000 km/year /b } 250 50-55 Improving driving practices by 10% 300 65-75 Increasing the rail share of Busan-Seoul container traffic to 50% 11 2.5-3 /a Additional measures which offer significant savings potential but which cannot be quantified at this time include: reducing the use of small trucks for long hauls, increasing truck load factors, increasing the rail share of steel traffic, and improving the technical and operating efficiency of rail and maritime transport. /b Level of savings estimated assumes activity at 1986 level. Reaching this target would involve the promotion of more intensive utilization of cars such as car-pooling, shifting from car to public transport, grouping trip purposes, etc... Source: Bank's estimates. The above savings estimates are independent and therefore additive. It would of course take several years to achieve these objectives. Nevertheless, it is clear that the potential reduction in Korea's oil import bill could more than pay for a concerted conservation program focused on such measures. Even if only about half the estimated savings were achieved (say US$150 mil- lion) this would represent about 3% of the country's present oil import bill. That may not seem a large gain. It is, however, two or three times the total cost of maintaining the Government's overseas establishment; about half the - 87 - cost of the country's current sugar or pulp and paper imports; and only slightLy more than the annual cost of all licensing and royalty fees paid for the use of foreign technology. Thus while the percentage energy savings seem small, the sums themselves are very large. They become very much larger if calculated not on the 1981 vehicle fleet but on the fleet 10 years from now. Then, on what today seem conservative assumptions, Korea is likely to have three times as many trucks, 1.6 times as many buses, and over five times as many cars as it has today. If the 1983 transport sector operates at 1983 standards, the cost to the economy compared with what it might have been with a good conservation program will be very high indeed. C. Recommended Government Programs and Policies 6.44 Achieving an optimum set of transport services is a never-ending process of problem-identification, policy reviews, technical and program studies, and government and private decisions on matters large and small. While the Government has generally moved very effectively to deal with the country's energy problems, it has given less attention to the energy problems of transport than to those of any other major sector. Since a resumption of upward pressure on energy prices is likely in the years ahead, the Government should strengthen its programs for helping the providers of transport services to use no more energy than serves the national interest. The latter means pushing the whole transport system in the direction of least-cost allocations among modes, the adoption of least-cost technology in each mode, making maximum use of the capital equipment in each mode in order to avoid over-investment, and helping transport operators (from companies to drivers) use their equipment in ways that minimize operating costs. There are some things that can best be done by government, others that can best be left to the decisions and behavior of the countless number of agencies, companies, and individuals who provide the nation's transport services. The most important contribution the Government can make is to create a framework of policies, prices, regulations, and information that will lead private decision-makers to use resources in ways that coincide with the national interest. To the extent Government succeeds in creating the right framework, the providers of transport services will make investment and operating decisions that will push the system towards the least-cost solutions. When this is done, energy use will be reduced to the level appropriate to its weight in the sum of resources that make up the total cost of transport. 6.45 The highest priorities for Government attention in the immediate future should go to revising policies and prices that now seem to be most seriously distorted, in the sense that they are keeping operators from moving towards lowest-resource cost solutions. The areas that are now in greatest need of Government attention are (a) a sharper definition of institutional responsibilities, (b) a relaxation of the regulations which now force nearly half of all truck trips to be made without carrying any freight; (c) adjust- ing fuel costs so that they better reflect true costs to the economy; (d) technology assessment as a basis for encouraging adoption of cost-saving devices by transport owners; and (e) public education of owners and operators about opportunities for cost savings. Each of these is discussed below. - 88 - Streamlining Institutional Responsibilities 6.46 In the five years of its existence MOER has developed strong internal capabilities, supplemented by outside researchers and implementing agencies (e.g. KIER and KEMCO). It has built a generally aggressive conser- vation program in the industrial and power generation sectors, and is gaining strength in applying conservation to commercial and residential buildings. Little has so far been done for transport, however. Ministry staff are relatively unfamiliar with this area, and institutional linkages have not yet been developed. 6.47 MOER recognizes the gap between its transportation and industrial conservation programs and is eager to narrow it, prompted by recent govern- ment directives setting a 1982 conservation goal of over 5% for the sector. While it seems clear that MOER should exercise the same leadership role for energy conservation in transport it has asserted in other sectors, it will need to clarify with at least two other ministries (Transportation, and Science and Technology) where its responsibilities end and theirs begin. There is a need to mount a technology assessment program to evaluate the kinds of energy-saving devices and practices listed in Annex 4; this should be done in one of the research institutes, perhaps one attached to MOST. Once recommended technology has been identified and is ready for recommending to owners, and some of which might find its way into regulations, MOT would seem the appropriate Ministry for transferring such technology into the sector. One question that will have to be settled is what role, if any, KEMCO should be asked to play in the transport sector. At present, neither MOER nor MOT has any group with responsibility or experience in energy conservation in transport. It is possible that MOER might wish to exercise no more than a general planning and monitoring role for energy use in trans- port, leaving to MOT responsibility for mounting the technology assessments that would underlie an Action Program. Improving Fuel Efficiency by Lifting Transport Regulations 6.48 The regulation of the trucking industry strongly affects both the quality of services and the volume of fuel consumed in transport. For example, one third to one half of all truck trips consist of empty back-hauls due to trucking regulations that prohibit private trucks from carrying any cargo other than their own (para. 2.36). Deregulating the trucking industry, in line with the Government's new philosophy of leaving more decisions to market forces, would probably be the single most important energy conservation measure in the transport sector, in addition to saving a substantial amount of capital, as the utilization and efficiency of the existing vehicle fleet would increase /1 (para. 5.15). One important change that would follow from liberalizing truck access to the railways would be an increase in Busan-Seoul container traffic, a cost-saving, energy-saving modal shift. /1 Under the Highway Sector Loan just negotiated with the Bank, the Government agreed that a study of the "Economic Impact of Regulation on the Trucking Industry" be carried out in 1984. - 89 - Pricing of Transport Fuel 6.49 We have noted earlier that the resource cost of fuel (i.e. net of taxes) rarely comprises more than 20-30% of total costs for road transport; it is somewhat less for rail, and more for both maritime and air. When "taxes" are added on top of the basic resource costs, the fuel-percentage rises, so that it often becomes the largest single cost in providing trans- port services. Technically and politically, the setting of fuel prices is fraught with difficulties. There are, however, some useful concepts that can help in addressing these problems. One of the most useful is to be clear on the distinction among the basic price (or resource cost) of fuel, the recovery of infrastructure costs from transport users through the various types of user charges (e.g. vehicle purchase taxes, annual licensing fees, or fuel add-ons that appear very much like a "tax"); and a pure tax element, i.e., a charge to the consumer that has no relation to the cost of the resources he is using and which is used for different purposes. 6.50 Resource Pricing. A useful basis for pricing any resource is to charge consumers a (resource) price that reflects the scarcity value of the resource to the economy. In a completely free-trade regime the prices of various energy products would be set, in an energy-importing country like Korea, by the c.i.f. price of imports. Refiners would not be able to set the price of any product higher than the import price because customers would be free to import. In such a pricing regime, the structure of product prices in domestic refineries could not get much out of line with import prices, which might of course fluctuate according to surpluses and shortages in world markets. Korea does not have a pricing regime of this sort. For many years petroleum product prices have been controlled by an administered price regime worked out in close cooperation with the country's five refineries. Gener- ally speaking, all product prices in Korea have been above world levels, i.e., higher than Singapore or Gulf prices even after allowing for transport costs. Two distinctive features of the Korean product-price structure have been (a) a domestic price for Bunker "C" substantially higher than the world price (Bunker "C" amounts to just under half the product produced by Korea's refineries); and (b) a diesel price that has traditionally been relatively low compared to gasoline, measured by differentials commonly found in other countries. The ex-refinery value of a reconstituted barrel of crude has of course been closely related to the world price of crude plus the cost of refining it. One could thus say that Korea, as a country, was paying (even more than the full scarcity value of its imported petroleum energy. But different classes of consumers were being treated very differently: the power-generating industry (the main user of Bunker "C") was paying much more than the import price, while truck and bus operators (the main users of diesel fuel) were paying a much smaller premium. By the test of border prices, all product prices were "distorted" but some were much more distorted than others./l /1 For a good description of petroleum pricing in Korea see the report, Analysis of Petroleum Product Pricing in the Republic of Korea, by Edward N. Krapels (July 1982, 48 pp.). This was one of several studies financed by the UNDP in connection with the World Bank's first Structural Adjustment Loan (SAL I). - 90 - 6.51 There are some who believe that the only satisfactory way to eliminate distortions in the structure of petroleum product prices is to de- control them and permit free trade. Although some de-control of fuel prices has recently occurred, it has been limited to minority products where buyers were able to avoid high Korean prices by purchasing abroad whenever they could (this was true for Avgas and solvents, two prices that have recently been de-controlled). Despite these minor changes and despite the trend towards trade liberalization in Korea today, there is considerable doubt that there will be any general de-control of major oil-product prices. The tradition of treating the refining industry as a public utility, with both consumers and producers protected by government-set prices, remains strong. It is of course possible to link domestic product prices to international prices by administrative price-setting rather than by de-controlling the market and opening it to free trade. A movement towards closer linking through administrative action was taken recently, when the price of Bunker "C" was sharply reduced. As the market for Bunker "C" contracts in the face of the power industry's massive shift into coal and nuclear generation, Korean refiners will be under strong pressure to upgrade more of their crude to middle distillates. This will involve higher refining costs, i.e., the resource cost of diesel will rise. 6.52 User Charges. To transport operators, the price of fuel is what they pay at the pump. In most countries, there is a big difference between the resource price of fuel and the pump price. Most people speak of this difference as a "tax;" there may indeed be a tax element in the price, but the greater part of the difference is a "user charge," an add-on to the resource cost designed to raise revenue to meet the costs of building and maintaining roads and bridges. The user charge is in fact a "resource price" to cover the cost of infrastructure resources that are difficult to recover through direct charges. In a few instances, these infrastructure costs are recovered directly through tolls (e.g. KHC's self-financing of expressways); but in most cases, infrastructure costs are recovered indirectly, either through a fuel add-on or from various vehicle licensing fees. Low fuel prices that do not recover full infrastucture costs are thus likely to result in inefficient resource allocations, a common example being artificially cheap road transport that penalizes railways, which are cheaper (and more energy efficient) for certain classes of transport services. The Government has already recognized that trucks and buses have not been paying their share of user costs and, under SAL I, it agreed to substantially raise the pump price of diesel fuel and bring it into a more normal relation to the price of gasoline (measured by the relationship found in other countries). The Government will have to decide how much of this increase in the pump price will be given to the refineries as a "resource cost" and how much to retain for itself as a road-user charge. With substantial increases in road con- struction and maintenance costs scheduled for the Fifth Plan, there is a pressing need for close study of the level and structure of road-user charges. The Government has agreed on the need for such study but is known to be worried that it may be difficult to impose substantially higher user charges so long as there is a large volume of low-tax kerosene used by households, since kerosene can easily be substituted for, or mixed with, vehicle fuels. - 91 - 6.53 Taxes. The pump price of fuel, besides meeting the ex-refinery resource cost plus the infrastructure cost, often includes a third element a pure tax - that is levied on transport users. A tax is a charge not related to the cost of resources used by the person who pays the tax; the distinction between user charges and taxes is often not recognized, and many user charges are misleadingly referred to as taxes. A tax element in any consumer price may of course be levied to influence consumer demand (e.g. the demand for automobiles) or to achieve distributional objectives or simply to raise money. The Government has deliberately used very high gasoline prices (through imposition of a stiff tax element) to discourage private car ownership and use, a policy equally supported by high taxes on the purchase and annual licensing of private cars. One of the more important and difficult policy decisions the Government will have to make in the near future is whether or not to hold to its present policy of discouraging private car ownership. This policy will have a stronger influence on future energy consumption in transport than any other decision it can take. The Bank does not have a firm view on an optimum rate of motorization for Korea; the SAL I loan did, however, commit the Government to a study of the costs as well as the benefits of rapid motorization. Such a study was completed in 1982 by the Korea Institute for Economics and Technology (KIET), using a study by a consulting group (Sigma) as an important input. The broad finding of these studies was that continued rapid motorization would not create serious environmental or congestion problems for Korea, at least not for the next several years. The KIET report therefore recommended a reduction in the present high purchase and licensing taxes on passenger cars. The Government has not yet accepted this recommendation, and more analysis and discussion are needed before decisions can be taken on the wisdom of changing the present "mix" of purchase taxes and road-uiser charges and pure tax now included in the pump price of gasoline and diesel. Today, approximately two-thirds of road-user costs are recovered through fuel taxes (two-thirds of them from gasoline, one-third from diesel, and almost none from LPG), and one-third from purchase taxes and license fees (purchase tax is heavily skewed towards passenger cars even though companies, which own a high proportion of all cars, are exempt from the purchase tax). Technology Assessments and Research Studies 6.54 The energy crisis of the 'seventies' stimulated much world-wide R&D activity by engineers and transport owners to find ways of reducing costs by saving on fuel consumption. Truck operators have learned to reduce aero- dynamic drag by mounting wind deflectors on the cab. Designers have learned to eliminate vertical ribs on truck bodies, to reduce the gap between tractors and trailers, and to streamline frontal designs. Radial tires reduce rolling resistance. Mechanical governors to limit uneconomic engine and road speeds have been installed on many vehicles. Changes in engine and clutch designs have increased power-train efficiency. Railway, marine, and air transport have likewise benefited from design and maintenance changes stimu:Lated by the increase in energy costs. An illustrative list of such technological developments, now widely used in Western vehicles, can be found in Annex 4. MOER and MOT, jointly, should sponsor a program of fuel-saving - 92 - technology assessments /1 by Korea's research institutes, working closely with the trucking associations, KNR, KAL, and the shipping industry. The area where most help is likely to be needed is road transport, composed of small operators using Korean-manufactured equipment that may not yet incorporate fuel-saving innovations that have proven cost-effective in other countries. Most fuel-saving changes involve some addition to vehicle capital or main- tenance costs; these costs must be weighed against their fuel savings to see which changes are worthwhile. 6.55 Improved technology is not the only way of reducing costs by saving fuel. Other studies, not focussed on technology, are also needed to develop a better understanding of truck utilization and the factors responsible for the growth in the private truck fleet and in the use of small trucks. MOT should be responsible for this study, perhaps with the assistance of the trucking associations, and MOER should work with MOT to develop conservation proposals arising from the study's findings. Such a study would be a part of the proposed road transport deregulation study to be implemented under the Highway Sector Loan. (para. 5.15). Public Education 6.56 A public education program, aimed primarily at owners and operators of road vehicles, can make an important contribution to fuel conservation. Its aim should be to tell people what they can do if they want to reduce transport costs, provide them with standards for measuring performance, and motivate them. The Bank is not certain whether responsibility for mounting such a program should be placed in MOER or MOT or whether implementation should be assigned to KEMCO or some other agency (KEMCO is an attractive candidate because it has proven its ability in other sectors). A starting- point for a public education program /1 should include the following activities: (a) review the literature on public information programs and mount a campaign to inform the general public of the energy implica- tions of their travel decisions and shippers of possible ways to reduce the energy (i.e., cost) of their product distribution; (b) work with truck and bus associations to inform members of energy conservation possibilities and to assist them in developing conservation and driver motivation programs; (c) disseminate information on conservation devices produced over- seas (e.g., air deflectors, fan clutches, governors, etc.) and encourage manufacturers to begin producing this equipment for the local market; and /1 Under the Highway Sector Loan, the Action Program agreed upon will be a vehicle to implement these components. - 92a - (d) develop a driver training program, perhaps as part of the drivers' licensing process, to teach fuel-efficient operating techniques. Model the program after those now operating elsewhere, but also include training geared specifically to Korean problems (including improper use of vehicle controls). - 93 - 7. FUTURE ROLE OF THE BANK 7.01 The Bank's involvement in Korea's transport sector has been sub- stantial in the past and should remain so in the coming years. But in view of the country's significant progress in project design and implemen- tation, it is necessary that the Bank's role be refocused on sector policies where weaknesses exist. The country could gain considerable benefits, well in excess of the traditional returns obtained from past projects, through more effective policies in the areas of investment planning and coordination, regulation and pricing, and energy conservation. Such a shift in emphasis, however, would require a major change by the Bank away from its past project approach to a sector approach. The lending program should thus include a growing number of subsector and multi-modal projects. The basis for such operations would be the Government's agreement to implement over a given time period a number of institutional and policy measures designed to improve efficiency in the sector. A continuous dialogue with the Government's numerous ministries and agencies concerned would obviously be necessary to define how specific issues should be tackled. A. Shift from Project to Sector Lending 7.02 In view of Korea's present stage of development, the resolution of transport needs requires that greater attention be given to a broader sectoral approach than in the past. In particular, the optimal integration of the transport networks could be achieved more easily if the planning and policy frameworks were conducive to such optimalization. In shifting to a sector approach, the Bank would assist Korea in adopting such a broader pers- pective essential to master the skills necessary to carry out inter- and intra-modal investment studies and develop policy objectives more in line with economic principles. 7.03 The task of developing of a more complete transport network makes the identification and selection of new projects increasingly more complex. Often, inter-modal transport solutions appear necessary to provide users with optimal service. This type of project will most likely be increasingly in demand in Korea and will require a broader approach than that used so far for single mode projects. Not only will the physical interdependence and smooth complementarity of the network have to be provided through appropriate - 94 - inter-modal transit and terminal facilities, but also the institutional and legal framework would have to ensure that users can fully benefit from the services offered. To this end, licensing and pricing policy restrictions might also have to be relaxed. 7.04 Similarly, a balanced regional development strategy makes it more important to ensure adequate intra-modal investment programs. Specifically roads and ports programs developed by the agencies concerned should be coordinated and fully integrated. This would ensure proper balance between investments which designs would be closely related to their respective functions. In addition, policies for road and port user charges and taxation should be compatible and neutral to avoid demand distortion and misallocation of resources. For all these reasons, the Bank's future role ought to be directed toward a sector lending approach which best could assist the Government in developing appropriate transport policies. B. Policy Objectives in Sector Lending 7.05 The most important objectives that could be pursued in sector lending to Korea would be to: (a) improve intra-modal transport planning agencies for roads and ports to harmonize the development of major facilities with rural and local requirements; (b) encourage ad hoc inter-modal planning coordination and enhance the complementarity of modes through the development of multi-modal regional transport projects; (c) integrate and coordinate investment programs through a more appropriate institutional framework; (d) gradually relax licensing regulations and controls on fares to allow freer entry in the transportation industry and encourage competition among operators to improve the quality of service, keep fares low and reduce fuel consumption; (e) discourage the practice of subsidized services for rail, sea and road transport through the promotion of more cost- effective alternative services; - 95 - (f) adopt more realistic pricing levels by generalizing cost-based fares for the railways; (g) adjust user charges for roads and ports more closely to actual use of (or damage to) the facilities; (h) adopt more realistic fuel pricing for transport by adjusting tax relationships on diesel, gasoline and LPG to encourage efficient energy use; (i) encourage the production of more fuel-efficient vehicles; (j) inform transport operators about fuel conservation techniques; (k) encourage selective shifts of traffic to more energy-efficient modes; and (1) consolidate the institutional functions and responsibilities relative to energy use in the transport sector. 7.06 Specific action packages under each objective remain to be defined based on detailed recommendations made throughout the report. Others will require specific studies by the Government through the services of consul- tants and Korean research institutes. Such studies are suggested in Annex 5. The problems relative to each objective have been discussed in detail in this report and should serve as a basis for the Bank's dialogue with Government. It is intended to gradually tackle selected groups of objectives through future transport projects that could be prepared jointly. Broader objectives such as (i), (j) and (1) can be dealt with under the ongoing transport sector dialogue. C. Project Possibilities in Transport 7.07 The projects through which the above policy objectives could be addressed might be selected from those discussed below. It is expected that substantial amount of cofinancing from other sources than the World Bank would be required in addition to what the Bank may contribute, in particular with respect to the multi-modal projects. The role of foreign commercial banks and other development agencies and funds may need to be very substan- tial. In addition to two projects approved in FY83, and one pending in FY84, new projects recommended for consideration from FY84 to FY90 comprise two road and two maritime transport subsector projects and three multimodal projects including substantial rail components. - 96 - Roads Subsector 7.08 The Provincial and County Roads Project signed in FY83 with the Bank was the first operation with MOHA and the fifth of the conventional road projects. The continuing involvement of the Bank should be assured through a first highway subsector loan in FY84. One of the main justifications is to make considerable headway toward objective (a) above (para. 7.05) concerning integration of road planning. Another justification is that the subsector loan would be an excellent basis to move forward with objectives (g) and (h) concerning proper road user charges and fuel pricing. It would also be an appropriate vehicle to deal with objectives (d) and (e) on operators' efficiency and as a follow-up to the introduction of the unscheduled transport services scheme to be monitored under the Provincial and County Road Project. 7.09 On project grounds, the Bank's involvement would be still required to assist in further developing the road maintenance system that has just been initiated for MOHA's network and also to strengthen the maintenance of city and village roads. The improvement of the network through paving and new construction is still a major objective since in 1982 only 36% of the country's roads are paved. A large proportion of provincial and county roads and many high priority national roads still need paving. The development of much needed secondary cities will depend on an appropriate road infrastruc- ture. A number of other objectives should also be pursued such as multi- modal terminals and depots, capital and institutional assistance to the private road transport industry, better road safety measures and inspection facilities, automation of vehicle licensing, improved mapping facilities and more effective quality control. 7.10 Sector lending would be an appropriate vehicle to deal with such an investment package. Project preparation can be effectively arranged through the existing government agencies. Part of the program referring to private road transport could possibly be channeled through the Korean Development Bank (KDB). Bank appraisal would be based on a tranche of the overall investment program for roads and road transport, and loan agreements would be worked out separately with each agency concerned. In view of the large investment program proposed by Korea and the urgent need to deal with the policy issues outlined above, the Bank should consider several substantial lending operations of the order of $200-250 million. As the policy objectives assigned to the highway subsector are broad-based, involving major institutional changes and important policy measures that will - 97 - substantially affect Korea's road/motorization development strategy, consideration for another highway subsector project most likely will be warranted in 3-4 years time. Maritime Subsector 7.11 The Bank's role in ports has in the past been primarily concen- trated on development of the Busan container facilities. This emphasis has neglected important aspects of the national port and shipping development strategy that are of major concern to the Government. In order to move toward a more integrated approach to satisfy the needs of lesser ports, coastal and overseas shipping, the Bank should also shift to subsector lending. 7.12 A maritime subsector project might be considered for FY85 or FY86 to assist the overall ports development program including the Busan third phase expansion, other secondary ports as well as major institutional improvements and policy measures. The Bank's rationale would be primarily to pursue objective (a) above concerning the integration of port planning through appropriate institutional changes and as a follow-up to actions under the Coal and Cement Project as indicated below (para. 7.15). Subsector lending would also be ideally suited to deal with objective (c) concerning the complementarity of shipping versus other modes. Emphasis would be put on deregulation and reduction in red tape clearance at entry ports to allow shippers more freedom in selecting routings for their cargoes. It would also provide an excellent perspective to deal with objective (g) to adjust port charges and liberalize ship pricing and with objective (k) to move toward improved fuel efficiency offered by maritime transport. 7.13 On project grounds, the Bank's involvement would be justified to promote the Government's effort to develop growth poles in coastal areas that would benefit from cheaper sea transport and help in implementing further the decentralization/regionalization strategy adopted by Korea. The Port Development Study recommended under the Plan would provide the Bank with an opportunity to offer its assistance (para. 3.41). The objective of developing local shipping companies and helping them to improve the management of their fleet to maintain a fair proportion of international trade traffic would also be desirable during a moderate growth period to avoid increase in foreign exchange costs. Other possible project components include (1) establishment of a well-managed shipping bank that could attract cofinanciers and (2) the development of the coastal fleet with more efficient ships. - 98 - 7.14 The basis for a maritime subsector project would be the prepara- tory work done for the Busan third expansion and related studies for immediate ports improvement. Components could be easily finalized by port districts. As for highways, the maritime project would comprise a tranche of investments, including maintenance expenditures. Each major component would be specified, based on detailed analyses to be carried out before loan funds could be disbursed. A number of measures would be implemented during project execution in accordance with explicit action and monitoring programs. In view of the possibility of obtaining funds from other cofinan- cing sources and given the limitation of counterparts funds, a loan for such maritime subsector project could amount to about US$200 million. To fully carry out the institutional and policy objectives recommended, a follow-on second maritime subsector project by FY89 is likely to merit consideration. Railways Subsector 7.15 Traditionally the Bank has lent to the railway based on a sub- sector approach. Compared to the general sectoral lending proposed for road and maritime transport, the future development of the railways should be more focused on specific functions where they have a comparative advantage. Investments in railways could thus be large components of multi-modal trans- port projects where the specificity of rail could be developed (see paras. 7.16 to 7.20). The Coal and Cement Distribution Project agreed in FY83 is an innovation along this line and is also the first of a possible new series of integrated inter-modal projects meeting objective (b) above. Therefore, it includes a number of features which address important policy objectives. Specifically, it will be instrumental in resolving objectives (c) and (f) above concerning inter-modal coordination and cost-based tariffs. It will provide an excellent basis to continue the work done to reach objective (e) to limit and eventually close uneconomic services and subsidized operations. It will achieve objective (k) for fuel efficiency. Integrated Multi-modal Projects 7.16 The increasing complexity of transport problems facing Korea in the 1980s requires a new integrated multi-modal approach. In many instances, solutions cannot be properly identified and implemented by any single modal agency. The risk of misinvestment that could occur given independent funding resources, makes it important that a practical and operational approach be used to deal with specific regional needs. Otherwise, uncoordi- nated planning would probably result in unnecessarily costly and wasteful investments due to the likely construction of competing and duplicating facilities in many of high growth areas where high traffic densities and many modes are present. _99 - 7.17 Although it is expected that Korea will make rapid progress to improve its institutional planning mechanisms defined as objective (c) above,, the surest way to achieve integrated planning is to approach it at the project level. This recognizes the practical limitations of institu- tional planning and the actuality of bureaucratic isolation. Therefore, the Bank could well assist Korea in this new approach that may eventually lead to a clearer perception of how to organize and institutionally structure transport coordination, a task, it was noted, addressed over the last ten years without success. Three operations are recommended for consideration. They would focus on Korea transport planning and coordination in three major transport concentrations: (a) the Seoul-Busan Corridor, (b) the Kyeonggi (Seoul suburbs) Regional Area and (c) the Southeastern Coast Industrial Belt. The related study program and status is shown in Annex 5. 7.18 The Seoul-Busan Transport Corridor. The Bank's objective in supporting a study in this area is to put into practice the concept of integrated planning at the project level. The corridor is served by road and rail, and connected at both ends by air and sea transport. Over 60% of the country's economic activity is located in this area. High traffic and complex transport requirements justify the existence and expansion of each mode. However, there are alternatives that could optimize the transport services while minimizing costs to the users. A Bank-financed study is now ongoing that is reviewing and comparing investments alternatives and combinations in order to define what type of complementarity offers the most attractive investment/improvement/management/financial package. The end-product will identify inter alia the merits of a high speed rail line between Seoul and Daejon and a number of related road/rail investments. This package might be considered as the basis for a first multi-modal project by the end of the decade. Policy objectives (d), (e) and (k) would be pursued. 7.19 The Kyeonggi Region Transport Area. The Bank's objective would be also to support integrated project planning in the Seoul suburban area, but mainly to assist the Government's objective to deconcentrate Seoul City and develop optimal links with its main satellite cities. Specifically, rail, for concentric mass passenger movement, and road, for freight and peripheric passenger transport, have complementary roles to play. A study discussed and agreed with the Government is now expected to start in FY84 and could be the basis for a suburban rail/road multi-modal project for FY86 or FY87. Policy objectives (c), (d) and (f) would be pursued. - 100 - 7.20 The Southeastern Coast Industrial Belt. The Bank's objective would be to support the country's industrial dispersion strategy and to meet the fast growing transport needs in this area. It stretches from Suncheon to the west to Pohang to the east via Masan/Changweon, Busan and Ulsan. This area has the country's highest concentration of heavy industries including steel and metal product complexes, shipbuilding and machinery industries, petro- chemicals and others. For strategic and economic reasons, these complexes, which require heavy imported raw materials, have been located on the coast. Linkages among them to supply intermediate products and with other consumer centers require better integrated transport networks including terminals to speed up exchanges. Rail, road and coastal transport have each an important role to play and their complementarity needs to be strengthened. A study should be undertaken about in FY85 to identify the needs to upgrade their related network and improve traffic allocation. A multi-modal project for rail/road/sea transport could subsequently be considered possibly by FY90. Policy objectives such as (c), (d), (f), (g) and (k) would be pursued. 7.21 The need to undertake the studies was discussed with Government and agreement for the first two was reached gradually, the last should be considered in 1984. The returns in undertaking this one too would be high. While the Government is quite rightly making an effort to trim capital and recurrent expenditures in a period of budgetary constraints, it is the Bank's role to re-emphasize the cost-effectiveness of preinvestment studies. The multimodal projects discussed above have in common the objective of seeking leastcost solutions in terms of both investment and operating costs. Optimization is attainable only if rigorous studies are carried out. The costs will be paid many times by the savings made possible by well thought-out solutions. 7.22 The approach recommended for project development in transport combines, as presented, past strengths acquired by Korea with new challenges that can be met through a continuing intense cooperation between the Government and the Bank. Problems are more complex, but the proposed approach recommended by the Bank to deal with the various issues is expected to strengthen efficiency in the sector and should be instrumental for further progress in the best interest of transport services and the people of Korea. - 101 - ANNEX 1 Page 1 of 7 KOREA TRANSPORT SECTOR ISSUES SURVEY MOT - Division of Responsibilities and Powers The following is a summary of the responsibilities of two main bureaus in MOT in charge of transport coordination and land transport. In practice, only a fraction of these functions are effectively carried out, which reduce considerably the powers of MOT. The main weaknesses, however, are in the Bureau of Transport Coordination which has failed so far, for various reasons including the lack of qualification of staff of its three divisions trained as public administrators, to impose its views about planning on the other main transport agencies. The Land Transport Bureau which is responsible of the management of commercial road transport has been more successful in administering its functions. However, many questions can be raised as to the overall usefulness of its regulating activity which is discussed in Chapter 4 of the Survey. Bureau of Transport Coordination (TCB) (a) Coordination Division: (i) Management Section a. Personnel Management of the Bureau (all divisions); b. The Bureau's basic operation plan and postevaluation of the performance; c. Preparation of budget proposal for the Bureau and follow-up; d. Action plan for recovery of transport facilities from damages due to flood or other causes; e. Short-term transport plan for all modes and investment coordination; and f. Other matters of common interest of the Bureau's divisions not specifically dealt with by any other single division. (ii) Development Section a. Medium and long term transport demand forecast; b. Medium and long term transport policy and investment plan; - 102 - ANNEX 1 Page 2 of 7 c. Long term transport system development based on forecast movement of major commodities between the production and consumption points; and d. Modal assignment of transport and modal coordination. (iii) Coordination Section a. Extraordinary transport measures for passengers and freights (i.e. national holidays such as new year and chuseog); b. Analyses of user charges and transport costs of each mode and coordination of rates and fares; d. Cooperation with other ministries and agencies with regard to the foregoing; d. Control on supply of transport equipment; e. Preparation of documents for the economic minister's conference (of which Minister of Transport is a member); and f. Various other matters relating to transport regulation. (b) Transport Management Division (i) Railroad Section a. Control over KNR and its performance: b. Policies/plans for construction of new lines; c. Formulation of standards for licensing small-sized railroad-related transport operators (companies) and their tariff rates; and d. Licensing private railroads for business or for own use. (ii) Maritime Section a. Control and supervision of maritime transport; b. Control and supervision of ports operation; c. Monitoring and formulating positions of MOT concerning policy issues in the sector of shipping industry and on major investment projects in the sector; and - 103 - ANNEX 1 Page 3 of 7 d. Study on proposed affiliation with UN Convention on International Multimodal Transport of Goods. (iii) Economic Cooperation Section a. Foreign capital inducement (loan, joint-venture etc) and management; and b. International cooperation. (c) Survey and Statistics Division (i) Survey Section a. Studies oriented to technological development of trans- port and rationalization in transport operations; b. Data collection and analyses on transport performance; and c. Management of the Ministry-s library; (ii) Statistics Section a. Compilation and publication of transport statistics, b. Studies oriented to improving statistics; and c. Arrangements for use of computer services by other bureaus of MOT. (iii) Complaints Treatment Section a. Dealing with letters from complaining transport users (receiving letters, distributing them to agencies/ officials and/or transport operators in charge, requesting from them appropriate actions to be taken, and replying the letter writers, etc.) b. Analysing trends in the nature of complaints; and c. Recommending on institutional improvements with regard to complaints reported by users. - 104 - ANNEX 1 Page 4 of 7 Bureau of Land Transport (BLT) (a) Transportation Policy Division (i) Management Section a. General and personnel affairs of the Bureau; b. Basic operation plan and post-evaluation of the Bureau's performance; c. Preparation of budget proposal and follow-up; d. Management of the vehicle(s) assigned to the Bureau; and e. Matters not specifically assigned to any other division of the Bureau. (ii) Survey Section a. Traffic survey and determination of traffic levels for new licenses to be issued by each province; b. Road transport statistics; and c. Long term road transport plan and studies oriented to institutional improvements. (iii) Promotion Section a. Road transport tariff rates; b. Road transport taxes; c. Basic plan for land transport promotion; and d. Subsidies (rewards) for developing services for remote areas. (b) Transport Operation Division (i) Inter-City Bus Section a. Formulation of criteria for licensing inter-city and charter bus operation and studies for institutional improvements; b. Control and supervision over provincial/city government in their transport regulation operations for inter-city bus services; - 105 - ATNEX 1 Page 5 of 7 c. Policies regarding expansion of private bus ownerships and utilization; and d. Policies regardin8 bus stops for private buses in downtown areas. (ii) Express-Bus Section a. Licensing express buses and express buses operation; b. Policies regarding express bus terminals; c. Institutional improvement of express buses operation; and d. Control and supervision of local governments over their use of power delegated by MOT related to express buses business operations. (iii) Trucking Section a. Formulation of criteria for licensing trucking operations; b. Policies related to truck terminals and warehouses; c. Measures to check private trucks from being involved in business operations; d. Control and supervision of provincial/city governments over their use of power delegated by MOT with respect to trucking business operations. (c) Urban Transport Division (i) Planning Section a. Urban transport overall planning; b. Urban and area transport demand projection and transport planning; and c. Consultant services management for studies in urban transportation. (ii) Intra-City Bus Section a. Criteria for licensing; b. Institutional improvement for intra-city bus transport services; and - 106 - 1 Page 6 of 7 c. Control and supervision of local governments over their use of powers delegated by MOT. (iii) Taxi Section a. Criteria for licensing taxis; b. Criteria for licensing rent cars; c. Institutional improvements for taxi services; and d. Supervision over provinces and cities with regard to deligated authorities. (iv) Subway Section a. Criteria for licensing subway operation and designation of routes; b. Technical and technological advices and controls over subway construction and subway trains; and c. Review and recommendation, for consideration by Minister, of proposed subway construction projects. (d) Guidance Division (i) Guidance Section a. Control and supervision of road transport business associations; b. Review and approval of budgets of the associations and the elected board of executives; c. Guidance in transport safety policies; and d. Guidance on transport business operations. (ii) Compensation Section a. Policies concerning automobile insurances; b. Licensing transport operators' mutual relief cooperatives and control and supervision of the cooperative opera- tions; and c. Studies and actions for improving transport insurance systems. - 107 - ANNEX 1 Page 7 of 7 (iii) Training Section a. Policies regarding training of workers in transport sector; b. Transport sector employment policies; and c. Measures for services improvements. (iv) Registration Section a. Policies regarding vehicles registration and mortgage handling of vehicles; b. Policies concerning sales handlings or scrapping of used vehicles; and c. Policies concerning the construction of automobile chassis and engines. (v) Maintenance Section a. Criteria for licensing garage services for automobiles; b. Policies regarding training of technicans for maintenance garages; c. Policies concerning mechanical aspects of road transport safety; and d. Control and supervision of cable car business operations. (vi) Inspection Section a. Criteria for mechanical automobile safety inspection; b. Guidance and supervision of inspection mechanics; c. Selection or designation of types for inspection equip- ment and instruments; d. Criteria for automobile structures; and e. Policies concerning renewal of old vehicles. March L982 - 108 - ANNEX 2 Page 1 of 7 KOREA TRANSPORT SECTOR ISSUES SURVEY Road Transport Licensing Procedures and Regulations A. The Procedure The attached excerpts in sections B and C from the Road Transport Business Act and the Rules of Implementation provide legal reference to the licensing procedure. It can be summarized as follows: 1. The eligible applicant to any of the seven categories of transport services must apply by completing an application form giving all informations required by law and supplement it by other documents required under Articles 10 to 15 of the Rules of Implementation. 2. The applicant submits his application to the Transport Division (through General Affairs Division) of the provincial or special city government office (Art. 16). 3. The provincial or special city Transport Division reviews the application to see whether: (a) the applicant is legally qualified (Art. 5 of Act); (b) the application meets the licencing criteria (Art. 6 of Act); (c) the proposed services would find demands as assessed by MOT through its traffic survey and analyses (Art. 9 of Rules); (d) the applicant's business operation plan provides all information regarding organization, vehicle fleet, facilities, etc. (Art. 12 and 13 of Rules). 4. If the application passes the review, the provincial or special city Transport Division prepares comments and recommendations for licensing which will be approved by the governor or mayor and submitted to MOT (Art. 14 and 16 of Rules). 5. In the Ministry of Transportation (MOT) the application and comments by the province or special city are further reviewed by the Transport Division of the Land Transport Bureau. If the comments are acceptable, MOT sends to the applicant a notice advising of the date when MOT and provincial or special city officials will visit the applicant to check and confirm that all informations provided in the application are true and correct (Art. 14 of Rules). - 109 - ANNEX 2 Page 2 of 7 6. After all these steps are followed, a license will be awarded to the applicant in accordance with Article 4 of the Act. 7. The procedure described above applies specifically to a new comer to the market. However, MOT's licensing power has been delegated to the provincial governors or special city mayors who are now responsible to handle licenses insofar as the transport services are expansions of existing operations which should however not extend across the provincial or special city boundary line. Part of the licensing power is delegated further by the province to cities or guns. 8. According to provincial sources, the whole licensing procedure when iit falls in the domain of compliance of provincial governors, is supposed to take a maximum of 15 days from reception of the application to issuance of a license. 9. The applicant must pay for "official revenue stamps." The stamp costs W 14,000 per application and W 2,000 per additional vehicle to the proposed fleet. B. The Road Transport Business Act Law No. 916, dated December 30, 1961 amended by Law No. 2867, December 31, 1976. (a) Types of Licenses (Art. 3) (i) Route bus services (ii) Charter bus services (iii) Taxi services (iv) Route trucking services (v) Area trucking services (vi) Special vehicles transport services (passenger or freight) (vii) Funeral bus services (b) Licensing (Art. 4) (i) License is required from MOT before anyone can start commercial services of any type of seven categories of services above; (ii) Licence defines area or routes to which the operator must limit his services; - 110 - ANNEX 2 Page 3 of 7 (iii) License can also limit the users or types of the services (types of goods or of passengers); (iv) License can be for a certain limited period of time if the services are to meet certain temporary demands. (c) Applicants not qualified for licensing (Art. 5) (i) Convicts serving a prison term; (ii) One who lost his license by cancellation by MOT during the last two years; (iii) A company having, as one of its members of board of directors, such a person as indicated in (a) and (b) above. (d) Criteria for Licensing (Art. 6) (i) Applicant's plan of operation (proposed services) must match the estimated transport demand on the proposed route(s) or area of services; (ii) The plan of operation to be prepared by the applicant must be a long-term operation plan; (iii) The applicant needs to be assessed to possess the ability to run the business; (iv) The proposed operation needs to be judged to serve the public interest as a result of evaluation by MOT. (e) Schedule of Charges (Art. 8 and 10). The transport operator shall prepare a schedule of charges for his services for approval by M40T (Art. 8). The approved schedule of charges should be made known to the users of the services by way of showing it on a bulletin- board (Art. 10). C. Rules of Implementation of the Road Transport Business Act MOT Decree No. 357, dated November 25, 1969, amended by MOT Decree No. 716, dated October 8, 1981. Art. 9: Criteria for Supplying Commercial Vehicles 1. Determination of whether the existing licensed transport services on a given route or in a given area are responding to the demand, is to be based on the supply criteria which MOT will set up as a result of demand and supply surveys carried out at least once a year. -ill1 - ANNEX 2 Page 4 of 7 2. How to set up the supply criteria shall be defined separately from these rules by the Ministry of Transportation. Art. 10: Application for License 1. Application for a road transport business license must be submitted to MOT, through provincial government (See Art. 64 below). The application shall include the following information: (a) Name and address of applicant; (b) Type of transport services being applied for; (c) Proposed route(s) or area of services; (d) Size of fleet proposed; (e) Statements describing how the proposed services will serve the public interest; (f) Types of passengers or goods to be transported or the scope of services (only in case of a limited license as defined in Art. 4-3 of the Act); (g) Proposed time period of services (only in case of a temporary license as defined in Art. 4-4 of the Act). 2. The application also shall be supplemented by the following documents: (a) Plan of operation; (b) Paper proving the total value and an itemized description of fixed assets devoted to the proposed business operation; (c) Financial plan; (d) Route and station map (for route licenses); (e) Papers specially required if the applicant is an existing company: (i) Articles of the company and the company-s copy of registration; (ii) Personal data of members of the board of trustees; (iii) Agreement by the board of trustees of the license application. - 112 - ANNEX 2 Page 5 of 7 (f) Papers required from a new company: (i) Articles of company notarized; (ii) List of names and personal data of the company organizers (members of board of trustees); (iii) Schedule of offer for stocks subcription. (g) Papers required from private applicants: (i) List of assets; (ii) Personal identification; (iii) Career statement of the applicant. (h) Paper certifying that the applicant is not disqualified for the applied license (Art. 5 of the Act). 3. When an existing operator wants to expand or reduce the scope of services only in a given (or licensed) type of services, his application needs not accompany papers listed in 5 or 6 above. Art. 11: License for Route Service Applications for route services shall provide in addition the following information: (a) End points of route (names of villages, etc.); (b) Distance in Km; (c) Route map showing: (i) Station and stops (ii) Class of road (expressway, national, provincial, and/or gun road, paved or gravel surfaced, etc.); (iii) Major facilities located alongside of the route (school, factory, railroad crossing, etc.). Art. 12: Operational Plan The following information should be provided: (a) Vehicle fleet (types, assignment by route etc.); - 113 - ANNEX 2 Page 6 of 7 (b) Facilities required (parking, garage, stations, etc.); (c) Operation time table. Art. 13: Minimum Fleet and Facilities Requirements 1. Minimum fleet required for licensing (amended by MOT Decree October 8, 1981) Seoul and Busan city City Gun Express bus 30 30 30 Intercity bus 30 30 30 Intracity bus 30 30 30 Route trucking 30 30 30 Area trucking (<8 ton) 20 10 5 Area ( 8 ton) 20 5 5 Pick-up local delivery No limit No limit No limit Chartered bus 20 10 10 Taxi 20 10 5 Special vehicle No limit No limit No limit Funeral bus No limit No limit No limit Car leasing 30 30 30 2. Minimum required garage area (MOT Decree May 20, 1980) Express bus 36 sq m Ordinary/Charter bus 32 sq m (large size) 23 sq m (small size) Taxi 10 sq m Trucking (large over 10 tons) 36 sq m (medium 5 to 10 tons) 26 sq m (small up to 5 tons) 13 sq m Pick-up local delivery 1 ton 7 sq m Funeral bus 32 sq m Special vehicle 26 sq m Renting vehicles 10 sq m (12 seats or larger: 13 sq m) Art. 14: License Approval 1. Upon receiving an application for license, the MOT first reviews the documents to check whether they comply with Article 10 of the Rules. The application being complete, MOT then notify the applicant the dates when MOT will send its officials to check his facilities. - 114 - ANNEX 2 Page 7 of 7 2. License will be issued when the applicant has passed the two steps of the reviewing of documents and the checking of facilities. Art. 15: Licensing - Exceptional Cases Taxi owner-driver or area truck licensing can be considered in the following cases: 1. For a driver employed within the last 4 years in commercial vehicle operation without driving accident during 3 years. 2. For a driver employed within the last 7 years in noncommercial vehicle operation without driving accident during 6 years. Art. 64: Application to be Submitted through Provincial Government The licensing application must be submitted to the provincial government. Provincial governor should attach his comments to the application before forwarding it to the MOT, with respect to the following points: - The applicant's financial capability; - Transport demand; - Proposed facilities; - Prospects on proposed business; - Influence on market; - Information on other applicants, if any; and - Other qualification requirements. March 1982 -115- ANNEX 3 Page 1 of 11 KOREA TRANSPORT SECTOR ISSUES SURVEY Taxation, Tariffs, Vehicle Standards and Other Regulations A. Motor vehicles Taxation Through a sophisticated tax and pricing regime, the Korean government has been highly successful in discouraging private automobile ownership. The deterrent effect of present rules can be measured by the fact that for example, private cars cannot be purchased with bank credit, or that gasoline tax almost triples its price from the refinery to pump, or even that Korean taxes on automobile ownership are very high, pushing the acquisition costs to 50-60% above ex-factory prices when taking into account compulsory purchase of Public Bonds. Rates for commercial use vehicles are much lower. Overall motor vehicles taxes including purchase and gasoline taxes and other user fees account for 8 to 10% of total national revenues. The table below gives a synthetic illustration of the incidence of taxes on few popular car models. PURCHASE, REGISTRATION AND OPERATING TAXES ON PRIVATE AUTOMOBILE OWNERSHIP /a (Won) /b Pony-II Maepsi-II Rekord (1,400 cc) (1,500 cc) (Saehan) Hyundai Saehan Ex-factory price 3,458,785 3,002,041 5,722,198 Special tax 363,173 315,214 801,107 Defense tax 108,952 94,465 240,332 Value added tax 393,090 341,181 676,363 (selling price) (4,324,000) (4,013,000) (7,740,000) Registration tax 216,200 200,650 387,000 Acquisition tax 86,480 80,260 154,800 (acquisition cost) (4,626,680) (4,293,910) (8,281,800) Annual operating taxes 252,000 252,000 401,400 First year capital cost 4,878,680 4,545,910 8,683,200 Overall taxes weight as percentage of ex-factory price (%) 41.1 51.4 51.7 /a Excludes Public Bond. /b As of April, 1982; Exchange Rate: US$1 = 720 Won. - 116 - ANNEX 3 Page 2 of 11 The tax system on motor vehicle ownership and usage can be divided into two main categories: The National Taxes including the: (i) Value Added; (ii) Special Excise; (iii) Defense Taxes and the Local Taxes including: (a) For Provinces the (i) Acquisition; (ii) Registration; and (iii) License Taxes. (b) For Cities (Si) and Counties (Gun) the (i) Automobile Tax; and (c) For gpecial Cities (Seoul, Busan, Daegu and Tncheon) the (1) Acquigitfon: (ii) Registration; (iii) License; and (iv) Automobile Taxes. The National Taxes Rates:/l (a) Value Added Tax (VAT):/2 Present rate 13%. (b) Special Excise Tax: Depends on engine displacement. (i) 1,500 cc or less and three wheel vehicles 15% (ii) over 1,500 cc but less than 2,000 cc and four wheel jeep type vehicles 20% (iii) six-cylinder, 2,000 cc or less 30% (iv) more than 2,000 cc 40% (c) Defense Tax:/3 Applies to passenger cars for nonbusiness purpose (excluding official cars) and, amount to a surcharge percentage of the Special excise tax 30% The Local Taxes Rates: (a) Acquisition Tax based on value of purchase 2% (b) Registration Tax: Tax base Rates New Record & Transfer Value 5% Creation of a lien Value 3% Other record Per Case 5,000 (Won) /1 Korea Taxation 1980, Ministry of Finance, Korea. /2 The VAT is a flexible rate that can range between 10% and 16% depending on changes in economic situation; the normal rate is 10%. /3 The defense tax is a temporary tax due to expire in the year of 1980 but it was extended until end-1985. - 117 - A 3 Page 3 of 11 (c) License Tax: Vehicle Cities with 500,000 Other Counties class inhabitants or more cities (guns) 1 W 27,000 W 18,000 W 10,800 2 W 21,600 W 13,500 W 7,200 3 W 16,200 W 9,000 W 4,800 4 W 10,800 W 6,000 W 3,600 5 W 7,200 W 3,000 W 1,800 6 W 3,600 W 1,500 W 600 (d) Automobile Tax: (Annual Tax Amount per Vehicle) (i) Automobiles (more than 4-Cylinder) Wheel base Business use Nonbusiness use Less than 8-cylinder 8-cylinder or more 275 cm or more W 84,000 W 1,683,000 W 1,980,000 :Less than 275 cm W 40,000 W 816,000 W 960,000 (ii) Small-size automobiles (4-Cylinder and less) Discharge Business use Nonbusiness use More than 1,500 cc W 30,400 W 374,400 More than 1,000 cc W 26,000 W 225,000 1,000 cc or less W 21,200 W 125,000 - 118 - ANNEX 3 Page 4 of 11 (iii) Other small-size automobiles Business use Nonbusiness use Per vehicle W 16,800 W 67,000 (iv) Buses Type Business use Nonbusiness use Express bus W 82,000 Large-size W 50,000 chartered bus Small-size W 41,000 - chartered bus Other large-size bus W 35,000 W 77,000 Other small-size W 21,000 W 44,000 (v) Trucks Class Cargo capacity Business use Nonbusiness use 1 1,000 kg or less W 4,400 W 19,000 2 2,000 kg or less W 6,400 W 23,000 3 3,000 kg or less W 9,000 W 32,000 4 4,000 kg or less W 12,000 W 42,000 5 5,000 kg or less W 15,000 W 53,000 6 8,000 kg or less W 24,000 W 87,000 7 10,000 kg or less W 30,000 W 105,000 8 More than 10,000 W 36,000 W 126,000 - 119 - ANNEX 3 Page 5 of 11 (vi) Special cars Class Category Business use Nonbusiness use 1 Large-size special car W 24,000 W 105,000 2 Small-size special car W 9,000 W 39,000 (vii) Cars with 3-wheel or less Class Category Business use Nonbusiness use 1 3-wheel car W 3,100 W 11,500 2 Small-size special car W 2,200 W 12,000 B. Tariffs and Fares. The government controls all transport tariffs and fares, which are as follows: ANNEX 3 - 120 - Page 6 of 11 KOREA: TARIFFS AiD FARES FOR TRANSPORT Effective date Mode Type of service 02704/74 05/01/75 07101/78 05/01/79 12/19/79 08/01/80 12/21/80 06/10/81 dighwa T __:i/ Bsic fare (2 ks) 160.00 200.00 250.00 300.00 400.00 500.00 550.00 600.00 Additional (per 500 a) 30.00 30.00 Additional (per 400 a) 30.00 40.00 40.00 50.00 50.00 50.00 Waiting (per 10 min.) 150.00 150.00 220.00 250.00 300.00 300.00 300.00 Microbus Single fare 300.00 350.00 Urban bus (intracity) Additional: Ordinary Adults 25.00 30.00 90.00 90.00 110.00/c Student, military, police 15.00 20.60 65.0 65.0 60o007 Special Adults 30.00 35.00 50.00 60.00 80.00 Student, military, police 20.00 25.00 35.00 50.00 55.00 Suburban bus (irtercity) Minimum freight rate (8 k.) 40.00 45.00 80.00 Ordinary Minimus freight rate (10 ki) 100.00 100.00 120.00 130.00 Additional: Paved (person/k.) 4.45 5.18 6.73 8.78 10.31 11.32 12.95 14.27 Unpaved (person/km) 4.98 5.79 9.83 11.55 12.68 14.51 16.00 Seoul to Inch-on (person/km) 3.17 3.68 ESpress Paved (person/k.) 8.47 9.31 10.94 12.01 13.73 15.13 Unpsved (person/ks) 10.42 12.24 13.43 15.36 16.93 High.ay bus Express 1 - 200 km (person/ks) 4.39 5.27 6.00 7.71 9.75 10.52 11.84 12.?9 201 - 400 k. (person/k.) 4.39 4.83 5.50 7.07 8.94 9.63 10.83 11.69 Over 401 k. (person/k.) 4.39 4.39 5.00 6.43 8.13 8.76 9.85 10.63 Ordinary 1 - 200 km (person/km) 3.95 4.74 6.93 8.77 9.45 10.63 11.48 201-400 k. (person/k.) 3.95 4.34 6.35 8.03 8.65 9.73 10.51 District freight/b (Sectoral local area) By distance One wiy (ton/k.) 35.11 41.64 Round trip (ton/ku) 22.50 26.69 By time Day (8 hours) (ton/k.) 2,553.57 3,000.00 Overtime (per hour) (ton/k.) 360.48 400.00 Waiting 1ot hour no charge (per 1/2 hour) 96.28 100.00 Line freight (route) Per 10 kg/10 km 3.28 3.89 5.76 6.86 7.79 8.73 9.31 Per ton/km 32.00 38.90 49.35 57.73 68.81 78.16 87.53 93.36 Local small delivery Basic fare (8 km) 700.00 (pickup, suall truck) Basic fare (5 km) 700.00 1,000.00 1,300.00 1,600.00 1.600.00 1,800.00 Additional (800 s) 60.00 Additional (500 *) 40.00 60.00 80.00 100.00 100.00 120.00 Waiting (per 5 sin.) 60.00 80.00 120.00 160.00 190.00 190.00 210.00 Charter bus By distance Basic fare (40 km) 7,300.00 8,500.00 11,050.00 13,260.00 15,580.00 17,100.00 19,560.00 21,570.00 Additional (per I ki) 92.85 108.00 140.00 170.00 200.00 219.00 250.00 275.00 By time First one hour 1,731.07 2,000.00 Additional (per 1/2 hour) 787.03 900.00 2,400.00 2,820.00 3,090.00 3,530.00 3,890.00 Waiting Lodging/trip (per 1/2 hour) 351.48 400.00 620.00 720.00 790.00 900.00 990.00 One-day trip (per 1/2 hour) 351.48 400.00 1,800.00 2,110.00 2,310.00 2,640.00 2,910.00 Funeral service Basic fare (30 k.) 15,000.00 17,500.00 44,420.00 Additional (per 1 ki) 163.85 190.00 470.00 Waiting (per 1 hour) 1,000.00 1,000.00 2,540.00 P.o. 1 ot 11 K . TARIS A1ND fAL PFOR STWALPOIT (oot'd) Effotto- d.t. Nod. 'Typ" of .-L.. 02104/16 05/01/73 07101178 05/01/179 12/1001 ('110118 12/21/00 06110181 121511111 07/1513' 1215/352 P.0.-S., Ordin ry /k 5ue1 Eop-o. (p-".oD/k) 11.76 15.88 27.75 29.14 32.13 U-D.oq o kpo... (p.r-o./k) 8.53 11.09 1',.25 17.06 10.1S 0p0.... (p.0ro-/k) 5.84 7.30 11.67 17.25 13. 0 Oodi-ory *pr.- (P-r /I.) 4.40 *.84 3. 2 8.42 - C- (pr .o../k) 2.94 3.24 5.A3 6.12 6.75 S.b-y (p-r 6 k8) 50.00 60.00 90.00 100.00 11O.0C - Eltr-tft t-1. (p.r 1 k) /- 4.21 4.63 6.38 7.45 71.2 a.11 .561 Cot.-r Stod.t.; op tO 21 k8, (p.0r0o/ko) 1. 2.92 3.06 3.375 Oo..tod..t. up to 21 k.. (P.o.../68) /I 4.25 4.725 "r.ight Crlo-d rot.. (p-r too/50 ) Li Coditit. /h Cl... 1 (too/50 k6) 593.00 652.00 717.00 75s.00 006.00 2 (tot/50 68) 539. 0 626.00 69. 00 723.0n 774.00 3 (too/50 68) 297.00 327.00 690.00 573.00 630.00 662.00 705.0o 4 (too/50 kC) L50.00 540.00 594. 00 6214.00 668.00 Spoio1 Al th-60 it. tooL 730. e 774.00 Bosgago 8It,..- 06808, Op tO 5 kg I - 100 k6 150.00 170. 00 190.00 20. 00 210.00 101 - 200 68 150.00 17000 190.00 200 .0 210 00 201- 300 k6 150.00 1 70.0 190 00 20 .00 21.00 301- 400 6 150.00 170. 0 100.00 2ro .0 210.70 D-ot 400 k6 150. 0 170.00 lqo.oo 200.00 210.00 For -.0h ddltit2i 5 k6 I- 1008 43 00 49 .o 54 .0 3. e0 61.0n 101 - 200 68 65.00 75.00 03.00 91.50 93.00 201 - 300 68 73.00 84.00 02.00 97.00 104. e 301 - 600 ko 80. 92.00 101.00 10.0on 113.00 O0_. 600 k6 S0 00 101.00 I11.00 117.00 125.00 Mi...llo .. .. S0i.his0 (p. ro_-.t/p.r 68) 4,244.00 5,?35.00 D--rg.6 (p.r ton/6 ho-r) /i 279.00 351.00 St1r0.. (p. ron/24 houre) ff 1,107.00 1,392. 00 Co..t.1 Shipping P0..... PSr. on/n tioal .11. 16.13 18.89 22.19 26.48 29.96 33.30 F-igSht S..11-.io.d (200 ton) Tob/wuti.tl .11. 18.70 23.47 28.68 33.66 19.02 43.35 L-rg.-i-od (600 too) Too/ooottoal ti. 13.04 14.06 16.75 20.59 246.2 27.15 A1iation (dt-til) 25 43 7 26.049 45.13 54.28 61.04 .0600ger 7nd 11... (p.r-ot/W) 0.437 0.503 0.03 Fr-ight P.o r s/kS . Th b8.I. f-rt for t-ti L. djot.bl. ocoordlog to -g.101 clir-at-no. ithl. t16 I.it of 200 voo Tr (i) M0ight (di.trlit. 1iI-, lot1 -11 dli-ory): djot ..nt *- of Ny 1.1975; 0th1- (to.L, urb0., -borb-bn, hi6-, Ohrt.r, f-..1): djot-4t a. of Jly 1, 1075. T7 W 10 Ourhrg 0.0 aduLt id., ithout 0060. 7d W 10 .-roh-rS. 06.. .tod.t rid.. ithout th1 tudant .o.p.P. 7- o0. q.oth0 50 ti.... Mfi.i. 0h-9 W 3.500 /f 00 .nth8 60 ti... M.i1 ch.rg. W 5Sf0f0 Z Htni-charg: by typ. of fr-ight r.: 30 tot (W 35.640), 40 ton (W 47,520), 50 tor (W 59,400). 74 A. Coo-load rate; CI... 1: Cattle, t1. 1.. fornitr-., -at, o.-, cotton, plywood, herd btood, tobocco, g.olit nd dg-roa g-ood.. Cl..s 27 C0.t, di.-I, btk-r oil, f-its. v-g.table.. Cl.. 3. L..br, rico, grait., relr, frtili-r, li..ton.. ores, puLp, asphalt, b6l10.. Cla.a 4. Sad, tr1. B. M0i0.i. h6.0. by typ. of freight car- Typ. of cat 8i1i0.. oh-rgo. 30 400 60,D90 40 too 53,440 50 to 66,800 /i lIttldiog 1ist 6 h.o.o f Coo-loud b6.i. - /k 04dl1ti.. (a) Sp-ol1 -00 o rogeo (b) Sl-opor chr.S () Hini.. ch-rg.. Up to Z30 4 Up tn40I 0 - 401 68 Dppr b-rth L-owo b0rth lopo.o. 1,200.00 2,000700 E topo,r7 7,900 -776FW C00 140 (up to 21 k4) U-D0n06 Etpr-.. 1,600.00 2,300 00 3,000 00 U-D .. Sopr... 10,100.00 15,000.DO Epr... 1,400 (op tn 107 la) S -w l spr-s 2,DOO 0O 2,900 00 4,000.00 U-D-000 Oopr... 1,000 (op to IC3 ka) S--Iur. Etop... 3,500 (op to 110 6) /1 D0t0 of th1 - -00001 r.ilroad t0riff. od f.ra.. T. 1.i.. ch-go (op t0 S L.); W 110. 0000-. G 0f.. -t ot K...a - 122 - ANNEX 3 Page 8 of 11 C. Vehicle Standards and Inspection 1. Maximum Vehicle standards in Korea compared to other countries are as follows: LIMITS OF VEHICLE SIZES AND WEIGHTS DIMENSIONS (m) AXLE LOAD (t) GROSS WEIGHT (t) Length Tractor Width Height Unit Combin. Single Tandem Unit Combin. +ST Korea 2.50 3.50 12.00 15.00 18.00 10.0 16.0 20.0 35.0 USA Maximum 2.74 4.27 16.78 19.81 21.35 10.9 18.4 29.5 40.8 Minimum 2.44 3.81 10.67 15.24 15.24 8.2 14.5 16.3 24.3 UK 2.50 4.57 11.00 13.00 18.00 (2) (2) 22.4 32.5 France 2.50 - 12.00 15.00 8.00 13.0 21.0 26.0 35.0 West Germany 2.50 4.00 12.00 15.00 18.00 10.0 16.0 22.0 28.0 Taiwan 2.50 3.80 11.00 14.00 - 8.0 11.0 14.0 20.0 Japan 2.50 3.50 12.00 24.00 24.00 10.0 20.0 20.0 40.0 Geneva Convention 2.50 3.80 11.00 14.00 18.00 8.0 14.5 (1) (1) AASHO Policy 2.59 4.12 12.40 16.78 19.81 9.1 14.5 (2) 32.6 Sources: Road Transportation Vehicle Law No. 962, January 10, 1962, revised January 16, 1967, and MOT Ordinance No. 111, March 29, 1962, revised April 20, 1967, MOT Decrees, April 4, 1968; August 8, 1969; July 1, 1970; and November 27, 1970. Other data = "Limits of Motor Vehicle, Sizes and Weights", Interna- tional Road Federation. Notes: (1) Gross weight = 11.25 + 1.25 a (a= distance between outer axles in in meters) (2) Depends on axle spacing and type of vehicle. - 123 - ANNEX 3 Page 9 of 11 2. There are two kinds of motor vehicle inspections designated by law: (a) Daily inspection: Object: all registered, operating motor vehicles Inspector: driver Time: every day before operating Format: Daily inspection report (lb) Periodic inspection: Object: all registered, operating motor vehicles except the 2-wheel small-size motors. Inspector: (i) Class-A motor vehicles must be inspected by the 1st Class inspection shop. (ii) Class B motor vehicles must be inspected by the 1st or 2nd Class inspection shop. Time: Interval between inspections: (i) Commercial motor vehicles: 2nd Class every 3 months 1st Class every 6 months (ii) Non-Commercial motor vehicle 2nd Class every 6 months 1st Class every 12 months (iii) Exceptions: a. No 2nd class inspection is required for new vehicles within 1 year for commercial use and within 2 years for noncommercial use. b. 1st class inspection is recquired only every 12 months for new vehicles for commercial and 2nd class inspection only every 6 months. c. For tractor - trailers the 2nd classs inspection is required only every 6 months and the 1st class inspection only every 12 months. Format: Only Certified Inspectors can sign the inspection report./l /1 A Certified Inspector must obtain the National Auto Mechanic License from the Government. - 124 - ANNEX 3 Page 10 of 11 D. Operating Permits /1 (a) The driver's license may be obtained from four sources, either (i) the Mayor of Seoul or (ii) the Mayor of Busan or (iii) the Mayor of Daegu (since 1981) or (iv) Provincial governors (b) The driver's licenses are classified into two types - unlimited and noncommercial as follows: (i) Type-I (unlimited) a. license for large size (all types of road vehicles); b. license for ordinary size (as above, except for buses with more than 16 seats and trucks transporting explosives or high-pressure gas over 60% of payload); and c. license for small size (auto-tricycles, motorcycles, etc.); d. special license (limited to any particular type of vehicle). (ii) Type-II (limited to noncommercial vehicle) a. license for ordinary size (cars, minibuses of less than 9 seats, trucks of 4-ton payload or less, motor powered tricycles and bicycles, etc.); b. license for small size (motorcycles); c. special license (limited any particular type of the above vehicles); and d. license for motor-installed bicycles. /1 Road Traffic Act, Law No. 941, Promulgated on December 31, 1961, amended by Five additional laws, No. 1112, 1300, 2236, 2382 and 2591 from 1962 to 1973. Laws of the Rep. of Korea, 3rd Edition, June 1975, The Korean Legal Center, Seoul, Korea (pp. 86-107). - 125 - ANNEX 3 Page 11 of 11 (c) The transport business license. (See Road Transport Licensing Procedure Annex 2). The government licenses private firms that operate services for hire on Korea-s road transport systems. Road transport licenses are issued for scheduled bus and truck services along established routes and for nonscheduled taxi and truck operations in defined areas. There are no special commodity carrier license for trucks, but special licenses are issued for truck trailers, tank trucks, and container trailers. To operate a road transport business, the operator must meet minimum fleet standards and minimum garage-area requirements. The minimum fleet requirement for road transport does not mean that the licensee must own the requisite number of vehicles. Vehicles are frequently individually owned, but may be licensed as an entity for business purposes. For road transport, licensing authorities attempt to match licensed capacity to demand. Annual surveys are conducted to determine the number of passengers carried daily by taxis and buses and the numbers of kilometers traveled daily by trucks. If the average use factor exceeds a set daily standard, i.e. 29 persons for buses, and 170 kilometers for trucks, additional capacity is licensed. This system is based on fairly uniform vehicle size and makes no allowance for improvements in productivity, whether through acquisition of larger vehicles or better use of existing vehicles. Licensing authorities also control the number of daily runs by each bus on a particular route, although the exact time of each run is determined by the operator and is reported to the government. New routes are authorized when demand has been demonstrated. March 1982 - 126 A4NEX 4 Page 1 of 2 KOREA TRANSPORT SECTOR ISSUES SURVEY Factors Affecting Fuel Consumption of Road and Rail Transport and Potential Fuel Savings by Selected Conservation Devices *nd Techniques Potential fuel sav- Factors affecting fuel consumption Applicable devices and/or techniques ings (%) /a A. Road Transport Aerodynamic Drag The air resistance encountered by a moving vehicle. 1. Wind deflectors mounted on top of the truck cab. 4-8 2. Eliminating exterior vertical ribs on trailers. 3. Reducing-the gap between tractor and trailer. 4. New truck frontal designs. Rolling Resistance The energy required to flex the tire tread and sidewall, Radial tires 3-10 and push the tire over various rood surfaces. Powertrain Efficiency 1. Fuel consumption per hp/hr of the bare engine 1. Turbocharged engines /b 2-10 "Fuel economy" engines-/c 2 The "match' between engine, transmission and axles 2. Tag axles /d 3. 4orsepower of the engine and poswer train 3. Reduction of excess hp /e 4. SIorsepower load of engine accessories (i.e., cooling 4. Fan clutches /f fan, air compressor, air conditioner, power steering) Speed Control 1. Engine speed (rpm) 1. Engine governors /S 4-20 2. Road speed (km/hr) 2. Road speed governors L Tachographs /h Vehicle Maintenance Preventive maintenance helps in fuel economy and 1. Regular inspection and replacement of air cleaners 1-5 lengthens tune-up intervals, and filters. 2. Regular tire inflation checks. Driving Practices 1. Observe speed limits. 1-10 2. Keep engine speed (rpm) down. 3. Avoid excessive speed changes. 4. Shut off engine when possible./i 5. Shift gears only when necesaary. 6. Skip shift gears when possible. Miscellaneous 1. Avoid overfilling fuel tanks. 1-3 2. Fuel additives, synthetic lubricants B. Railways Aerodynamic Drag The air resistance encountered by a moving vehicle. 1. Aerodynamically efficient grouping of mixed 1-2 trains./3 2. Eliminate caboose. Rolling Resistance The energy required to push the wheels over the rail. 1. Increase track rigidity. 3-5 2. Improve roadbeds to reduce friction. 3. Improve roller bearings/seal sets on wheel trucks. /k Powertrain Efficiency 1. Empty weight of locomotive 1. Substitute lighter weight, high strength iron and 6-10 steel components. 2. Fuel consumption per hp/hr of the bare engine. 2. Turbocharging /b 3. Horsepower load of engine accessories (i.e., air 3. Wayside energy storage /1 compressor, radiator cooling system and auxiliary Clutching mechanism to diaengage accessory generators), when not needed. Maintenance Improper operation of engine and fuel system components. Regular inspection and replacement of air filters, 1-5 fuel injectors, injection pulmps, turhochargers, governors and engine blowers. Operating trocedures 1. Shut down extra power units when not needed. 1-5 2. Reduce speed to the lowest level consistent with 3-10 required performance. 3. Shut down engine if locomotive will he idling more than one hour and ambient temperature is not expected to drop below 130C. 4. Use minimum hp/trailing gross ton ratio consistent with required performance level. 5. Use low idle when engine is idling and shut down is Impractical. 6. Use most efficient braking and throttle modulation procedure. 7. Increase car loading. Footnotes see page 2. Sources: Joint Industry-Government Voluntary Truck and Bus Fuel Economy Program, How to Save Truck Fuel; and US General Accounting Office, The Federal Government Should More Actively Promote Energy Conservation by Heavy Trucks, March 1980. C.L. Saricks and I.M. Bertram, Summary of Rail Fuel Conservation Measures, Argonne National Labaoratory, unpublished draft 1982. H.C. Eck, et al., Fuel Conservation in Triin Operation, Association of Amercian Railroads, December 1981. - 127 - ANNEX 4 Page 2 of 2 FOOTNOTES FOR ANNEX 4 /a Fuel savings of devices/techniques are only partially additive as each additional measure diminishes the base of fuel consumption that can be reduced further. The ranges shown correspond to results obtained in the US under typical operating conditions. Savings achieved elsewhere will depend on local concitions. /b Turbochargers are fans driven by exhaust gases that force more air into the combustion chamber, thereby increasing pressure and combustion efficiency. /c These are turbocharged engines with direct injection of fuel into the combustion chamber, high torque (i.e., force delivered to the driveshaft) at low engine speeds (i.e., 1,600 rpm and below), engine governors to keep engine speed within the most fuel efficient range ( i.e., generally below 2,000 rpm), and low numberical axle ratios (i.e., fewer driveshaft rotations per drive wheel rotation). /d Tandem axle arrangements in which one of the axles is "dead" (i.e., not driving wheel rotation). /e Selecting the lowest hp engine with the performance characteristics needed. /f Fans that operate only when neded to reduce engine temperature (generally less than 5% of engine running time). /g Devices that limit maximum engine or road speed (i.e., rpm or km/hr) by limiting fuel flow. /h Devices that continuously record engine speed (rpm) versus time. /i Devices now on the market will shut the engine down automatically after a specified time delay. /j A mix train is composed of different car types (e.g., hoppers, tank cars, boxcars, flatcars, etc.) An aerodynamically efficient grouping minimizes the number of surfaces exposed to the greatest air resistance. /k Wheel trucks are the wheels and associated swiveling assemblies connecting them to the rail car body. Improved bearings and seals minimize friction losses. /1 Large flywheel housed in underground structure near grade summit electroni- cally recovers braking energy tranmitted from train on down grade and trans- mits it to following train for use on upgrade. -1 28- ANNEX 5 Page 1 of 3 KOREA TRANSPORT SECTOR ISSUES SURVEY List of Follow-up Studies 1. Many of the recommended government actions and policy measures are of sufficient complexity and technical sophistication as to benefit from some measure of Bank involvement. As explained in this Survey, often more analyses are required to prepare such action programs (para. 4.25). The main objective is generally to increase efficiency in the transport sectory by promoting the right incentives. Sometimes, organizational changes might be relevant. In particular, as the transport energy issue is a relatively new area, it is to be expected that institutional arrangements are not yet well defined and that most professional staff in Government are only little familiar with current developments in the field. Thus, future Bank involvement could focus on providing technical assistance with the objective of strengthening the institutional structure of MOER, and of organizing its relationship with MOT, MCI and other ministries involved, to deal with the required research and build-up of a comprehensive action program. 2. The Bank would be willing to finance a number of recommended studies as part of future projects (e.g., the Highway Sector Project or Mari- time Sector Project). Also, it is strongly advised that a number of detailed follow-up studies of particular system anomalies be financed directly by Government and be carried out by the increasingly active Korean research institutes dealing with transportation. At this time, urgent attention should be given to the following specific studies which complexity seems to require special expertise and may warrant the Bank's assistance: (a) A study for improving the efficiency of trucking industry. With a view to provide direction in defining a more competitive and stimulating regulatory framework, it would cover (i) own-account trucking, the factors responsible for its rapid development, its operating characteristics, and the energy and investment conse- quences of its continued growth; and (ii) commercial trucking, the factors responsible for its apparent stagnation, its operating characteristics, and its energy efficiency vis-a-vis private truck and rail (para. 5.15). (b) A study for appropriating road infrastructure costs to users. With a view to promote a fairer basis for competition among trans- port modes through the introduction of a neutral taxation system, the study would analyze road costs on the country's networks, the level of user charges that ought to be raised and the taxation system best suited to recover those costs (para. 5.15). - 129 - ANNEX 5 Page 2 of 3 (c) Two separate studies for improving institutional structures for coordination and planning, namely for: (i) funding and apportioning budget for road investment programs, in particular through new mechanisms such as a unified budgeting system (para. 4.27); and (ii) restructuring institutional responsibilities for ports programs (para. 4.29). 3. Among other studies that ought to be carried out by Government researc'h institutes are: (a) an assessment of the impact in Korea of the energy conservation energy technics and devices recommended in Annex 4 (para. 6.54); (b) the definition of an energy management program, with fuel consump- tion forecast in the transport sector, and a close monitoring system (para. 6.47); (c) the development of standard energy-conservation criteria for use in project evaluation similar to Bank's project analysis methods or other recognized techniques, and that could be systematically adopted by all investment planning agencies (para. 6.09); (d) the periodic revision of MOER forecasts for transport energy demand and supply requirements to reflect anticipated savings from the conservation program, to avoid overcapacity and premature investment in energy supply facilities (para. 6.22); and (e) analyze systematically the energy implications of the Government's investment program in transportation under the Five-Year Plan. 4. With respect to the preparation of future intermodal transport projects, the objectives and status of the three recommended studies (the first started in March 1983, the second will start early in 1984) are given below: KOREA TRANSPORT SECTOR Multi-odal Transport Feasibility Studies (Ai of Der. q853) invite Receive Select sif. nr- TOSs Short- pro- Pro- consul- co- tion Title Study objective Lead agency Source of funds Cost statOs list Pposals posals anto tr.ct (ens.) Comnents and current staits Moltimodal Transport Feasibility Studies /n Review of Long-Tern Troan- See title. Tra-opnrt 7th Railway I ,5(,000 final Cc- Yes Yes Yes Yes 14 Study started March 1q82. coeds hov port Investen-t Needs io Coordination TLoan pleted n7/R2 ns/87? he pro.idod tinder bhdget rTi-tahle the SRenl-Susan Corridor Bureau - MOC v e ln r u gt. m and Feasibility Stdy nf ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~for pro jnect preparation woo agreed asd Feasibility It,,dy of p i.MthI9 Seig Rail Capacity Expansion up~~~~~~~~~~~~~~~~~~~~~~~~~~~~~non Sc March IaR2. Steering Conmittee Rail Capacity Enpansion was estahlished before start of sto,dy. Between Seol and Daejos Stady w-ald he hbsi or a multit-da] fracp-rt projet -ararbd for Fool or FY88. Kyn..ggi Region Istograted Stidy land tran.part requiro- Pbreau of 7th Railway 1,512,lOl final Coo- Yes Ye Yens V 12 overnent has ngreed tI carry not TesnoPort Itody nects (rail/road) and to coodoct Public Roads Lone and plotod Fl/MI 11/12 st ly -eder MOC which bus specific (Seonl Suburban) feasibility studies on proposed (BPR) - MOC Coal and 6c0,F0F respoen.bility for plhasole in Rea -ew lioks to deteroine the cost Cement Repio. TOER woo fl-lied after cost-cffective transport system Poject inters eport f Renal City Transport for the region. Phase 1. Pro- .a. issued to ensr Sonoth catinsity. pare Tnvestoent Plan. Phase II. wrsdy is enpete d toe start early 1004 Feasibility Stoldy. ond be basis for Repinnal T-aportly Project ochedoled for FY55 or FY52. Susan Iedustrial RelrtSec Kycooggi Rg°ino; but Coastal MOC PrpoSecd Sigh I ,500,00o N. N. N N Rn Nn 12 C-vereent has deferred decisiano TraSporttuino Stady shippicg, port tnreicaalo, and or way Sector Loa.n preynrotoy steps~ for this todv whIch port facilities requireneets MOT -old be fi-ancod s nder a proposed would be considered in addition pcorl project. tdy shund d start in to rail and road needs. 555, or iqRh for an FY89 project. /a Each resulting project will require in addition fall detailed -ngineering studies to he f-oded from othe r coerces. - 131 - KOREA TRANSPORT SECTOR ISSUES SURVEY STATISTICAL APPENDIX - 132 - KOREA TRANSPORT SECTOR ISSUES SURVEY STATISTICAL APPENDIX List of Tables 1. General Transport Sector and Energy Data 1.1 Gross Domestic Capital Formation (1971-80) 1.2 Gross National Product by Sectors (1971-86) 1.3 Allocation of Investment Plans by Sectors (1967-86) 1.4 Growth Trend of Domestic Passenger Traffic (1961-82) 1.5 Growth Trend of Domestic Freight Traffic (1961-82) 1.6 Growth Trend of International Traffic (1961-82) 1.7 Freight Movement by Main Commodities 1.8 Transportation Investment Plans by Modes (1967-86) 1.9 Actual Capital Expenditures by Sectors (1962-80) 1.10 Evolution of Transport Facilities and Equipment (1961-80) 1.11 Transport Equipment by Age Groups (1981) 1.12 Allocation of Gross National Product (1979-86) 1.13 Major Economic Indicators - Summary (1980-86) 1.14 Comparison of Investment Plans (1977-81 and 1982-86) 1.15 Transport Investment by Government and Private Sectors (1982-86) 1.16 Demand for Domestic Passenger Transport (1980-86) 1.17 Demand for Domestic Freight Transport (1980-86) 1.18 Demand for Domestic Freight by Commodities and Modes (1980-86) 1.19 Demand for International Transport (1980-86) 1.20 Pump Price of Major Petroleum Products in Korea (1980-83) 1.21 Projected Final Energy Demand by Fuel Type and Source (1980-86) 1.22 Current and Projected Final Energy Demand by Sector (1980-86) 1.23 Current and Projected Petroleum Product Demand by Sector (1980-86) 1.24 Estimated Activity and Energy Demand by Mode and Fuel Type - 1980 1.25 Comparative Energy Efficiencies of Transport Modes 1.26 Ex-Refinery Prices of Major Petroleum Products in Korea (1970-83) 1.27 Wholesale Prices of Gasoline and Diesel Oil in Korea (1970-83) 2. Roads and Road Transport 2.1 Public Roads Network (1962-82) 2.2 Status of KHC Expressways Network 2.3 Motor Vehicle fuel Consumption (1962-82) 2.4 Motorization Rates, Korea and Other Countries (1979 or 1980) 2.5 Registered Motor Vehicles (1962-82) 2.6 Korean Motor Vehicle Production (1962-82) 2.7 Commercial Licensing of Road Transport Companies (1974-82) 2.8 Regular Bus Route Development in Remote Areas by Year (1976-80) - 133 - - ii - 2.9 Road Commercial Transport Passenger Demand (1980-86) 2.10 Motor Vehicle Fleet Expansion Plan (1980-86) 2.11 Motor Vehicle Production Program (1980-88) 2.12 Road Transport Investment Plans - Summary (1982-86) 2.13 Fifth Five-Year Plan: Expenditures on Roads (1982-86) 2.14 Fourth Five-Year Plan: Expenditures on Roads (1977-81) 2.15 Expenditures on Roads (1962-81) 2.16 Expenditures on Roads (1981) 2.17 MOHA - Tentative Road Investment Program (1982-86) 2.18 KHC Expressway Investment Plan by Project (1982-86) 2.19 Road Development Financing Plan (1982-86) 2.20 Paving Program by Road Class (1981-86) 2.21 Regular Bus Route Development Plan for Remote Areas (1982-85) 2.22 Road Authorities and Agencies 2.23 Expressway Traffic and Toll Revenue by Routes (1970-81) 2.24 Expressway Traffic and Toll Revenue by Vehicle Categories (1970-81) 2.25 KHC Income and Expenditure (1977-86) 2.26 Road User Charges (1966-81) 3. Railways and Subways 3.1 Railways' Network and Fleet (1961-80) 3.2 Railways' Rolling Stock by Age (end-1981) 3.3 Train and Engine Performance by Type of Traction (1961-81) 3.4 Rail Freight Traffic-Tons and ton-km (1966-86) 3.5 Rail Freight Traffic (Average distance in km) 3.6 Intercity Rail Passenger Traffic (1966-86) 3.7 Seoul Urban Passenger Traffic (SMESRS) 3.8 Calculation of Unit Costs and Revenues (end-1981) 3.9 Traffic Revenues and Operating Costs (1967-80) 3.10 KNR Railway Passenger Demand Forecast (1980-86) 3.11 Railway Investment Plan Summary (1982-86) 3.12 Status of Investment for SMESRS (1972-86) 3.13 Major Constraints for Operating Longer Trains by Line 3.14 Railway Capacity Requirements Forecast 3.15 KNR Financing Plan (1982-86) 3.16 Summarized Forecasted Financial Statement (1981-86) 3.17 KNR's Programs to Reduce Uneconomic Services (1974-86) 3.18 Subway Investment Plan by Year (1982-86) 3.19 Subway Investment Financial Plan (1982-86) 3.20 Comparative Rail and Road Tariffs for Selected Commodities 3.21 Occupancy Ratio of Passenger Trains (January 1982) 3.22 Operating Patterns of SMESRS (1974-82) - 134 - - iii - 4. Ports and Maritime Transport 4.1 Korean Ports System 4.2 Ports Cargo Handling Capacities (1961-80) 4.3 Ports Cargo Traffic (1961-81) 4.4 Comparison of Stevedoring Capacity and Requirement (end-1981) 4.5 Comparison of Stevedoring Capacity and Requirement (1961-86) 4.6 Evolution of Marine Fleet (1961-80) 4.7 Coastal Shipping Fleet by Type (end-1981) 4.8 Coastal Shipping Fleet by Age (end-1981) 4.9 Coastal Cargo Traffic by Major Commodities (1966-81) 4.10 Port Traffic Forecast by Major Commodities (1980-86) 4.11 Ports Cargo Volume Forecast (1980-86) 4.12 Forecast of Coastal Shipping Fleet Requirement (1982-86) 4.13 Ports and Maritime Investment Plan Summary (1982-86) 4.14 Vessels Tonnage Expansion Plan (1980-86) 4.15 Development Plan of Port Stevedoring and Berthing Capacities (1982-86) 4.16 Ports' Capacity Expansion Plan and Estimated Requirement (1981-86) 4.17 Industrial Ports' Capacity Expansion Plan (1982-86) 5. Airports and Air Transport 5.1 Performance of Civil Air Transport (1961-81) 5.2 Aviation Investment Financial Plan (1980-86) 5.3 Expansion Plan of Three International Airports (1982-86) Tables in Text 2.1 Average Annual Domestic Traffic Growth (%) 2.2 Evaluation in Domestic Traffic Distribution 2.3 Summary of KNR's Operating Statistics 3.1 Fourth and Fifth Transport Investment Plans 3.2 Average Highways Traffic Volumes 3.3 Freight Terminal Construction Plan 3.4 Warehouse Construction Plan 3.5 Rail Traffic Volumes 3.6 Seoul-Daejon Annual Transport Demand 3.7 Forecast of International Air Traffic in Seoul (1979-2001) 6.1 Petroleum Import Bill for Selected Countries 6.2 Transport Energy Consumption by Fuel Type -1980 - 135 - Table 1.1 KOREA TRANSPORT SECTOR Gross Domestic Capital Formation (1971-80) (Unit: Billion Won) 1971 /a 1976 /b 1980 /b Gross domestic capital formation 748.8 3,112.4 4,660.6 (%) (100.0) (100.0) (100.0) Agriculture, forestry and fishery 55.8 273.4 340.8 (%) (7.5) (8.8) (7.3) Mining and manufacturing 136.8 719.2 982.4 (%) (18.3) (23.1) (21.1) Social overhead capital 247.1 1,019.7 1,877.4 (%) (32.9) (32.7) (40.3) Transportation, storage and communication (177.8) (701.3) (1,205.5) (%) (23.7) (22.5) (25.9) Other services 240.9 906.1 1,775.9 (%) (32.2) (29.2) (38.1) Increase in stocks 68.2 193.9 -315.8 (%) (9.1) (6.2) (-6.8) /a At 1970 constant market price. /b At 1975 constant market price. Sources: (1) Statistical Yearbook of Transportation - 1977, MOT, Korea, p.3. (2) Statistical Yearbook of Transportation - 1982, MOT, Korea, p. 5. - 136 - Table 1.2 KOREA TRANSPORT SECTOR Gross National Product by Sectors (1971-86) (Unit: Billion Won) Average annual in- Actual /a Forecast /b crease (%) 1971 1976 1980 1982 1986 (1982-86) GNP 6,962.5 11,275.5 13,842.8 40,193.3 53,676.9 7.6 (%) (100.0) (100.0) (100.0) (100.0) (100.0) Agriculture, forestry and fishery 2,005.4 2,702.7 2,207.5 7,206.8 7,955.0 2.6 (%) (28.8) (24.0) (15.9) (17.9) (18.4) Mining and manufacturing 1,455.3 3,328.3 4,935.5 12,569.5 18,766.3 10.8 (%) (20.9) (29.5) (35.6) (31.3) (35.0) Social overhead capital 769.4 1,420.7 2,306.5 7,142.4 10,004.3 8.9 (%) (11.1) (12.6) (16.7) (17.8) (18.6) Transportation and storage (316.1) (590.7) (948.2) (1,776.5) (2,032.9) 3.4 (%) (4-5) (5.2) (6.8) (4.4) (3.8) Other services 2,732.4 3,823.8 4,393.3 13,274.6 16,951.4 6.4 (%) (39.2) (33.9) (31.8) (33.0) (31.6) /a At 1975 constant market prices. /b At 1980 constant market prices. Sources: (1) Statistical Yearbook of Transportation - 1979, MOT, Korea, p. 3. (2) Statistical Yearbook of Transportation - 1982, MOT, Korea, p. 5. (3) "Draft" for Preparation of Fifth Five-Year Social and Economic Plan - Transportation Sector, August 1981, MOT, Korea, pp. 10, 64-67. - 137 - Table 1.3 KOREA TRANSPORT SECTOR Allocation of Investment Plans by Sectors (1967-86) (Billion won) Second five- Third five- Fourth five- Fifth five- year plan year plan year plan year plan (1967-71) /a (1972-76) /b (1977-81) /c (1982-86) /d Amount % Amount % Amount % Amount % Agriculture, forestry and fishery 160 16.3 649 13.6 1,979 10.4 6,300 8.7 (1,251) (3,472) (4,453) Mining 17 1.7 67 1.4 303 1.6 500 0.7 (133) (358) (682) Manufacturing 284 29.0 1,246 26.1 5,088 26.7 16,200 22.5 (2,221) (6,666) (11,448) Electricity 79 8.1 252 5.3 2,479 13.0 4,700 6.5 (618) (1,348) (5,578) Communications 59 6.0 149 3.1 750 3.9 6,960 9.4 (461) (797) (1,688) Transportation 150 15.3 1,076 22.5 2,784 14.6 9,940 14.1 (1,173) (5,757) (6,264) Housing 75 7.7 383 8.0 2,641 13.9 14,400 20.0 (587) (2,049) (5,942) Education 25 2.6 179 3.7 749 3.9 3,600 5.0 (196) (958) (1,685) Other services /e 131 13.3 777 16.3 2,255 12.0 9,500 13.1 (1,024) (4,157) (5,074) Total 980 100.0 4,778 100.0 19,028 100.0 72,100 100.0 (7,664) (25,562) (42,813) Note: Figures in parentheses indicate the 1980 prices. /a The Second Five-Year Economic Development Plan (1967-71). Government of the Republic of Korea, 1966, pp. 210-211 (1965 prices). /b The Third Five-Year Economic Development Plan (1972-76). Government of the Republic of Korea, 1971, pp. 178-179 (1970 prices). /c The Fourth Five-Year Economic Development Plan (1977-81). Government of the Republic of Korea, 1976, pp. 140-163 (1975 prices). /d The Fifth Five-Year Economic Development Plan (1982-86). Government of the Republic of Korea, 1982, p. 173 (1980 prices). /e Included public works and other construction, manpower development, health, science and technology, and others. September 1982 KOREA TRANSPORT SECTOR Growth Trend of Pomestic Passenger Traffic (1961-82) (Units: 1,000 Passengers; mpillion pass-km) 1961 1966 1962-66 1971 1967-71 1976 1972-76 1981 1977-81 1982 Traffic Y Traffie S i TrTraffic f P in- Traffic- r S in- Traffic S % in- Traffic % voltume share volume share crease volune share crease volume share crease volume share crease volume share Passenper Railways Rail intercity 88,291 13.0 138,299 8. 3 9.4 129,159 4.1 (1.5) 148,562 2.8 3.0 268,364 ?.9 13.1 282,022 2.9 Seoul subuirban N.A. - N.A. - - N.A. - 100,107 1.9 - 172,765 1.q 10.7 161,548 1.6 Subtotal 88,291 13.0 138,299 8.3 9.4 128,15Q 4.1 (1.5) 248,699 4.7 14.2 441,129 4.8 12.2 443,570 4.5 Subway - - - - - - - - 33,914 0.6 - 88,326 1.0 21.1 89,298 0.9 Highways Intercity N.A. - 277,078 16.7 - 339,886 10.7 4.2 651,624 12.2 13.9 910,657 9.9 7.0 978,402 10.0 Urban N.A. - 1,234,480 74.6 - 2,684,343 85.0 16.8 4,399,359 82.4 10.4 7,772,473 84.2 12.0 8,280,850 84.5 Suibtotal 586,864 86.4 1,511,558 91.3 20.8 3,024,229 95.7 14.Q 5,050,983 94.6 10.8 8,683,130 94.1 11.4 9,259,252 94.5 Maritime 3,743 0.6 5,909 0.4 9.6 6,371 0.7 1.5 5,994 0.1 (1.2) 9,230 0.1 9.0 9,602 0.1 Aviation 62 - 192 - 25.4 1,105 - 44.8 795 - (6.8) 1,555 - 14.4 1,844 - Total 678,060 100.0 1,655,958 100.0 19.5 3,159,864 100.0 13.8 5,340,385 100.0 11.1 9,223,370 100.0 11.5 9,803,566 lOO.C H cm Pass-km Railways Rail intercity 5,372 53.0 8,665 42.5 10.0 8,750 27.1 0.2 12,440 21.2 7.3 16,552 18.2 5.8 15,838 16.5 Seoul subuirban N.A. - M.A. - - 'N.A. - - 1,865 3.2 - 4,976 5.4 21.7 5,196 5.5 Subtotal 5,37? 53.0 R,665 42.5 10.0 8,750 27.1 0.2 14,305 24.4 10.3 21,528 23.6 8.5 21,034 22.0 Subway - - - - - - - - 388 .n7 - 1,258 1.4 26.5 1,309 1.4 Highways Intercity N.A. - N.A. - - 11,936 37.0 - 25,030 42.7 16.0 35,559 39.0 7.3 38,211 39.9 Urban N.A. - N.A. - - 10,981 ?4.1. - 18,369 31.3 10.8 31,756 34.9 11.6 33,899 35.4 Subtotal 4,618 45.5 11,464 56.2 19.9 22,917 71.1 14.q 43,399 74.0 13.6 67,315 73.9 9.2 72,110 75.3 Maritime 136 1.3 196 1.0 7.6 256 0.8 5.5 249 0.4 (0.6) 480 0.5 14.0 610 0.6 Aviation 18 0.2 55 0.3 25.0 314 1.0 41.7 276 0.5 (2.6) S57 0.6 15.1 654 0.7 Total 10,144 100.0 20,380 100.0 15.0 32,237 100.0 9.k 58,617 100.0 12.7 91,138 100.0 9.2 95,717 1O.0 Sources: (1) Fifth Five-Year Economic and Social Development Plan, Transportation Sector Plan - (1982-86), December 1981, Transportation Sector Sector Planning Task Force, MOT, Korea, pp. 2-3. (2) Statistical Yearbook of Transportation - 1981, MOT, Korea, pp. 16-17, np. 60-63, pp. 110-113. (3) Statistical Yearbook of Transportation - 1973, MOT, Korea, pp. 76-77. (4) Statistical Yearbook of Transportation - 1q82, '10T, Korea, pp. 8-9. (5) Mission to Korea. _ KOREA TRANSPORT SECTOR Growth Trend of Domestic Freight Traffic (1961-82) (Units: 1,000 tons; million tons-km) 1961 1966 1962-66 1971 1967-71 1976 1972-76 1981 1977-81 1982 Traffic % Traffic % % in- Traffic % % in- Traffic % % in- Traffic % % in- Traffic % volume share volume share crease volume share crease volume share crease volume share crease volume share Tonnage Railways 15,373 47.9 24,064 46.9 9.4 31,955 25.1 5.8 43,629 17.8 6.4 48,761 12.1 2.2 47,437 11.0 Highways Commercial N.A. - N.A. - - 73,934 58.0 - 93,751 38.2 4.9 104,256 26.0 2.1 108,576 25.2 Private & gov-t. N.A. - N.A. - - 10,320 8.1 - 94,439 38.4 55.7 226,547 56.4 19.1 247,675 57.6 Subtotal 15,299 47.6 24,528 47.8 9.9 84,254 66.1 28.0 188,190 76.6 17.4 330,803 82.4 (11.9) 356,251 82.8 Maritime 1,442 4.5 2,686 5.3 13.2 11,263 8.8 33.2 13,829 5.6 4.2 22,206 5.5 9.9 26,454 6.2 H Aviation - - - - - 7 - 49.1 5 - (5.7) 18 - 28.5 30 - Total 32,114 100.0 51,278 100.0 9.8 127,479 100.0 20.0 245,653 100.0 5.2 401,788 100.0 10.3 430,172 100.0 Tons-km Railways 3,486 88.2 5,450 81.6 9.3 7,841 48.9 7.5 9,728 44.6 4.4 10,815 37.5 2.2 10,892 36.9 Highways Commercial N.A. - N.A. - - 3,302 20.6 - 4,374 20.0 5.8 4,868 16.9 2.2 5,097 17.2 Private & gov't. N.A. - N.A. - - 237 1.5 - 2,172 10.0 55.7 5,217 18.1 19.2 5,674 19.2 Subtotal 323 8.2 558 8.4 11.6 3,539 22.1 44.7 6,546 30.0 13.1 10,085 35.0 9.1 10,771 36.4 Maritime 141 3.6 672 10.0 36.7 4,653 29.0 50.2 5,533 25.4 3.5 7,927 27.5 7.5 7,881 26.7 Aviation - - - - - 2 - - 2 - (2.5) 7 - 26.5 11 - Total 3,950 100.0 6,680 100.0 11.1 16,026 100.0 19.1 21,809 100.0 6.4 24,834 100.0 5.8 29,555 100.0 Sources: (1) Fifth Five-Year Economic and Social Development Plan, Transportation Sector Plan - (1982-86), December 1981, Transportation Sector Planning Task Force, MOT, Korea, pp. 2-3. (2) Statistical Yearbook of Transportation - 1981, MOT, Korea, pp. 111, 113, 155, 157. (3) Statistical Yearbook of Transportation - 1973, MOT, Korea, pp. 76-77, 101. (4) Statistical Yearbook of Transportation - 1982, MOT, Korea, pp. 10-11, 159, 161. (5) Mission to Korea. H KOREA TRANSPORT SECTOR Growth Trend of International Traffic (1961-82) (Units: 1,000 Passengers; million tons) 1961 1966 1962-66 1971 1967-71 1976 1972-76 1981 1977-81 1982 Traffic 7 Traffic % in- Traffic x % in- Traffic % % in- Traffic % in- Traffic % volume share volume share crease volume share crease volume share crease volume share crease volume share Passenger Total 31 100.0 143 100.0 35.8 553 100.0 31.1 2,077 100.0 30.3 3,280 100.0 8.5 3,558 100.0 Maritime - - 12 8.4 - 38 7.0 25.9 63 3.0 10.6 51 1.6 (7.4) 57 - 1.6 Aviation 31 100.0 131 Q0.6 33.4 515 93.0 31.5 2,014 97.0 31.4 3,229 98.4 8.9 3,501 98.4 Freight Total 3,416 100.0 8,442 100.0 19.8 28,478 100.0 27.5 55,862 100.0 14.4 105,530 100.0 12.8 108,742 100.0 Maritime 3,413 99.9 8,435 99.9 19.8 28,449 99.9 27.5 55,757 99.8 14.4 105,321 99.8 12.8 108,507 99.8 Aviation 3 0.1 7 0.1 18.5 29 0.1 32.9 105 0.2 29.3 209 0.2 15.0 235 0.2 Source: (1) Fifth Five-Year Economic and Social Development Plan - Transportation Sector Plan (1982-86), December 1981, Transportation Sector Planning Task Force, MOT, Korea, pp. 10-11. (2) Mission to Korea. KOREA TRANSPORT SECTOR Freight Movement by Main Commodities in 1980 (Units: 1,000 tons; million tons-km) Anth- Ferti- Oil racite Cement Grains lizer product Minerals Lumber Other Total Tonnage Total 25,093 21,217 8,986 5,632 17,566 7,246 5,617 81,420 172,777 Railways 18,588 9,837 984 1,705 3,903 3,348 665 9,978 49,008 (%) (74.1) (46.4) (11.0) (30.3) (22.2) (46.2) (11.8) (12.3) (28.4) Highways 4,871 8,349 7,928 3,821 3,234 2,664 4,899 68,760 104,526 (%) (19.4) (39.4) (88.2) (67.8) (18.4) (36.8) (87.2) (84.4) (60.5) Maritime 1,634 3,031 74 106 10,429 1,234 53 2,669 19,230 (%) (6.5) (14.3) (0.8) (1.9) (59.4) (17.0) (1.0) (3.3) (11.1) Aviation - 13.0 13.0 (%) _ Tons-km Total 4,628 3,252 607 629 6,362 1,071 384 6,253 23,186 Railways 3,943 2,018 310 461 833 798 120 2,315 10,798 (%) (85.2) (62.1) (51.1) (73.3) (13.1) (74.5) (31.2) (37.0) (46.6) Highways 141 252 289 125 96 140 258 3,619 4,920 (%) (3.0) (7.7) (47.6) (19.9) (1.5) (13.1) (67.2) (57.9) (21.2) Maritime 544 982 8 43 5,433 133 6 314 7,463 (x) (11.8) (30.2) (1.3) (6.8) (85.4) (12.4) (1.6) (5.0) (32.2) Aviation - - - 5.0 5.0 (%) (0.1) Note: Figures in ( ) indicate per-means share, in percentage. Source: (1) Fifth Five-Year Economic and Social Development Plan - Transportation Sector Plan (1982-86), December 1981, Transportation Sector Planning Task Force, MOT, Korea, pp. 10-11, 179, 188. (2) Mission to Korea. KOREA TRANSPORT SECTOR Freight Movement by Main Commodities in 1982 (Units: 000 tons; million ton-km) Anthracite Cement Grains Fertilizer Oil product Minerals Lumber Other Total Tonnage Total 28,039 19,884 8,051 6,115 19,404 8,459 5,798 86,273 182,023 Railways 19,574 9,519 651 1,829 2,877 3,876 629 8,482 47,437 (%) (69.8) (47.9) (8.1) (29.9) (14.8) (45.8) (10.8) (9.8) (26.1) Highways 6,768 7,013 7,337 4,145 4,243 3,343 5,119 70,607 108,575 (%) (24.1) (35.3) (91.1) (67.8) (21.9) (39.5) (88.3) (81.9) (59.7) Maritime 1,697 3,352 63 141 12,284 1,240 50 7,154 25,981 (%) (6-1) (16.8) (0.8) (2.3) (63.3) (14.7) (0.9) (8.3) (14.2) Aviation 30 30 Ton-km Total 4,959 3,574 512 671 5,246 1,316 394 7,120 23,792 Railways 4,221 2,053 215 503 632 960 112 2,195 10,891 (%) (85.1) (57.4) (42.0) (75.0) (12.0) (73.0) (28.4) (30.8) (45.7) Highways 196 212 267 135 126 176 269 3,716 5,097 (%wo) (4.0) (5-9) (52.2) (20.1) (2.4) (13.4) (68.3) (52.2) (21.4) Maritime 542 1,309 30 33 4,488 180 13 1,198 7,793 (%) (10.9) (36.7) (5.8) (4.9) (85.6) (13.6) (3.3) (16.8) (32.7) Aviation - - - - - ]1 11 (%) - - - - - - - (0.2) (0.2) Note: Figures in parentheses indicate per-means share, in percentage. m X (D Source: Mission to Korea. 0o KOREA TRANSPORT SECTOR Transportation Investment Plans by Modes (1967-86) (Billion won) Second five- Third five- Fourth five- year plan year plan year plan Fifth five-year plan Id /e (1967-71) /a (1972-76) lb (1977-81) /c 1982 1983 1984 1985 1986 Subtotal Modes Amount % Amount % Amount % Amount Z Amount % Amount % Amount Z Amount % Amount % Railways 46.5 31.0 105.6 9.8 402.1 14.5 187.2 10.5 271.9 13.1 269.5 13.9 211.4 10.0 390.8 19.2 1,330.8 13.4 Road Transport 59.2 39.4 682.8 63.5 1,225.6 44.0 633.1 35.6 716.5 34.6 746.1 38.5 777.7 36.7 845.4 41.6 3,718.8 37.4 Roads 30.2 20.1 227.1 21.1 457.8 16.4 210.3 11.8 235.6 11.4 274.9 14.2 281.5 13.3 307.4 15.2 1,309.7 13.2 Vehicles 28.1 18.7 394.7 36.7 741.2 26.6 402.5 22.7 453.5 21.9 457.3 23.6 473.1 22.3 521.2 25.6 2,307.6 23.2 Others 0.9 0.6 61.0 5.7 26.6 1.0 20.3 1.1 27.4 1.3 13.9 0.7 23.1 1.1 16.8 0.8 101.5 1.0 Sea Transport 34.0 22.7 204.2 19.0 994.1 35.7 484.8 27.3 494.9 23.9 521.3 26.9 566.6 26.7 587.5 28.9 2,655.1 26.7 Ships 17.5 11.7 146.6 13.6 773.3 26.3 2,061.4 20.7 Ports and facilities 16.5 11.0 57.6 5.4 260.8 9.4 593.7 6.0 Aviation 10.3 6.9 11.2 1.0 58.9 2.1 15.1 0.9 95.9 4.6 130.5 6.7 188.9 8.9 164.1 8.1 594.5 6.0 Subway - - 72.3 6.7 101.0 3.6 455.5 25.7 492.6 23.8 268.7 13.9 373.7 17.7 45.0 2.2 1,635.5 16.5 Waterway - - - - 1.9 0.1 0.8 - 0.8 - 3.1 0.1 0.2 - 0.1 - 5.0 - Total - Transport Sector 150.0 100.1 1,076.1 100.0 2,783.6 100.0 1,776.5 100.0 2,072.6 100.0 1,939.2 100.0 2,118.5 100.0 2,032.9 100.0 9,939.7 100.0 /a The Second Five-Year Economic Development Plan (1967-71), Government of the Republic of Korea, 1966, pp. 232-237 (1965 prices). /b The Third Five-Year Economic Development Plan (1972-76), Government of the Republic of Korea, 1971, pp. 188-191 (1970 prices). /c The Fourth Five-Year Economic Development Plan (1977-81), Government of the Republic of Korea, 1976, pp. 152-153 (1975 prices). /d "Draft" for Preparation of the Fifth Five-Year Social and Economic Plan-Transport Sector Plan, August 1981, MOT, Korea, pp. 64-67 (1980 prices). /e The Fifth Five-Year Economic and Social Development Plan - Transportation Sector Plan (1982-1986), December 1981, Transportation Sector Planning Task Force, MOT, Korea, p. 80, p. 126. Sources: EPB, MOT, MOC and MORA. KOREA TRANSPORT SECTOR Actual Capital Expenditures by Sectors (1962-80) - (Unit: Billion won) Science, Agriculture Manufac- Transpor- Communi- tech. & & forestry Fishery Mining turing _ Electricity tation cation Housing education Others Total Amt. % Amt. % Amt . % Amt. % Amt. % Amt. F t. % Amt. % Amt. % Amt. % First FYP 1962 7.4 27.2 0.5 1.8 1.4 5.1 4.5 16.6 3.4 12.5 3.8 14.0 1.1 4.0 0.6 2.2 - - 4.5 16.6 27.2 100.0 1963 5.0 18.4 1.3 4.8 0.5 1.9 4.9 17.9 3.6 13.2 6.5 23.9 1.3 4.8 0.6 2.2 - - 3.5 12.9 27.2 100.0 1964 4.5 18.2 0.5 2.1 0.5 2.0 4.4 17.9 3.5 13.8 4.7 18.3 2.6 14.3 0.3 1.2 0.9 3.9 1.9 8.3 23.8 100.0 1965 6.9 23.2 1.5 5.2 0.5 1.8 6.6 22.3 1.1 3.8 5.2 17.9 3.8 12.8 0.4 1.2 1.3 4.9 2.2 7.5 29.5 100.0 1966 14.2 22.7 3.2 5.0 0.9 1.4 10.8 17.2 2.8 4.5 13.1 21.0 6.9 11.1 0.5 0.8 5.9 9.4 4.3 6.9 62.6 100.0 Second FYp 1967 13.3 16.9 6.7 8.4 1.7 2.2 12.0 15.1 3.6 4.6 17.0 21.6 8.8 11.0 0.6 0.7 9.3 11.9 6.0 7.6 79.0 100.0 1968 26.3 22.3 6.0 5.1 2.1 1.9 9.9 8.4 7.6 6.6 32.0 27.2 10.5 8.9 1.0 0.8 13.1 11.1 9.1 7.7 117.6 100.0 1969 44.0 25.0 5.0 2.9 2.6 1.5 17.5 9.9 5.9 3.3 47.8 27.3 14.3 8.1 1.1 0.7 17.8 10.1 19.6 11.2 175.6 100.0 1970 39.2 21.2 5.8 3.2 5.4 2.9 17.2 9.3 8.0 4.3 44.0 23.8 15.9 8.7 1.2 0.8 23.7 12.8 23.9 13.0 184.3 100.0 1971 46.2 21.7 6.3 2.9 6.3 2.9 26.1 12.2 6.4 3.0 56.0 21.6 18.9 8.9 2.3 1.1 20.4 14.3 24.4 11.4 213.3 100.0 Third FYP 1972 53.1 17.1 6.5 2.1 5.6 1.8 90.8 29.3 7.7 2.5 60.4 19.5 27.5 8.9 2.6 0.8 32.2 10.4 23.4 7.6 309.8 100.0 1973 58.8 23.6 5.8 2.4 7.6 3.1 22.7 9.1 5.1 2.0 59.3 23.8 31.6 12.7 3.9 1.7 290 11.7 24.8 10.0 248.6 100.0 1974 108.9 27.6 2.4 0.6 14.1 3.6 25.1 6.4 27.6 7.0 84.9 21.5 44.6 11.3 1.1 0.3 35.5 9.0 50.4 12.7 394.6 100.0 1975 114.7 21.4 3.6 0.5 17.0 2.5 62.3 9.2 22.2 3.3 142.6 21.0 82.1 12.2 8.4 1.2 48.9 7.2 145.7 21.5 677.5 100.0 1976 153.1 17.6 6.6 0.8 18.5 2.1 94.5 10.8 93.4 10.7 180.7 20.7 112.0 12.9 11.4 1.3 69.9 8.0 130.9 15.1 871.0 100.0 Fourth FYP 1977 188.0 18.4 10.5 1.0 23.9 2.3 57.1 5.6 102.5 10.0 233.5 22.8 149.8 14.9 11.0 1.1 92.0 9.1 154.4 15.1 1,022.7 100.0 1978 181.6 14.6 15.1 1.2 30.8 2.5 100.3 8.1 69.6 5.6 257.8 20.7 211.3 17.0 17.6 1.4 131.6 7.2 228.9 21.3 1,244.6 100.0 1979 261.8 12.2 24.7 1.2 65.1 3.0 61.6 2.9 85.0 4.0 490.2 22.9 238.8 11.2 49.9 2.3 220.8 10.3 640.3 30.0 2,138.3 100.0 1980 /a 297.0 12.8 34.5 1.5 103.5 4.4 116.1 5.0 45.0 1.9 405.5 17.5 650.1 28.0 41.9 1.8 311.0 13.4 316.3 13.7 2,320.9 100.0 /a Based on the budget. Source: Handbook of Korean Economy - 1980, EPB, Korea, p. 44-45. - 144 - Table 1.10 KOREA TRANSPORT SECTOR -Evolution of Transport Facilities and Equipment (1961-80) 1980/61 Unit 1961 1966 1971 1976 1980 multiplier Railroad Total Length km 4,360.0 5,049.0 5,582.0 5,653.0 6,007.4 1.3 - Route length km 3,021.8 3,062.7 3,198.7 3,144.3 3,134.6 1.04 - Double-track lines km 477.0 505.0 559.0 580 719.6 1.5 Subway total length km - - - 9.5 22.1 Locomotives ea 463 587 589 774 971 2.1 Diesel engine ea 95 173 337 386 425 Electric engine ea - - - 69 90 Steam engine ea 350 251 96 68 30 Diesel-driven car ea 18 163 157 123 130 Electric-driven car ea - - - 128 296 Passenger car ea 1,303 1,418 1,621 1,806 1,901 1.5 Freight car ea 9,455 11,454 15,189 16,055 16,702 1.8 Road Total length km 27,169 34,476 40,635.4 45,513.6 46,951 1.7 National Highway Pavement Total Length km 720 1,419 2,302.2 3,746.0 5,547 7.7 Expressway Total Length km - - 655.0 1,142.4 1,224.6 Business-use motor vehicle ea 21,489 31,331 77,608 89,544 149,710 7.0 Sedan ea 4,674 10,889 29,627 29,319 62,816 13.4 Bus ea 6,287 7,675 15,646 19,229 28,214 4.5 Truck ea 10,528 12,767 32,335 40,996 58,680 5.6 Nonbusiness moror vehicle ea 7,710 18,829 62,661 129,434 378,019 49.0 Sedan ea 2,985 10,761 37,955 66,780 186,286 62.4 Bus ea 94 387 1,765 4,414 14,249 151.6 Truck ea 4,631 7,681 22,941 58,240 177,484 38.3 Harbor stevedoring capacity 000 ton/yr 9,020 14,650 18,751 34,000 82,261 9.1 Ship Tonnage -000 GT 240 294 1,138 3,139 5,436 22.7 International-line vessel 000 GT 178 219 932 2,907 5,175 29.1 Domestic-line vessel 000 GT 62 75 206 232 261 4.2 Airplane in service ea 3 6 23 25 38 12.7 (No. of seats supplied) seat 120 328 1,514 4,414 7,278 60.6 Tourist hotel guest room room 578 1,920 5,673 11,514 18,547 32.1 Source: Fifth Five-Year Economic and Social Development Plan, Transportation Sector Plan (1982-86), December 1981, Transportation Sector Planning Task Force, MOT, Korea, p. 18. - 145 - Table 1.11 KOREA TRANSPORT SECTOR Transport Equipment by Age Groups (as End of 1981) A. Railways and Vessels Under 11-12 21-25 26-30 Over 10 years years years years 31 years Total Railways (each) Passenger car 928 1,135 14 47 27 2,150 Freight car 7,406 6,263 159 1,812 925 16,565 Total 8,334 7,398 173 1,859 952 18,716 Vessels (ton) Passenger ship 15,276 12,817 436 - - 29,529 Freight ship 1,569,278 1,747,705 124,349 17,234 18,483 3,477,049 Tanker 680,203 656,134 24,053 13,989 4,734 1,379,113 Others 41,616 25,283 1,490 937 4,796 74,122 Total 2,306,373 2,441,939 150,328 32,160 28,013 4,958,813 B. Motor Vehicles Under 6-10 11-15 Over 5 years years years 16 years Total Commercial Motor Vehicles (each) Passenger car 65,692 237 25 - 66,224 Bus 28,829 1,647 161 29 30,666 Truck 50,943 7,041 2,030 339 60,353 Total 145,734 8,925 2,216 369 157,243 Non-commercial Motor Vehicles (each) Passenger car 187,073 12,256 1,872 180 201,381 Bus 16,361 3,172 372 24 19,929 Truck 170,817 17,729 3,293 1,362 143,201 Total 374,251 33,157 5,337 1,565 414,510 Grand Total 519,985 42,082 7,753 1,934 571,754 Passenger 253,035 12,493 1,897 180 267,605 Bus 45,190 4,819 533 53 50,595 Truck 221,760 24,770 5,323 1,701 253,554 Source: Statistical Yearbook of Transportation - 1982, MOT, Korea, p. 44. KOREA TRANSPORT SECTOR Allocation of Gross National Product (1979-86) (Unit: billion won) (1980-price) 1979 1980 1981 1982 1983 1984 1985 1986 __ Average Composite Comite te Composiposite osite Composite Composite Componite Composite annual in- Amount ratio Aoount ratio Amo.st ratio Amount ratio Amount ratio Amount ratio Amount ratio Amount ratio crease (X) ---- (Actual) ------ (Tentative) --- ----------------------------------------------------------- (For-cat) --------------------------------------------------------- (1982-86) Gross satios.I product 37,138.8 100.0 35,030.6 100.0 37,216.0 100.0 40,193.3 100.0 43,207.8 100.0 46,448.4 100.0 49,932.0 100.0 53,676.9 100.0 7.6 (X increase) (6.4) (-5.7) (6.2) (8.0) (7.5) (7.5) (7.5) (7.5) Consumption expenditure 27,802.1 74.9 27,593.4 78,8 28,420.0 76.4 29,913.0 74.4 31,486.9 72.9 33,146.1 71.4 34,891.6 69.9 36,730.2 68.4 5.3 Govern-ent (4,400.1) (11.8) (4,402.9) (12.6) (4;622.0) (12.4) (4,806.9) (12.0) (4,999.2) (11.6) (5,199.1) (11.2) (5,407.1) (10.8) (5,623.4) (10.5) (4.0) Private (23,402.0) (63.0) (23,190.5) (66.2) (23,797.9) (64.0) (25,106.1) (62.4) (26,487.7) (61.3) (27,947.0) (60.2) (29,484.5) (59.1) (31,106.8) (57.9) (5.5) (X increase) (8.7) (-0.9) (2.6) (5.5) (5.5) (5.5) (5.5) (5.5) Gress investoent 14,359.0 38.6 10,869.8 31.0 11,818.9 31.7 12,764.4 31.8 13,720.5 31.8 14,961.1 32.2 16,378.5 32.8 18,030.2 33.6 8.6 (X increase) (17.5) (-24.3) (8.7) (8.0) (7.5) (9.0) (9.5) (10.1) Ptied capital formation (13,017.1) (35.0) (11,094.0) (31.7) (11,060.7) (29.7) (12,078.3) (30.1) (13,105.0) (30.3) (14,258.2) (30.7) (15,541.4) (31.1) (17,017.8) (31.7) (9.0) (X increase) (9.7) (-14.8) (-0.3) (9.2) (8.5) (8.8) (9.0) (9.4) ICOR (5.87) _ (5.06) (4.06) (4.35) (4.40) (4.46) (4. 54) Increat e in ntoeks (1,341.9) (3.6) (-224.2) (-0.7) (758.2) (2.0) (686.1) (1.7) (615.5) (1.5) (702.9) (1.5) (837.1) (1.7) (1,012.4) (1.9) Exporti 12,716.8 34.2 13,672.5 39.0 15,693.8 42.2 17,532.8 43.6 19,593.6 45.3 21,485.0 46.3 23,820.2 47.7 26,318.8 49.0 10.9 Foreign trade (9,370.2) (25.2) (10,487.9) (29.9) (11,967.2) (32.2) (13,351.7) (33.2) (14,897.3) (34.5) (16,508.1) (35.5) (18,425.6) (36.9) (20,555.6) (38.3) (11.4) Invisiblen (receipt) (3,346.2) (9.0) (3,184.6) (9.1) (3,726.6) (10.0) (4,181.1) (10.4) (4,696.3) (10.9) (4,976.8) (10.7) (5,394.6) (10.8) (5,763.2) (10.7) (9.1) Imports 17,739.1 47.8 17,105.0 48.8 18,716.6 50.3 20,016.9 49.8 21,593.2 50.0 23,143.8 49.8 25,158.3 50.4 27,402.2 51.1 7.9 Foreign trade (14,415.4) (38.8) (13,258.7) (37.8) (14,018.4) (37.7) (15,089.4) (37.5) (16,305.2) (37.7) (17, 528.9) (37.7) (19,127.6) (38.3) (21,007.7) (39.1) (8.4) Invisiblen (payment) (3,323.7) (8.9) (3,846.4) (11.0) (4,698.2) (12.6) (4,927.5) (12.3) (5,288.0) (12.2) (5,614.9) (12.1) (6,030.7) (12.1) (6,394.6) (11.9) (6.4) Foreign savings 5,022.3 13.5 3,432.6 9.8 3,022.8 8.1 2,484.1 6.2 1,999.6 4.7 1,658.8 3.6 1,338.1 2.7 1,083.5 2.0 - Doestic savings 9,336.7 25.1 7,437.2 21.2 8,796.1 23.6 10,280.3 25.6 11,720.9 27.1 13,302.3 28.6 15,040.4 30.1 16,946.7 31.6 - Net factor iseo-e fro. abroad -231.1 -0. 6 -928.4 -2.7 -2,243.1 -3.3 -1,217.0 -3.0 -1,188.3 -2.8 -1,203.6 -2.6 -1,250.5 -2.5 -1,285.3 -2.4 - Gross dos-tic product 37,369.9 100.6 35,959.0 102.7 38,459.1 103.3 41,410.3 103.0 44,396.1 102.8 47,652.0 102.6 51,182.5 102.5 54,962.2 102.4 7.4 Source: "Drsft for Preparation of Pifth Five-Year Social and E-onomic Plan - Transportation Sector, Aug. 1981, MOT, Korea, p. 12. - 147 - Table 1.13 KOREA TRANSPORT SECTOR Major Economic Indicators - Summary (1980-1986) Annual in- crease (%) Unit 1980 1981 1986 1982-86 Gross national product W bln, current prices 35,030.6 44,650.4 107,461.2 - W bln, 1980 prices 35,030.6 37,216.0 53,676.9 - (X increase) X (-5.7) (6.2) (7.5) 7.6 Gross investment rate %, current prices 31.0 31.2 32.4 20.2 (Fixed investment) X, current prices (31.7) (29.8) (30.1) (19.4) Domestic savings rate X, current prices 21.2 .22.3 29.6 - Overseas savings rate X, current prices 9.8 8.9 2.8 - Per capita gross US$, current prices 1,506 1,703 3,471 - national product US$, 1980 prices 1,506 1,576 2,103 5.9 Total population -000 persons 38,124 38,723 41,839 1.55 GNP deflator 1980 - 100 100.0 120.0 200.2 10.8 Monetary circulation Balance, W bln 3,807.0 4,682.0 10,720.0 - (% increase) % (16.3) (23.0) (16.0) 18.0 Current account US$ mln, current prices -5,700 -5,400 -3,600 - (balance of payments) Commodity export US$ mln, current prices 17,212 21,000 53,000 20.3 Commodity import US$ mln, current prices 21,972 25,200 55,500 17.1 Exchange rate Annual ave., W per $ 610 677 740 1.8 Year-end, W per $ 660 693 743 0.8 Source: "Draft" for Preparation of Fifth Five-Year Social and Economic Plan - Transporta- tion Sector, Aug. 1981, MOT, Korea, p. 9. - 148 - Table 1.14 KOREA TRANSPORT SECTOR Comparison of Investment Plans (1977-81 and 1982-86) (Billion won) The Fourth Plan (1977-81) /a /c The Fifth Plan (1982-86) /b Investment requirements Composi- Investment requirements Composi- Domestic Foreign tion ratio Domestic Foreign tion ratio Transport investment capital capital Total (X) capital capital Total (X) (US$ mln) (US$ mln) Railways 289.9 231.7 402.1 14.5 894.3 715.6 1,330.8 13.4 (719.0) (574.6) (997.2) Road transport 1,141.0 174.9 1,225.6 44.0 3,568.9 245.8 3,718.8 37.4 (2,829.7) (433.8) (3,039.5) Roads /d 373.1 174.9 457.8 16.4 1,175.0 220.8 1,309.7 13.2 (925.3) (451.2) (1,135.3) Vehicles /e 741.2 - 741.2 26.6 2,307.6 - 2,307.6 23.2 (1,838.2) (-) (1,838.2) Others 26.6 - 26.6 1.0 86.3 25.0 101.5 1.0 (66.0) - (66.0) Sea transport 557.4 902.3 994.1 35.7 1,693.2 1,576.9 2,655.1 26.7 (1,382.4) (2,237.7) (2,465.4) Ships 358.8 773.6 733.3 26.3 1,228.6 1,365.2 2,061.4 20.7 (889.8) (1,918.5) (1,818.6) Ports and facilities 200.6 128.7 260.8 9.4 464.5 211.7 593.7 6.0 (497.5) (319.2) (646.8) Aviation 51.4 15.5 58.9 2.1 175.4 687.0 594.5 6.0 (127.5) (38.4) (146.1) Subway 54.1 97.0 101.0 3.6 1,324.5 509.8 1,635.0 16.5 (134.2) (240.6) (250.5) Waterway 1.9 - 1.9 0.1 5.0 - 5.0 - (4.7) - (4-7) Total 2,095.7 1,421.4 2,783.6 100.0 7,661.4 3,735.0 9,939.7 100.0 (5,197.3) (3,525.1) (6,903.3) Total capital expenditure 14,188.0 10,000.0 19,028.0 57,659.2/f 23,673.4 72,100.0 (35,186.2) (24,800.0) (47,189.4) Total transport investment as % of total capital expenditure 14.8 14.2 14.6 13.3 15.8 14.0 /a The Fourth P'lan figures are in 1975 constant value. /b The Fifth Plan figures are in 1980 constant value. /c The figures in parentheses indicate the 1980 constant value. /d Including construction, repairing and loan repayment. /e Including increase of vehicle fleet and vehicle replacement. /f Estimate. Note: GNP deflator: 1975 - 100, 1980 - 247.9. Sources: (1) The Fourth Five-Year Economic Development Plan (1977-81), 1976, EPB, Korea, pp. 140-141, pp. 152-153. (2) The Fifth Economic and Social Develpoment Five-Year Plan - Transport Part for Implementation (1982-86), October 1981, MOT, Korea, p. 51. (3) Transport Part of the Investment Plan, October 12, 1981, EPB, Korea, pp. 17, 26, 8. - 149 - Table 1.15 KOREA TRANSPORT SECTOR Transport Investment by Government and Private Sectors (1982-1986) (Billion Won; 1980 Price) Government Private Total Railways 1,330.8 0 1,330.8 Highways 1,210.7 2,508.1 3,718.8 Maritime 578.2 2,076.9 2,665.1 Aviation 163.4 431.1 594.5 Subway 951.5 684.0 1,635.5 Waterway 5.0 0 5.0 Total 4,329.6 5,700.1 9,939.7 Source: (1) The Fifth Five-Year Economic and Social Development Plan - Transportation Sector Plan (1982- 1986), Transportation Sector Planning Task Force, December 1981, MOT, Korea, P. 87,126, 140,200. (2) "Draft" for preparation of Fifth Five-Year Social and Economic Plan-Transport Sector Plan, August 1981, MOT, Korea, p. 31. KOREA TRA5SPORT SECTOR Demand for Domestic Passenger Transport (198 0-86) 6 1980 1981 1982 1983 1984 1985 1986 1982-86 1986-80 7-X X __ v . X X AveraBe MAiti- Setorrs Traffio Share Growth Tratffi Share Growth Traffic Share Growth Traffic Share Grooth Traffir Shore .rowth Traffic Shore Growth Traffir Share Growth groath pirr Passenger ('000) Total 8,544,916 10.0 5. 9,1 0 100.0 8.8 9,864,917 100).0 8.3 10,733,029 100.0 8.8 11,634603 I(O.0 8.4 12,600,275 100.0 8.3 13,633,497 100.0 8.2 8.40 1.60 Railways 430,773 5.0 1.7 470,154 5.2 9.3 523,873 5.3 11.3 585,856 5.5 11.8 650,931 5.6 11.1 721,065 5.7 10.8 793,702 5.8 10.1 11.01 1.84 Subhays 65,076 0.8 (2.1)/b 102,200 1.1 37.0 113,515 1.2 11.1 181,405 1.7 59.8 363,905 3.1 100.6 805,555 6.4 21.4 962,140 7.1 19.4 56.59 14.78 Highways 8,039,006 94.1 5.6 8,525,291 93.6 6.0 9,216,447 93.4 8.1 9,954,056 92.7 8.0 10,607,368 91.2 6.6 11,060,434 87.8 4.3 11,863,647 87.0 7.3 6.83 1.48 0.1 5.7 11,441 0.1 5.7 4.9 0 1.33 Maritime 8,580 0.1 8.2 9,006 0.1 5.0 9,329 0.1 3.6 9,772 0.1 4.7 10,253 0.1 4.9 10,826 - 11.6 2,672 - 11.6 10.40 1.80 Aviation 1,481 - (18.3) 1,629 - 10.0 1,753 - 7.6 1,941 - 10.7 2,146 - 10.6 2,395 Pas-km (eI.) Total 87,626 100.0 2.6 94,023 100.0 7.3 101,921 100.0 8.4 110,788 100.0 8.7 120,537 lOO.0 8.8 130,903 100.0 8.6 141,375 100.0 8.0 8.00 1.61 Railvays 21,640 24.7 1.2 23,401 24.9 8.1 25,654 25.2 9.6 28,177 25.5 9.8 31,004 22.7 10.0 33,958 25.9 9.5 36,990 26.1 8.9 9.59 1.71 .b.hays 926 1.1 2.4 1,362 1.4 47.1 1,517 1.5 4.4 2,227 2.0 46.8 4,084 3.4 83.4 8,162 6.2 99.9 9,745 6.9 19.4 48.22 10.52 Highways 64,131 73.1 3.3 68,247 32.6 6.4 73,669 72.3 7.9 74,210 71.5 7.5 84,172 69.8 6.3 87,391 66.8 3.8 93,115 65.9 6.5 6.41 1.45 Maritime 401 0.5 3.9 426 0.5 6.2 443 0.4 4.0 464 0.4 0.7 489 0.4 5.4 516 0.4 5.5 549 0.4 6.4 5.20 1.37 Aviation 528 0.6 (17.0) 587 0.6 11.2 638 0.6 8.7 710 0.6 11.3 788 0.7 11.0 876 0.7 11.2 976 0.7 11.4 10.70 1.85 /a Forecast figneos as itdi-ated in FFYP; aetnaj Eiguras for 1981 nar ohowo io Table 1.4. /b Figures in braokets - ) tdirate negative growth. Sosroe: *Draft" for preparation of Fifth Fiv-Year So-ial and Eoonomic Plan-Tr.anport Sert-r. Ang-nt 1981, MOT, Kor.a, p. 17. Septehber 1982 KOREA TRANSPORT SFCTOR D-md for D Ce-ti T 90586) Ia 1980 1981 1982 1983 1984 1985 1986 1982-86 1986-80 % % 7 ~~~~~~~~~~~~~~~~~~~~~~~~~SSAv-rg. M.Sti- Sector- Traffic Share Growth Traffic Share Growth Traffic Share Growth Traffic Share Growth Traffic Share Growth Traffic Share Growth Traffic Share Growth gro-th plier To.s ('000) Total 172,776.8 100.0 (18.4)/h 182,279.4 100.0 5.5 194,856.0 100.0 6.9 208,691.3 100.0 7.1 223,717.4 100.0 7.2 240,048.7 100.0 7.3 257,812.0 100.0 7.4 7.18 1.49 Railways 49,008.0 28.4 (3.7) 51,225.0 2E.1 4.5 53,680.0 27.5 4.8 56,161.0 26.9 4.6 58,916.0 26.3 4.9 61,933.0 25.8 5.1 65.386.0 25.4 5.6 5.00 1.33 Highways 104,526.0 60.3 (26.1) 110,826.0 60.8 6.E 119,573.( 61.4 7.9 129,391.0 62.0 E.2 139,99 5.0 62.6 8.2 151 ,49S.0 63.1 8.2 163,870.0 63.5 8.2 8.14 1.37 Maritime 19,230.0 11.1 - 20,215.0 11.1 5.1 21,589.0 11.1 6.8 23,124.0 11.1 7.1 24,790.0 11.1 7.2 26,603.0 11.1 7.3 28,537.0 11.1 7.3 7.14 1.48 Aviation 12.8 - (7.9) 13.4 - 4.7 14.3 - 6.7 15.3 - 7.0 16.4 - 7.2 17.7 - 7.9 19.0 - 7.3 7.23 1.48 Tona-km (mtillion) Total 23,186.1 100.0 (8.3) 24,322.3 100.0 4.9 25,781.0 100.0 6.0 27,457.2 100.0 6.5 29,242.7 100.0 6.5 30,201.5 100.0 6.7 33,354.0 100.0 6.9 6.52 1.44 Railways 10,798.0 46.6 (2.6) 11,267.0 46.3 4.3 11,756.0 45.6 4.3 12,329.0 44.9 4.9 12,938.0 44.3 4.9 13,603.0 43.6 5.1 14,357.0 43.1 5.5 4.97 1.33 Highways 4,920.0 21.2 (36.4) 5,235.0 21.6 6,4 5,780.0 22.2 9.0 6,246.0 22.8 9.4 6,818.0 23.3 9.2 7,461.0 23.9 9.4 8,153.0 24.4 9.3 9.26 1.66 Maritime 7,463.0 32.2 (0.7) 7,815.0 32.1 4.7 8,312.0 33.2 6.4 8,876.0 32.3 6.8 9,480.0 32.3 6.8 10,100.0 52.5 6.9 10,836.0 32.5 7.0 6.75 1.45 Aviation 5.1 - 2.0 5.3 - 3.9 5.8 - 9.4 6.2 - 4.9 6.7 - 8.1 7.5 - 1.9 8.0 - 6.7 8.58 1.57 /a Forecast figures -s iodirated it FFYP, -ct-l1 figures for 1981 are showed in Table 1.5. 7i; Figures in brackets () indicate negative growth. Source: "raft' for preparation of Fifth Fiee-Year Social and e--conic Plan-Transport Sector, August 1981, MOT, Korea, p. 18. I1; KOREA TRANSPORT SECTOR Demand for Domestic Freight by Commodities and Modes (1980-1986) (Unit: Million tons; Billion ton-km) 1980 1981 1982 1983 1984 1985 1986 Yin- Mode share () % in- % in- i vi- Y in- % in- Mode share (Y)- Traffic crease Rail Road Sea Traffic crease Traffic crease Traffic crease Traffic crease Traffic crease Traffic crease Rail Road Sea Tons Anthracite coal 25.1 (6.8)/a 74 19 7 26.3 4.8 27.2 3.5 27.7 1.9 28.2 1.8 28.8 2.2 29.4 2.0 72 21 7 Cement 21.2 (10.4) 46 40 14 23.4 10.5 25.5 9.0 27.4 7.4 30.9 12.6 32.6 5.7 36.2 10.9 41 42 17 Petroleum 17.6 (14.5) 22 18 60 18.5 5.1 19.2 4.5 20.3 5.4 21.5 5.7 22.8 6.1 24.3 6.6 23 20 57 Fertilizer 5.6 (15.7) 30 68 2 6.0 7.0 6.1 2.8 6.3 0.9 6.3 0.9 6.4 1.0 6.4 0.9 31 67 2 Grains 9.0 (18.9) 11 88 1 11.9 32.5 12.1 2.3 12.5 2.4 12.7 1.7 13.0 2.6 13.3 2.0 10 90 - Mineral ore 7.2 (18.8) 46 37 17 7.6 5.2 8.0 5.0 8.4 4.7 3.8 4.8 9.2 4.5 9.6 4.4 51 34 15 Lumber 5.6 (20.6) 12 87 1 5.9 4.6 6.2 6.4 6.6 5.1 6.9 5.1 7.3 4.9 7.6 4.9 12 88 0 Other 81.4 (23.7) 12 84 4 82.7 1.6 90.1 9.1 99.6 10.4 108.4 8.9 119.9 10.6 131.0 9.2 11 84 5 Total Tons 172.7 (18.4) 28 61 11 182.3 5.5 94.8 6.9 208.6 7.1 223.7 7.2 240.0 7.3 257.8 7.4 26 63 11 Ton-km Anthracite coal 4.6 1.4 4.8 4.7 4.9 2.5 5.1 2.1 5.2 1.8 5.3 2.2 5.4 2.1 Cement 3.3 (7.8) 3.6 9.5 3.8 8.7 4.2 7.2 4.7 12.2 4.9 5.5 5.4 10.6 Petroleum 6.4 (1.6) 6.7 5.3 7.n 5.6 7.5 5.8 5.9 5.8 8.4 6.1 8.9 6.2 Fertilizer .6 (12.9) .7 4.1 .6 3.1 .7 2.1 .7 2.0 .7 2.0 .7 2.1 Grains .6 (15.5) .7 21.1 .7 1.5 .8 1.5 .8 1.1 .8 1.7 .8 1.2 Mineral ore 1.1 (9.5) 1.1 3.8 1.1 4.8 1.2 5.2 1.3 5.1 1.4 5.0 1.4 5.1 Lumber .4 (19.0) .4 4.2 .4 5.5 .4 4.7 .5 4.5 .5 4.5 .5 4.3 Other 6.3 (18.2) 6.3 1.0 6.1 8.7 7.6 11.3 8.3 8.4 9.3 11.9 10.1 9.5 Total Ton-km 23.2 (8.3) 24.3 4.9 25.7 6.0 27.5 6.5 29.3 6.5 31.2 6.7 33.4 6.9 /a Fig.res in brackets () indicate negative growth. Source: "Draft" for preparation of Fifth Five-Year Social and Economic Plan - Transportation Sector, Aug. 1981, MOT, Korea, p. 24. KORYA TRANSPORT SECTOR Demand for Internationalransport (1980-86) 1980 1981 1982 1983 1984 1985 1986 1982-86 1986- 80 T x S X Average M.iti- Sector- Traffic Share Growth Traffic Share Gr-tI, Traffic Share Crowth Traffic Share Grooth Traffic SIar Gr01 Trffic SIae Grth T-tit Shr G-th grth plier Passenger ( 000) Total 2,963.0 100.0 (2.3)/a 3,12 5. 100.0 5.5 3,589. 100.0 24.8 4,166.0 100.0 16.1 4,836 0 100.0 16.1 5,639 0 OS 0 16. 6 6,575.1) ID0.0 16 6 16.04 2.22 Maritime 41.0 1.4 (4.77 43.0 1.4 4.9 44.0 1.2 2.3 46.0 1.1 4.5 49.0 1.0 6,5 52.0 0.9 6.1 55.0 0.8 5.8 5.05 1.34 Aviation 2,922.0 98.6 (2.2) 3,086.0 98.6 5.6 3,545.0 98.6 14.9 4,120.0 98.9 16.2 4,787.0 99.0 16.2 5, 587. 0 99 1 16.7 6,520.0 99.2 16.7 16.14 2.23 Toms ('000) Total 94,226.0 150.0 3.6 102,207.2 100.0 8.5 112,294.1 1008L 9.0 122,930.5 180.0 9.5 134,922.0 100.0 9.0 1OO49,51 10.0 10.8 165,415.0 100.0 10.6 10.12 1.76 M-aritie 94,025.0 99.8 3.5 102,000.0 99.8 8.5 112,051.0 99.8 9.9 122,644.0 99.8 9.5 134,584.0 99.7 9.7 149,115.0 90.7 10.8 164,941.0 99.7 10.6 10.09 1.75 Aviation 191.0 0.2 14.0 207.2 0.2 8.5 243.1 0.2 17.3 286.5 0.2 17.9 338.0 0.2 18.0 400.0 0.3 18.3 474.0 0.3 18.5 18.00 2.48 /a Figures in brackets () iodicate -egative growth. Source: Draft for preparation of Fifth FiveY-ear Social and Eco.n..c Pan..- Transport Sector . A0g0 t 1981, MOT, Korea, p. 19. KOREA TRANSPORT SECTOR Pump Price of Major Petroleum Products in Korea (1980-83) (Won/liter) Ex-refinery price Wholesale price Retail price Ex-refinery Tax rate Margin rate Margin rate price Tax /a Price (v) MarRin Price (%) Margin Price (M) Premium gasoline 1080 NOV 321.28 499.62 P20.90 60.9 23.15 844.05 2.7 35.95 880.00 4.1 1981 APR - - 944.04 - - - - - 1,010.00 - 1982 MAR 391.64 609.05 1,000.69 60.9 22.52 1,023.21 2.2 36.79 1,060.00 3.5 1983 FEB 377.59 453.11 830.70 54.5 22.52 853.22 2.6 36.78 890.00 4.1 1983 MAY 377.59 453.11 830.70 54.5 22.52 853.22 2.6 36.78 890.00 4.1 Regular gasoline 1980 NOV 249.91 380.43 630.34 60.4 17.23 657.57 2.6 22.43 680.00 3.3 1981 APR 261.00 399.34 660.34 60.5 - - - - 700.00 - 1982 MAR 272.78 427.19 699.97 61.0 17.41 717.38 2.4 22.62 740.00 3.1 1983 FEB 281.80 338.16 619.96 54.5 17.41 637.37 2.7 22.63 660.00 3.4 1983 MAY 281.80 338.16 619.96 54.5 17.41 637.37 2.7 22.63 660.00 3.4 Kerosene 1980 NOV 180.12 22.84 202.96 11.3 9.30 212.26 4.4 13.74 226.00 6.1 1981 APR - - 242.92 - - - - - 268.00 - 1982 MAR 237.34 29.62 266.96 11.1 10.10 277.06 3.6 14.94 292.00 5.1 1983 FEB 247.24 - - - - - - - 297.00 - 1983 MAY 241.79 24.18 265.97 9.1 10.10 276.07 3.7 14.93 291.00 5.1 Diesel 1980 NOV 160.30 33.54 193.84 17.3 8.90 202.03 4.4 12.97 215.00 6.0 1981 APR 197.00 34.97 231.97 15.1 - - - - 255.00 - 1982 MAR 211.25 43.68 254.93 17.1 8.94 263.87 3.4 14.13 278.00 5.1 1983 FEB 216.60 - - - - - - - 283.00 - 1983 MAY 211.60 42.10 253.70 16.6 9.17 262.87 3.5 14.13 277.00 5.1 la Including excise tax, V.A.T., and transportation cost. S Sources: (1) A Study on the Improvement of Energy Price Structure in Korea, Dec. 1982, EPB, Korea, pp. 66-67. (2) MOER and mission to Korea. KOREA TRANSPORT SECTOR Projected Final Energy Demand By Fuel Type and Source (1980-86) /a Unit Historic (Preliminary) Projected Growth rate Source (%) 1970 1975 1980 1981 1982 1983 1984 1985 1986 1982-86 Domestic Energy MTOE 10,332 11,397 11,622 11,662 11,811 11,994 12,068 12,189 12,117 6.3 (52.5) (41.2) (26.5) (25.4) (24.3) (21.9) (20.6) (19.4) (18.1) Anthracite Ton ( 000) 11,500 15,945 18,715 18,450 19,231 20,300 21,800 21,200 21,500 2.5 (29.4) (27.3) (19.5) (18.5) (18.2) (17.0) (16.3) (15.5) (14.7) Hydroelectric GwH 1,220 1,863 1,984 2,732 2,193 2,146 2,144 2,760 2,903 5.4 power (1.5) (1.5) (1.1) (1.5) (1.1) (1.0) (0.9) (1.1) (1.1) Firewood MTOE 4,251 3,420 2,517 2,492 2,417 2,120 1,964 1,747 1,501 -9.3 1 (21.6) (12.4) (5.7) (5.4) (5.0) (3.9) (3.3) (2.8) (2.2) W Imported Energy MTOE 9,347 16,247 32,493 34,167 36,707 42,842 46,606 50,533 54,952 8.8 (47.5) (58.8) (73.7) (74.6) (75.7) (78.1) (79.4) (80.6) (81.9) Petroleum Bbl (-000) 62,256 104,040 178,998 176,797 183,828 215,953 217,916 218,962 229,389 3.9 (47.0) (56.3) (60.3) (57.3) (56.3) (58.3) (54.7) (51.1) (49.8) Gas Ton ( 000) 37 149 392 431 575 1,113 1,238 2,172 3,002 44.6 (0.2) (0.6) (1.0) (1.1) (1.4) (2.4) (3.5) (4.3) (5.6) Anthracite coal Ton (-000) - - 2,115 3,222 3,580 4,724 4,618 4,510 4,648 4.5 (2.8) (4.2) (4.4) (4.0) (3.6) (3.3) (3.2) Bituminous coal Ton ('000) 80 786 5,032 7,176 8,612 8,918 11,798 13,930 13,772 93.4 (0.3) (1.9) (7.5) (10.3) (11.7) (10.7) (13.3) (14.7) (13.6) Nuclear energy GwH - - 3,477 2,887 3,599 5,935 12,613 18,243 26,242 53.3 (2.0) (1.6) (1.9) (2.7) (5.4) (7.3) (9.8) Total MTOE 19,679 27,644 44,115 45,829 48,518 54,836 58,674 62,722 67,069 7.0 (100.0) (100.0) (100.0) (100.0) (100.0) (100.0) (100.0) (100.0) (100.0) /a In computing final energy, all electricity (including energy consumed in power generation, distribution and consump- tion) is allocated to the final or ultimate use sector. Source: Ministry of Energy and Resources (MOER). - 156 - Table 1.22. KOREA TRANSPORT SECTOR Current and Projected Final Energy Demand by Sector (1980-1986) /a Growth rate 1980 1981 1982 1983 1984 1985 1986 1982-86 Industry 208161 23,086 24,841 26,559 28,351 30,182 32,156 6.9 MTOE (%) /a (47.2) (48.4) (48.5) (48.4) (48.3) (48.1) (48.0) Transportation 4,979 5,936 6,846 7,729 8,731 9,867 11,141 13.4 MTOE (%) /a (11.3) (12.4) (13.4) (14.1) (14.9) (15.7) (16.6) Residential/commercial 15,379 16,158 16,859 17,668 18,502 19,335 20,187 4.6 MTOE (%) /a (34.8) (33.8) (32.9) (32.2) (31.5) (30.8) (30.1) Public 2,941 2,582 2,702 2,880 3,090 3,338 3,615 7.0 MTOE (%) /a (6.7) (5.4) (5.2) (5.3) (5.3) (5.4) (5.3) Total 44,115 47,762 51,248 54,836 58,674 62,722 67,069 7.0 MTOE (%) (100.0) (100.0) (100.0) (100.0) (100.0) (100.0) (100.0) /a In computing final energy, all electricity (including energy consumed in power production, distribution and consumption) is allocated to the final or ultimate use sector. /b Thousand tons of oil equivalent (1 TOE = 107 KCal.) Source: Ministry of Energy and Resources (MOER). - 157 - Table 1.21 KOREA TRANSPORT SECTOR Current and Projected Petroleum Product Demand by Sector (1980-1986) Growth rate 1980 1981 1982 1983 1984 1985 1986 1982-86 Industry 10,611 10,807 11,750 12,030 12,659 13,236 13,952 5.2 MTOE (%) /a (39.9) (38.4) (38.4) (37.6) (39.5) (41.3) (41.7) Transportation 4,695 5,580 6,333 7,132 8,064 9,038 10,226 12.9 MTOE (%) /a (17.7) (19.8) (20.7) (22.3) (25.1) (28.2) (30.6) Residential/commercial 2,084 2,119 2,359 2,558 2,775 2,976 3,247 8.9 MTOE (%) /a (7.8) (7.5) (7.7) (8.0) (9.3) (9.3) (9.7) Public 2,198 1,988 1,902 2,039 2,191 2,349 2,529 7.2 MTOE (%) /a (8.3) (6.4) (6.2) (6.4) (6.8) (7.3) (7.6) Electric 6,988 7,835 8,273 8,220 6,348 4,411 3,477 -15.0 MTOE (%) /a (26.3) (27.9) (27.0) (25.7) (19.9) (13.9) (10.4) Total 26,576 28,129 30,164 31,979 32,073 32,037 33,431 3.5 MTOE (%) (100.0) (100.0) (100.0) (100.0) (100.0) (100.0) (100.0) /a Thousand tons of oil equivalent (1 TOE = 107 KCal.) Source: Ministry of Energy and Resources (MOER). - 158 - Table 1.24 KOREA TRANSPORT SECTOR Estimated Activity and Energy Demand by Mode and Fuel Type - 1980 Passenger or Consumption /a ton-km Subsector/Mode Fuel type MTOE % Billion Road Automobile Private and Government cars Gasoline 490 9.8 Taxis Gasoline 300 6.1 LPG 130 2.6 Diesel 5 0.1 Total Automobile 925 18.6 21.1 20.2 Bus Urban buses Diesel 480 9.7 23.1 Interurban buses Diesel 390 7.8 32.8 Other buses Diesel 100 2.9 4.1/b Total Bus 970 19.5 60.0 57.3 Truck Commercial Diesel 675 13.6 4.9 Private Diesel 780 15.6 4.6 Total Truck 1,455 29.2 9.5 34.2 Total Road 3,350 67.3 Railway Freight Diesel 75 1.4 Electric 35 0.6 Total Freight 100 2.0 10.8 38.8 Passenger Diesel 100 2.0 Electric 60 1.2 Total Passenger 160 3.2 21.6 20.6 Total Railway 260 5.2 Subway Electric 15 0.3 0.9 0.9 Air Transport /c Domestic /d Jet fuel 320 6.4 0.5 0.5 Foreign /e Jet fuel 100 2.0 10.5 - Total Air 420 8.4 11.0 0.5 Maritime Transport Coastal shipping Diesel 65 1.3 Heavy fuels 40 0.8 Total Coastal 105 2.1 7.5 26.9 Foreign trade /d Diesel 185 3.7 Heavy fuels 525 10.6 Total Foreign Trade 710 14.3 625.6 - Foreign bunkering /e Diesel 15 0.3 Heavy fuels 105 2.1 Total Bunkering /e 120 2.4 Passenger service /f 0.4 0.4 Total Maritime 935 18.8 Total Transport Sector 4,980 100.0 99.2(PK) 100.0 27.8(TK) 100.0 g /a Calculated from consumption and official estimates of fuel economy (see Table 1.25). Th Charter and private bus. 7E Consumption includes belly freight. Activity is total KAL passenger-km (1980 KAL air freight activity - 5.1 million domestic and 1,032.6 million intl. ton-km). /d Domestic refueling by Korea flag carriers. 7_ Domestic refueling by foreign flag carriers. /f Energy consumption included in freight totals. F Domestic only. - 159 - Table 1.25 KOREA TRANSPORT SECTOR Comparative Energy Efficiencies of Transport Modes (In Gram of Oil Equivalent (GOE) /a) GOE Per Ton or Passenger-km GOE Per Vehicle-Km Korea USA France Argentina Korea USA France Argentina Passengers Automobile Total 44/m 39 85 70 Urban 46 67 91/b Interurban 25 32 68/c 65 Bus All services 16 14-20 12 550/d 250-315 Urban 19 16-20 13 277/e 430-510 - Interurban 11 13-20 12 277/e 3.25 - Subway 15 25 22 - Railway All services 7 14 12 - - - - Express 11 - - - - - Freight Truck 125-170/f 40/135/g 28-70 40-70 138-417/h 250-485 Railway 10 12-30 8-10 16 150/i - - - Coastal shipping 7-15/j 10-27/k 7-27/1 13/k - - - - /a 1 gram of oil equivalent (GOE) = 1OKCal. /b 35% fuel economy penalty for urban traffic conditions (Merlin et al, Comment Economiser l1Energie dans les Transports). /c Fuel economy of 11 km/l (Ministry of Commerce and Industry). /d Average load of 29.4 passengers (Korea Research Institute for Highway Safety). /e Fuel economy of 3 km/l (Korea Advanced Institute of Science and Technology). /f Commercial only. Intercity only. Fuel efficiency of 50 1/100 km (Several Korean trucking companies). /i Fuel efficiency of 18 1/100 km (Korean National Railways). 7j Based on experience of one shipping company. /k River and coastal shipping. /1 River shipping only. 7m Average occupancies of 2.0 for urban operation and 2.7 for interurban operation (Source: Korea Advanced Institute for Science and Technology). Sources: Korea: Estimated by transport sector mission based on above assumptions. USA: American Bus Association, Bus Facts, 1981 Edition. A.B. Rose, The Role of Air Freight in View of Energy Intensity and Related Parameters - An Intermodal Comparison, 1978 SAE International Air Transportation Meeting, May 1978. American Public Transit Association, Transit Fact Book, 1981 Edition. G. Kulp, et al., Transportation Energy Conservation Data Book, Edition 5, Oak Ridge National Laboratory, 1981. Argentina: Secretaria de Estado de Transporte y Obras Publicas, Plan Nacional de Transporte, Programa del Sector Transporte - 1980. France: Jean-Marie Beauvais and Jean-Philippe Pillet, Transports et Energies: Nouveaux Enjeux, Enertrans, April 1981. - 160 - Table 1.26 KOREA TRANSPORT SECTOR Ex-Refinery prices of Major Petroleum Products in Korea (1970-83) (Won/1) /a Date of pric- Regular Premium Exchange rate ing change gasoline gasoline Kerosene Diesel (USS) 03/17/70 8.29 9.78 9.35 8.08 311.00 06/02/71 9.91 11.79 13.04 9.66 08/20/71 11.99 14.27 14.78 11.69 347.00 07/21/72 14.04 16.71 18.48 13.69 393.97 08/08/73 15.87 18.88 20.88 15.47 12/04/73 20.31 24.17 26.73 19.80 398.00 02/01/74 35.54 42.30 46.73 34.65 04/08/74 39.63 47.16 46.73 38.63 10/07/74 39.63 47.16 46.78 38.42 12/07/74 41.42 49.28 55.20 38.39 400.43 11/21/75 45.09 53.66 60.10 41.80 484.00 05/20/77 47.02 55.95 62.67 43.59 07/01/77 59.54 71.34 50.91 43.21 484.00 01/28/78 61.68 73.91 52.74 45.85 484.00 03/07/79 67.54 80.93 57.75 50.21 07/10/79 107.39 128.68 87.49 78.33 484.00 01/29/80 171.21 205.15 139.49 124.88 08/24/80 196.41 252.50 160.02 142.41 11/19/8() 249.91 321.28 180.12 160.30 607.43 04/19/81 261.01 373.14 220.83 197.09 681.03 11/29/81 276.67 395.53 242.69 216.60 03/11/82 276.67 395.53 242.69 216.60 714.30 02/06/83 281.80 377.59 247.24 216.60 04/19/83 281.80 377.59 241.79 211.60 765.60 /a 1 gallon = 3.7853 liters. Sources: (1) Ministry of Energy and Resources (MOER). (2) International Financial Statistics Yearbook, International Mone- tary Fund, Feb. 1975, p.227, Dec. 1981, p.236 (3) Mission to Korea. - 161 - Table 1.27 KOREA TRANSPORT SECTOR Wholesale Prices of Gasoline and Diesel Oil/a in Korea (1970-83) (Won/i) Gasoline Diesel 1970 30.16 15.12 1971/b 43.50 20.50 1972 51.00 26.00 1973 73.00 37.00 1974 189.50 67.50 1975 206.00 73.00 1976 206.00 73.00 1977 190.00 65.00 1978 198.50 69.50 1979 232.50 76.00 1980/c 630.34/e 193.84 1981 7 660.34/e 231.97 1981 (Nov 29) 717.387-e 263.87 1982 (Mar 11) 717.387e 263.87 1983 (Feb 6) 637.37/e 268.87 1983 (Apr 19) 637.37/e 262.87 /a Retail or pump prices include additional agent (i.e., distributor) and service station markups. In November 1980 these were 17.23 and 22.43 won/l of regular gasoline and 8.90 and 12.97 won/l of diesel. In November 1980 pump prices were 680, 880 and 215 won/l for regular gasoline, premium gasoline and diesel oil (see Table 1.20). /b 1971-79 estimated from crude oil price increases over 1970 and gasoline and diesel tax rates. /c As of November 19, 1980. /d As of April 19, 1981. /e Regular gasoline. Sources: MOER and mission to Korea. KOREA TRANSPORT SECTOR Public Roads Network (1962-82) /a (Unit: km) National roads /b Provincial roads County roads Special city roads City roads Total Grand Paved Gravel Total Paved Gravel Total Paved Gravel Total PaV.d Gravel Total Paved Gravel Total Paved Gravel total First FYP 1962 857 4,886 5,743 73 10,470 10,543 - - n.a./c - - - 345 10,539 10,884 1,275 25,894 27, 169 1963 865 4,947 5,810 54 11,244 11,298 - - n.a. 8 95 63 515 10,329 10,845 1,443 26,573 28,016 1964 963 4,936 5,899 54 11,343 11,39, - - n.a. 27 36 63 515 10,270 10,785 1,558 26,587 28,145 1965 1,042 4, 857 5,899 71 12, 267 12,338 - - n.a. 27 36 63 486 9,359 9,843 1,627 26,517 28,145 1966 1,349 6,837 8,186 31 10,364 10,395 - - n.a. 345 1,517 1,862 208 13,824 14,033 1,934 32,542 34,476 Second PYP 1967 1,442 6,744 8,186 52 10,600 10,652 - - n.a. 353 1,464 1,817 244 13,900 14,144 2,092 32,708 34,799 1968 1,540 6,626 8,166 74 10,597 10,671 - - n.a. 303 1,247 1,650 354 32,294 14,535 2,200 32,750 34,949 1969 2,110 6,461 8,571 134 10,703 10,837 - - n.a. 452 2,293 2,744 427 14,590 15,016 2,970 34, 199 37,169 1970 2,461 6,197 8,658 202 10,692 10,894 - - n.a. 724 4,751 5,476 477 14, 739 15,216 3,864 36, 681 40,244 1971 2,943 5,843 8,786 ?54 10,524 10,774 - - n.a. 1,934 3,728 5,662 658 29,494 15,413 5,789 34,846 40,635 Third FYP 1972 3,319 5,610 8,929 283 10,517 10,800 - - n.a. 2,464 4,022 6,487 703 15,949 16,652 6,769 36,099 42,867 1973 3,868 5,419 9,287 503 10,389 10,892 - - n.a. 2,633 3,904 6,537 816 16,049 16,865 7,820 35, 761 43,581 1974 4,070 5,217 9,287 639 10,250 10,889 - - n.a. 2,911 3,698 6,609 1,019 16,372 17,392 8,640 35, 538 44,179 1975 4,748 4,612 9,360 719 10,092 10,811 - - n.a. 3,377 3,389 6,767 1,155 16,812 17, 967 10,000 34,906 44,905 1976 4,876 4,486 9,360 811 10,057 10,868 - - n.a. 3,880 3,419 7,291 1,347 16,648 17,995 10,912 34,602 45,514 Fourth FYP 1977 5,434 4,008 9,442 922 9,933 10,855 384 12,125 12,509 4,051 3,405 7,456 1,306 4,095 5,401 12,097 33,567 45,664 1978 6,200 3,257 9,457 998 9,821 10,819 442 12,061 12,503 4,537 3,220 7,657 1,468 4,051 5,519 13,544 32,411 45,955 1979 6,224 3,233 9,457 1,169 9,819 10,988 466 12,022 12,488 4,823 3,042 7,865 1,595 3,941 5,536 14,278 32,056 46,333 1980 6,772 2,685 9,457 1,385 9,636 11,021 564 11,948 12,512 5,035 2,903 7,939 1,844 4,179 6,023 15,599 31,352 46,950 1981/d 8,019 5,473 13,492 1,103 8,910 10,013 532 11,325 11,377 5,854 3,549 9,403 1,672 4,379 6,051 17,179 33,158 50,337 Fifth FYP 19R2 8,643 4,833 13,476 1,285 8,720 10,005 597 10,848 11,445 6,186 3,296 9,482 2,571 6,956 9,527 19,283 34,653 53,936 (64.1x) (35.9%) (100%) (12.8%) (87.2%) (100%) (5.2%) (94.8%) (100%) (65.2%) (34.8%) (100%) (27.0%) (73.0%) (100%) (35.8%) (64.2%) (100%) /a In addition there are village access roads of which 52,444 km had been constructed and improved under the Seamaul Movement at the end of 1980. 7T Includes roads under the jurisdiction of KHC, totalling 1,245 km in 1981. /c Length not available (n.a.) before 1977 as city roads were tabulated iointly with gun roads. Length of gun roads in 1962 believed to have been about 10,000 km. 7d Road networks were reclassified during the early part of 1981. Sources: 1. Statistical Yearbook of Transportation - 1973, MOT, Korea, pp. 112-113. 2. Statistical Yearbook of Transportation - 1981, MOT, Korea, pp. 166-167. 3. Statistical Yearbook of Transportation - 1982, MOT, Korea, pp. 170-171. 4. MOC and mission to Korea. lb KOREA TRANSPORT SECTOR Status of KHC Expressways Network Route no.: 1 2 3 4 5 6-1 6-2 7 8 Seoul- Seoul- Daejeon- Suweon- Gangreung- Busan- Busan- Daegu- Onyang- Sections Unit Busan Incheon Suncheon Gangreung Mugho Suncheon Masan Masan Ulsan Length km /a 428 29.5 261.1 201 30 176.5 20.6 84.2 14.3 Lanes each 4 4 2 2 2 2 4 2 4 Work period 1968.2.1 - 1967.3.24 - 1970.4.15 - 1971.3.24 - 1974.3.28 - 1972.1.10 - 1978.5.20 - 1976.6.24 - 1969.6.20 1970.7.7 1968.12.21 1973.11.14 1975.10.14 1975.10.24 1973.11.14 1981.9.4 1977.12.17 1969M2.29 Construction million costs Won 40,972 2,601.5 21,654 21,530 5,588 19,524 61,662 20,888 1,595 Right of way costs 2,001 548.5 2,167 1,446 1,848 2,659 4,683 3,531 220 > Earth works 000 cu m 61,494 3,179 26,347 24,164 4,263 16,543 4,882 8,721 2,021 Bridges Each/m 317/17,240 33/951 153/8,343 77/4,510 11/573 93/6,290 24/3,381 35/2,705 12/333 (325/18,544) (49/1,833) (159/8,612) (79/4,538) (97/6,580) Tunnels 6/1,593 - 1/689 2/850 2/971 3/1,539 1/432 1/565 - Intercharges Each 19(20) 4(6) 6(13) 7(10) - 5(7) 5 3 - Rest facilities (12) - (4) 2(6) - (4) 1 1 - Cattle path 523 13 284 229 23 259 20 135 18 Bus stops 83 5 47 42 8 32 2 13 4 Road crossings - 33(26) 19(16) 9(7) 34(28) - 16 - /a Total distance is 1,245.2 km, of which 515.3 km are 4 lanes and 729.9 km are 2 lanes. Note: 1. Numbers in parenthesis are as of end-1981 and indicate changes since the opeTning. H 2. Construction costs include 1.4% for detailed design and 0.7% for construction supervision. Source: Korea Highway Corporation and mission to Korea. - 164 - Table 2.3 KOREA TRANSPORT SECTOR Motor Vehicle Fuel Consumption (1962-82) ('000 Kiloliters) Year Gasoline a! Diesel First FYP 1962 108 307 1963 97 358 1964 102 386 1965 223 507 1966 336 558 Second FYP 1967 481 765 1968 573 1,251 1969 748 1,507 1970 865 1,775 1971 992 2,099 Third FYP 1972 976 2,338 1973 1,040 2,838 1974 698 2,918 1975 664 3,328 1976 838 4,103 Fourth FYP 1977 642 1,687 b/ 1978 962 2,065 1979 1,160 2,426 1980 /c 915 2,592 1981 771 2,861 Fifth FPYP 1982 551 2,814 Average Annual Growth (% p.a.) 1962-67 25.5 12.7 1967-72 15.2 22.4 1972-77 -3.0 11.9 1977-81 3.9 11.2 /a Gasoline consumption is totally for vehicles, but diesel consumption includes 20-30% of other consumption. lb Diesel consumption from 1977 corresponds only to motor vehicle consumption. /c Figures from computer data. Source: Ministry of Commerce and Industry and mission to Korea. - 165 - Table 2.4 KOREA TRANSPORT SECTOR Motorization Rates, Korea and Other Countries (1979 or 1980) 4-wheel mo- Passenger Buses and Buses and Buses and tor vehicles cars trucks trucks trucks as a x GNP per per 1,000 per 1,000 per 1,000 per million of 4-wheel mo- capita inhabitants inhabitants inhabitants US$ of GDP tor vehicles (US$) India (1980) 240 1.8 1 1 4 55 Indonesia (1979) 370 7.2 4 3 9 44 Thailand (1979) 600 18.3 9 10 17 31 Philippines (1979) 640 19.4 12 7 11 36 Morocco (1979) 780 29.0 19 9 12 31 Nigeria (1980) 1,010 12.3 6 6 6 49 Ivory Coast (1980) 1,150 21.2 15 7 6 33 Turkey (1979) 1,380 23.7 15 9 7 38 Malaysia (1979) 1,450 67.1 54 13 9 20 Korea (1980) 1,520 13.7 7 7 5 51 Brazil (1979) 1,770 85.0 70 17 10 20 Mexico (1979) 1,880 80.8 59 21 11 26 Chile (1980) 2,160 58.3 38 21 10 36 Romania (1980) 2,340 17.1 11 6 3 35 Portugal (1980) 2,350 120.0 93 24 10 20 Argentina (1980) 2,390 153.6 108 43 18 28 Sources: (1) Statistical Yearbook of Transportation - 1981, MOT, Korea, pp. 160 - 163. (2) 1981 World Bank Atlas, 1982, the World Bank, Washington, D.C., USA. (3) Bank missions. - 166 - Table 2.5 Page I of 3 KOREA TRANSPORT SECTOR Registered Motor Vehicles (1962-82) Years Cars/a Trucks/b Buses/c Motorcycles Others/d Total First FYP 1962 8,733 13,093 6,747 1,846 395 30,814 1963 9,569 13,929 8,132 2,029 569 34,228 1964 11,409 14,951 8,617 2,158 678 37,813 1965 13,001 16,015 9,316 2,385 794 41,511 1966 17,502 19,432 10,888 1,322 1,016 50,160 Second FYP 1967 23,235 22,955 11,499 1,722 1,286 60,697 1968 33,112 31,582 12,786 2,188 1,283 80,951 1969 50,299 40,134 14,237 2,531 1,468 108,669 1970 60,677 48,901 15,831 2,865 1,097 129,371 1971 67,582 53,405 17,411 4,068 1,871 144,337 Third FYP 1972 70,244 55,116 17,550 4,297 2,727 149,934 1973 78,334 64,584 18,871 5,407 3,518 170,714 1974 76,462 76,833 20,060 6,039 4,150 183,544 1975 84,212 82,862 21,818 6,594 5,035 200,521 1976 96,099 93,885 23,643 7,342 5,351 226,320 Fourth FYP 1977 125,613 118,150 26,710 7,440 4,839 282,752 1978 184,886 161,886 30,597 12,020 7,167 696,556 1979 241,422 206,822 37,697 181,976 8,437 676,354 1980 249,102 226,940 42,463 216,498 9,224 744,227 1981 267,605 243,828 50,595 276,335 9,726 848,089 Fifth FYP 1982 305,811 263,939 66,326 410,286 10,920 1,057,282 Average Annual Growth (% p.a.) 1962-67 14.9 8.2 10.0 - 6.5 21.0 10.2 1967-72 23.9 18.4 8.7 8.8 7.8 18.9 1972-77 6.5 11.2 6.1 11.3 14.4 8.6 1977-81 16.3 15.6 13.6 206.1 14.9 25.0 Fleet Composition (%) 1962 28.3 42.5 21.9 6.0 1.3 100 1967 38.3 37.8 18.9 2.9 2.1 100 1972 46.8 36.8 11.7 2.9 1.8 100 1977 44.4 41.8 0.5 2.6 1.7 100 1982 28.9 25.0 6.3 38.8 1.0 100 /a Includes taxis and Government vehicles. /b Includes public carriers as well as private and government-owned trucks. 7c Includes microbuses. 7d Public service and special vehicles. Sources: (1) Statistical Yearbook of Transportation - 1973, MOT, Korea, pp. 102-105. (2) Statistical Yearbook of Transportation - 1982, MOT, Korea, pp. 164-167. (3) Mission to Korea. - 167 - Table 2.5 Page 2 of 3 Cars by Categories of Ownership (1967-82) ( 000 vehicles) Years Government Private Commercial Total (mostly taxis) Second FYP 1967 2.2 9.9 11.1 23.2 1968 2.8 14.4 15.9 33.1 1969 3.1 23.7 23.5 50.3 1970 3.6 28.7 28.4 60.7 1971 4.0 34.0 29.6 67.6 Third FYP 1972 4.5 36.4 29.3 70.2 1973 5.0 43.4 29.9 78.3 1974 4.9 44.6 27.0 76.5 1975 5.0 50.1 29.1 84.2 1976 5.2 61.6 29.3 96.1 Fourth FYP 1977 5.7 85.1 34.8 125.6 1978 6.1 128.8 50.0 184.9 1979 6.8 172.9 61.7 241.4 1980 7.8 178.5 62.8 249.1 1981 7.9 193.5 66.2 267.6 Fifth FYP 1982 7.8 225.6 72.4 305.8 Fleet Composition (%) 1967 9.5 42.7 47.8 100 1q72 6.4 51.9 41.7 100 1977 4.5 67.8 27.7 100 1982 2.6 73.7 23.7 100 Cars per 1,000 Population Population Private Total (million) ( 000) ( 000) 1967 30.1 0.33 0.77 1972 33.5 1.09 2.10 1977 36.4 2.34 3.45 1982 39.3 5.74 7.78 Source: (1) Handbook of Korean Economy-1980, EPB, Korea, p.395. (2) Statistical Yearbook of Transportation-1976, MOT, Korea, p. 125. (3) Statistical Yearbook of Transportation-1982, MOT, Korea, p. 164. (4) ?Iission to Korea. - 168 - Table 2.5 Page 3 of 3 Trucks by Categories of Ownership (1967-82) ('000 vehicles) Years Government Private/a Commercial/b Total Second FYP 1967 2.2 5.6 15.1 22.9 1968 2.7 7.6 21.3 31.6 1969 2.8 11.0 26.3 40.1 1970 3.0 15.2 30.7 48.9 1971 3.3 18.5 31.6 53.4 Third FYP 1972 3.6 21.5 30.0 55.1 1973 4.9 26.8 32.9 64.6 1974 4.9 45.3 36.6 76.8 1975 5.0 39.9 38.0 82.9 1976 5.9 49.4 38.6 93.9 Fourth FYP 1977 7.3 69.5 41.4 118.2 1978 7.6 105.4 48.9 161.9 1979 8.3 146.2 52.3 206.8 1980 8.9 165.4 52.6 226.9 1981 9.2 180.6 54.0 243.8 Fifth FYP 1982 9.1 199.2 55.6 263.9 Fleet Composition (%) 1967 9.6 24.5 65.9 100 1972 6.5 39.0 54.5 100 1977 6.2 58.8 35.0 100 1982 3.4 75.5 21.1 100 /a For carrying own goods. lY Common carriers. Source: (1) Statistical Yearbook of Transportation-1976, MOT, Korea, p. 123. (2) Statistical Yearbook of Transportation-1982, MOT, Korea, p. 166. (3) Mission to Korea. - 169 - Table 2.6 KOREA TRANSPORT SECTOR Korean Motor Vehicle Production (1962-82) Year Cars Buses Trucks Motorcycles Total Actual First FYP 1962 991 42 884 - 1,917 1963 1,430 233 143 - 1,806 1964 179 405 108 343 1,035 1965 166 1,251 965 507 2,889 1966 3,398 1,482 559 1,461 6,900 Second FYP 1967 5,033 941 1,512 4,635 12,121 1968 11,421 1,632 5,212 17,374 35,639 1969 19,727 1,884 9,626 13,735 44,972 1970 13,636 3,690 13,032 16,242 46,600 1971 11,870 3,059 8,072 12,317 35,318 Third FYP 1972 9,952 2,581 6,115 9,012 27,660 1973 12,751 3,494 9,979 13,851 40,075 1974 9,069 3,945 17,276 11,495 41,785 1975 18,570 3,808 14,913 11,665 49,016 1976 26,701 3,468 19,219 16,798 66,186 Fourth FYP 1977 43,981 5,453 35,263 32,629 117,326 1978 86,823 7,279 63,446 70,654 228,202 1979 113,564 12,307 76,661 100,496 303,028 1980 57,225 12,053 51,660 110,773 231,711 1981 68,760 13,358 52,166 123,521 257,805 Fifth FYP 1982 /a 98,751 20,872 44,428 124,351 288,402 Average Annual Growth Rate (%) 1972-76 21.8 6.1 25.6 13.3 19.9 1977-81 10.3 19.6 8.1 30.5 17.0 /a Economic Statistics Yearbook 1983, The Bank of Korea, Korea, p. 167. Source: (1) Statistical Yearbook of Transportation-1973, MOT, Korea, p. 115. (2) Statistical Yearbook of Transportation-1982, MOT, Korea, p. 173. (3) Mission to Korea. - 170 - Table 2.7 KOREA TRANSPORT SECTOR Commercial Licensing of Road Transport Companies (1974-82) Taxis Number of Number of Owners- Year companies vehicles drivers Total taxis 1974 669 28,906 652 29,558 1976 711 29,104 856 29,960 1977 722 29,830 4,773 34,603 1980 1,517 53,588 15,958 69,546 1981 1,881 51,951 19,163 71,114 1982 1,932 53,153 24,435 77,588 Trucks Area license Route license Total Number of Trucks Number of Trucks Number of Trucks Year companies ( 000) companies (-000) companies ( 000) 1974 839 39.2 30 1.9 869 41.1 1976 889 37.0 32 1.6 921 38.6 1977 1,029 40.6 32 1.6 1,061 42.2 1980 1,245 56.9 30 1.9 1,275 58.8 1981 1,415 57.3 29 1.9 1,444 59.2 1982 1,659 61.4 26 1.4 1,685 62.8 Buses Intracity Intercity /a Charter Total Number Buses Number Buses Number Buses Number Buses Year of co. ('000) of co. ( 000) of co. ( 000) of co. (-000) 1974 n.a. n.a. n.a. n.a. 80 1.0 341 16.5 1976 199 9.5 144 8.7 93 1.3 436 19.5 1977 204 10.2 150 9.5 108 1.9 462 21.6 1980 336 15.4 161 11.2 153 2.8 650 29.4 1981 359 16.9 177 11.2 171 3.1 707 31.2 1982 376 18.3 177 11.4 182 3.3 735 33.0 /a Include companies operating services on the expressways (12, 11 and 10 in 1974, 1977 and 1980). Sources: (1) Statistical Yearbook of Transportation - 1982, MOT, Korea, pp. 162-163, 168. (2) MOT and mission to Korea. - 171 - Table 2.8 KOREA TRANSPORT SECTOR Regular Bus Route Developments in Remote Areas by Year (1976-80) Province Until 1976 1977 1978 1979 1980 Total Gyeonggi 34 10 7 14 8 73 Gangweon 29 14 16 4 - 63 Chungbug 49 25 10 8 6 98 Chungnam 69 62 17 3 4 155 Jeonbug 17 20 15 13 18 83 Jeonnam 8 8 23 17 8 64 Gyeongbug 87 24 28 14 16 169 Gyeongnam 27 22 12 8 3 72 Jeju 15 7 2 2 1 27 Total 335 192 130 83 64 804 Source: MOT, October 1981. KOREA TRANSPORT SECTOR Road Commercial Transport Passenger Demand (1980-86) (Unit: -000 passengers) Average annual increase (%) 1980 1981 1982 1983 1984 1985 1986 (1982-86) City bus 5,239,834 5,537,989 5,998,774 6,477,679 6,861,989 7,029,138 7,533,951 (% increase) (8.8) (5.7) (8.3) (8.0) (5.9) (2.4) (7.2) 6.35 (% share) (65.2) (64.9) (65.1) (65.1) (64.7) (63-5) (63.5) Suburban bus 794,522 849,344 914,743 987,008 1,062,021 1,141,673 1,223,873 (% increase) (-3.2) (6.9) (7.7) (7.9) (7.6) (7.5) (7.2) 7.58 (% share) (9.9) (10.0) (9.9) (9.9) (10.0) (10.3) (10.3) Express bus 55,627 59,577 63,688 67,891 72,168 76,570 80,935 (% increase) (-0.5) (7.1) (6.9) (6.6) (6.3) (6.1) (5.7) 6.32 (% share) (0.7) (0.7) (0.7) (0.7) (0.7) (0.7) (0.7) Chartered bus 40,090 43,458 47,630 52,345 57,265 62,476 67,912 (% increase) (17.7) (8.4) (9.6) (9.9) (9.4) (9.1) (8.7) 9.34 (% share) (0.5) (0.5) (0.5) (0.5) (0.5) (0.6) (0.6) Passenger cars 1,908,983 2,034,923 2,191,612 2,369,133 2,553,925 2,750,577 2,956,871 (% increase) (1.5) (6.6) (7.7) (8.1) (7.8) (7.7) (7.5) 7.76 (% share) (23.7) (23.9) (23.8) (23.8) (24.1) (24.9) (24.9) Total 8,039,006 8,525,291 9,216,447 9,954,056 10,607,368 11,060,434 11,863,542 (% increase) (5.6) (6.0) (8.1) (8.0) (6.6) (4.3) (7.3) 6.83 (% share) (100.0) (100.0) (100.0) (100.0) (100.0) (100.0) (100.0) Source: Draft for Preparation of Fifth Five-Year Social and Economic Plan - Transportation Sector, Aug. 1981, MOT, Korea, p. * . KOREA TRANSPORT SECTOR Motor Vehicle Fleet Expansion Plan (1980-86) (Unit: Vehicles) 1980 1981 1982 1983 1984 1985 1986 1982-86 increase Holdings Increase Holdings Increase Holdings Increase Holdings Increase Holdings Tncrease Holdings Increase Holdings Total Motor Vehicles Annual Net Increase /a Passenger Cars Commercial 1,131 62,816 3,796 66,612 5,129 71,741 5,811 77,552 6,049 83,601 6,438 90,039 6,752 96,791 30,179 Noncommercial 6,549 186,286 18,815 205,101 36,139 241,240 42,506 283,746 56,692 340,438 68,020 408,458 81,610 490,068 284,967 Total 7,680 249,102 22,611 271,713 41,268 312,981 48,317 361,298 62,741 424,039 74,458 498,497 88,362 586,859 315,146 Buses Commercial 1,478 28,214 1,920 30,134 2,461 32,595 2,635 35,230 2,395 37, 625 1,831 39,456 2,874 42,330 12,196 City 880 14,882 1,384 16,266 1,350 17,616 1,409 19,025 1,123 20,148 483 20,631 1,486 22,117 5,851 Suburban 481 9,321 300 9,621 741 10,362 818 11,180 850 12,030 902 12,932 931 13,863 4,242 Express 53 1,385 16 1,401 97 1,498 99 1 ,597 100 1,697 104 1,801 102 1,903 502 Charter 64 ,2626 220 2,846 273 3,119 309 3,428 322 3,750 342 4,092 355 4,447 1,601 Noncommercial 3,288 14,249 2,380 16,629 2,672 19,301 3,102 22,403 3,600 26,003 4,179 30,182 4,850 35,032 18,403 Total 4,766 42,463 4,300 46,763 5,995 63,628 6,010 69,638 7,724 77,362 30,599 Trucks Commercial 988 58,680 800 59,480 4,699 64,179 5,263 69,442 5,694 75,136 6,161 81,297 6,666 87,963 28,483 Noncommercial 19,917 177,484 25,277 202,761 28,995 231,756 33,141 264,897 37,880 302,777 43,297 346,074 49,489 395,563 192,802 Total 20,905 236,164 26,077 262,241 33,694 295,935 38,404 334,339 43,574 377,913 49,458 427,371 56,155 483,526 221,285 Grand Total Commercial 3,597 149,710 6,516 156,226 12,289 168,515 13,709 182,224 14,138 196,362 14,430 210,792 16,292 227,084 70,858 Noncommercial 29,754 378,019 46,472 424,491 67,806 492,297 78,749 571,046 98,172 669,218 115,496 784,714 135,949 920,663 496,172 Total 33,351 527,729 52,988 580,717 80,095 660,812 92,458 753,270 112,310 865,580 129,926 995,506 152,241 1,147,747 567,030 Commercial Motor Vehicles Expected to be Scrapped /b Passenger cars 14,988 15,925 21,375 21,798 19,851 23,162 26,322 112,508 Buses 5,446 4,059 4,236 5,475 6,279 6,668 6,769 29,427 Trucks 9,625 9,146 10,394 11,520 10,953 10,973 12,032 55,872 Total 30,059 29,130 36,005 38,793 37,083 40,803 45,123 197,807 Noncommercial Motor Vehicles Expected to be Scrapped Passenger cars 23,332 16,464 15,357 39,885 67,408 82,380 110,316 315,346 Buses 1,588 4,041 5,031 6,788 6, 726 7 ,322 6, 507 32,374 Trucks 16,670 14,377 13,512 22,076 21,473 19,569 15,813 92,443 Total 34,882 33,900 68,749 95,607 109,271 132,636 440,163 Gross Annual Addition to the Vehicle Fleet ic Passenger cars 46,000 55,000 78,000 110,000 150,000 180,000 225,000 743,000 Buses 11,800 12,400 14,400 18,000 19,000 20,000 21,000 92,400 Trucks 47,200 49,600 57,600 72,000 76,000 80,000 84,000 369,600 Total 105,000 117,000 150,000 200,000 245,000 280,000 330,000 1,205,000 /a Net increase is annual sales from local production and imports less vehicles that are scrapped. Th Assuming the vehicle-s operating life is as follows: passenger car: commercial - 4 years, noncommercial - 5 years; bus: 7 years; truck: 13 years; funeral: 10 years. Tc For simplification, the production forecast by MOCI has been used and this omits the few imported vehicles. 0 Sources: 1. 'Draft for Preparation of Fifth Five-Year Economic and Social Plan - Transportation Sector, August 1981, MOT, Korea, pp. 38-39. m 2. Fifth Five-Year Economic and Social Development Plan - Transportation Sector Plan (1982-86), Transportation Sector Planning Task Force, MOT, Korea, p. 80. 3. EPB, Korea. - 174 - Table 2.11 KOREA TRANSPORT SECTOR Motor Vehicle Production Program (1980-88) (000) Production 1980 1981 1982 1983 1984 1985 1986 1987 1988 Passenger Cars Total production 61 71 95 135 186 227 288 371 469 - Domestic market 6 55 78 110 150 18 225 285 355 - Export market 15 16 17 25 36 47 63 86 114 Production capacity 238 238 192 192 492 492 492 492 492 % of production for export 25 23 18 19 19 21 22 23 24 Trucks and Buses Total production: 70 74 89 107 113 120 128 141 155 - Domestic market 59 62 72 90 95 100 105 115 125 - Export market 11 12 17 17 18 20 22 26 30 Production capacity 122 122 145 145 145 145 145 175 175 % of production for export 16 16 19 16 16 12 12 18 19 /a According to a MOCI forecast, 1986 motor vehicle production will total one million units, 312 thousand of which will be for the export market. A Com- parable KDI (Korea Development Institute) forecast pegs 1986 production at 241-527 thousand units, 39-87 thousand of which will be for the export market. Source: Economic Planning Board (EPB). - 175 - Table 2.12 KOREA TRANSPORT SECTOR Road Transport Investment Plans - Summary (1982-86) (Unit: billion won, 1980 prices) Capital required Financial sources Foreign Govern- Project name Project scale Domestic (US$ mln) Total memt Private Addition to commercial 70,858 vehicles 703.2 - 703.2 - 703.2 vehicles fleet Replacement of scrapped 197,807 vehicles 1,604.4 - 1,604.4 - 1,604.4 commercial vehicles Construction of 36 370 thousand pyongs 45.8 25.0 61.0 15.3 45.7 terminals Construction of 135 40.5 - 40.5 - 40.5 warehouses Roads construction and 1,175.0 220.8 1,309.7 1,195.4 114.3 improvement 1. Expressways 183.1 km (new) 291.4 - 291.4 177.1 114.3 172.8 km (widening) 2. National roads 531.1 214.2 661.8 661.8 - IBRD 4th 130.7 65.9 170.9 170.9 - IBRD 5th 72.5 74.1 117.7 117.7 - ADP 5th 68.6 73.2 113.2 113.2 - General projects 259.3 1.0 259.9 259.9 - 3. National road maintenance 186.9 6.6 190.9 190.9 - 4. Debts repayment and miscellaneous 165.6 - 165.6 165.6 - Total 3,568.9 245.8 3,718.8 1,210.7 2,508.1 /a This road transport plan does not include the development programs for the provin- cial, county, city and special city roads which are all funded by local governments' resources and MOHA grants. This has revealed a sizable omission as those investments are expected to exceed the total expenditure on expressway and national roads. Source: Fifth Five-Year Economic and Social Development Plan - Transportation Sector Plan (1982-86), Transportation Sector Planning Task Force, MOT, Korea, p. 87, 206-209. - 176 - Table 2.13 KOREA TRANSPORT SECTOR Fifth Five-Year Plan: Expenditures on Roads (1982-86) (In 1980 prices) Total 1982 1983 1984 1985 1986 US$ Qty. ----------- (W billion) --------- W bln. mln. /a (km) Central Government Financing Construction & Improvement Expressways (KHC) /b 38.5 52.3 117.4 37.8 45.4 291.4 477.7 360 National Highways 99.5 101.3 65.4 133.3 153.4 552.9 906.4 - Paving 91.9 93.9 51.9 92.6 109.9 440.2 721.6 2,239 Widening 7.6 7.4 13.5 40.7 43.5 112.7 184.8 182 Bridges (length in m) 3.9 3.7 6.8 8.4 6.2 29.0 47.5 7,591 Provincial roads paving 2.9 2.9 2.6 9.4 8.0 25.8 42.3 82 Subtotal 144.8 160.2 192.2 188.9 213.0 899.1 1,473.9 - Others National highway maintenance 28.6 31.6 37.1 43.5 50.1 190.9 313.0 - Overhead & studies 10.5 10.7 12.3 14.4 7.6 55.5 91.0 - Loan amortization 26.4 33.1 33.3 34.7 36.7 164.2 269.1 - Subtotal 65.5 75.4 82.7 92.6 94.4 410.6 673.1 - Total 210.3 235.6 274.9 281.5 307.4 1,309.7 2,147.0 - /a Exchange rate 1980: US$1 = W 610. /b Excluding maintenance expenditures of KHC. Sources: MOC and mission to Korea. - 177 - Table 2.14 KOREA TRANSPORT SECTOR Fourth Five-Year Plan: Expenditures on Roads (1977-81) (Won billion) Total 1977 1978 1979 1980 1981 1977-81 X National & Express Highways /a Administration 9.8 12.2 16.6 24.8 35.8 99.2 5.2 Construction 80.9 70.0 105.0 117.4 180.1 553.4 28.8 Maintenance 21.0 25.7 43.4 55.5 76.6 222.2/b 11.6 Subtotal 111.7 107.9 165.0 197.7 292.5 874.8 45.6 Others _c Provincial, Gun (County) & City Roads Administration 0.7 0.8 1.9 2.8 2.8 9.0 0.5 Construction 44.9 32.9 51.5 92.1 56.5 277.9 14.5 Maintenance 2.6 3.1 6.1 14.6 15.5 41.9 2.2 Subtotal 48.2 36.8 59.5 109.5 74.8 328.8 17.2 Special Cities Administration - 1.8 2.7 32.9 21.3 58.6 3.0 Construction 67.7 115.1 32.4 159.7 131.0 606.0 31.5 Maintenance 1.9 3.4 3.0 4.7 36.6 49.6 2.6 Subtotal 69.6 120.3 138.1 197.3 188.9 714.2 37.2 Total, Current Prices 229.5 265.0 362.6 504.5 556.2 1,917.8 100.0 Total, 1975 Prices /d 167.6 160.5 184.1 203.5 191.0 906.7 Total, 1980 Prices /d 415.6 397.9 456.3 504.5 473.5 2,247.8 /a Including MOC and KHC. /b Maintenance of KHC network amounted to W 124 billion or 56%. /c Fourth Year Plan document did not include those expenditures funded by MOHA and local government and by MOC on a few provincial roads. /d GNP deflator: 1975 = 100, 1977 = 136.9, 1978 = 165.1, 1979 = 197.0, 1980 = 247.9, 1981 = 291.2. Source: MOC and MOHA. - 178 - Table 2.15 KOREA TRANSPORT SECTOR Expenditures on Roads (1962-81) /a (million won) Total Total Total Total First Plan Second Plan Third Plan Fourth Plan 1962-66 % 1967-71 % 1972-76 % 1977-81 % Government Expenditures on National Highways/b Administration 74 1 946 1 5,887 2 99,241 8.2 Construction 3,811 53 89,022 72 179,424 66 553,388 46.0 Iaintenance/c 193 3 1,448 1 11,479 4 222,087 18.5 Subtotal 4.078 57 91,416 74 196,790 72 874,716 72.7 Expenditures on Provincial Gun (County), and City Roads 7d /e Administration - - - - - - 8,979 0.7 Construction 2,174 31 26,286 21 65,150 24 277,984 23.0 Maintenance /f 851 12 5,737 5 11,516 4 41,930 3.5 Subtotal 3,025 43 32,023 26 76,666 28 328,893/g 27.3 Total 7,103 100 123,439 100 273,456 100 1,203,609 100.0 /a At current prices. 7b Includes roads under the jurisdiction of KHC. 7c Does not include funds contributed by provinces for the maintenance of national highways. Id Seoul City excepted in First to Third Plans, and Special Cities (Seoul, Busan, Daegu and Incheon) excepted in the Fourth Plan. /e Includes Government grants. 7T Maintenance includes expenditures on gravelled national highways, estimated at up to 70% of the total except the value of voluntary labor provided for all by farmers until 1971. /g Investments under the Fourth Plan for the Special Cities amount to an additional W 714.2 billion and would represent 37%, if taken into account, of total road expenditures. Source: Ministry of Construction, Ministry of Home Affairs and mission to Korea. - 179 - Table 2.16 KOREA TRANSPORT SECTOR Expenditures on Roads (1981) (million Won) Local government MOC /a KHC lb /c Total % Expressways Administration - 4,178 - 4,178 Construction 20,000 19,889 - 39,889 Maintenance - 37,551 - 37,551 Total 20,000 61,618 - 81,678 14.7 National Pighways Administration 30,691/d - 898 31,589 Construction 100,527 - 39,687 140,214 Maintenance 32,596 - 6,431 39,027 Total 163,814 - 47,016 210,830 37.9 Special City Roads /e Administration - - 21,299 21,299 Construction - 131,036 131,036 Maintenance - 36,605 36,605 Total - 188,940 188,940 34.0 Provincial Roads Administration - 1,713 1,713 Construction 2,719 - 26,686 29,405 Maintenance - 6,835 6,835 Total 2,719 - 35,234 37,953 6.8 City Roads Administration - 651 651 Construction - 14,206 14,206 Maintenance - 5,706 5,706 Total Z Z 20,563 20,563 3.7 Gun Roads Administration - - 409 409 Construction - - 12,935 12,935 Maintenance - - 2,976 2,976 Total - - 16,320 16,320 2.9 Total Administration 30,691 4,178 24,970 59,839 Construction 123,246 19,889 224,550 367,685 Maintenance 32,596 37,551 58,553 128,700 Total 186,533 61,618 308,073 556,224 100.0 /a Ministry of Construction. 7 Korea Highway Corporation. 7T Nine provincial governments and four special cities. /d Reimbursement cost W 24,190 million for previous loan is included. 7e Seoul, susan, Daegu and Incheon special cities. Source: MOC, MOHA, KRC and mission to Korea. KOREA TRA-NSPORT SECTOR MORA - Tentative Road Investment Program (1982-86) (In billion Won 1980 prices, length in km) 1982 1983 1984 1985 1986 Total Length Won Length Won Length Won Length Won Length Won Length Won (km) (billion) (km) (billion) (km) (billion) (km) (billion) (km) (billion) (km) (billion) Capital Provincial roads-paving 490.0 110,200 445.0 95,750 302.0 64,950 271.0 58,240 295.0 63,400 1,803.0 392,550 County roads-paving 17.4 400.0 57,980 606.0 81,640 340.0 58,500 340.0 58,500 1,703.4 256,630 Maintenance equipment 0.0 0 0.0 11,270 0.0 9,720 0.0 0 0.0 0 0.0 20,990 City roads-paving 180.0 38,710 210.0 45,170 230.0 49.470 250.0 53,770 870.0 187,110 Special city roads paving 59.4 95,300 400.0 137,650 400.0 137,650 400.0 137,650 420.0 144,530 1,679.4 652,770 Subtotal 566.8 205,500 1,425.0 341,370 1,518.0 339,130 1,241.0 303,860 1,305.0 320,200 6,055.8 1,510,050 Subtotal (excluding 507.8 110,200 845.0 165,000 908.0 156,320 611.0 116,740 635.0 121,900 3,506.4 670,170 0 city roads) Recurrent Provincial roads 60.8 26,600 0.0 11,010 0.0 13,680 0.0 17,380 0.0 21,340 60.8 90,000 County roads 0.0 4,820 0.0 9,290 0.0 13,420 0.0 19,870 0.0 47,400 City roads 0.0 7,570 0.0 8,860 0.0 9,720 0.0 10,500 0.0 36,650 Special city roads 30.8 61,200 0.0 120,440 0.0 96,780 0.0 135,670 0.0 155,460 30.8 569,550 Others Consultants studies 0.0 3,790 0.0 4,300 0.0 0 0.0 0 0.0 8,090 Subtotal 91.6 87,800 0.0 147,630 0.0 132,920 0.0 176,190 0.0 207,160 91.6 751,690 Subtotal (excluding 60.8 26,600 0.0 19,610 0.0 27,270 0.0 30,800 0.0 41,210 60.8 145,490 city roads) Total 658.4 293,300 1,425.0 488,990 1,518.0 472,040 1,241.0 480,040 1,305.0 527,360 6,147.4 2,261,740 Source: MOHA X -4 - 181 - Table 2.18 KOREA TRANSPORT SECTOR KIC Expressways Investment Plan by Project (1982-86) (Unit: Billion Won) Length Project Amount of Project name (km) period investment 1982 1983 1984 1985 1986 Standard New Construction Daegu-Gwangju 174.9 1981-84 160.0/a 38.5 41.7 80.3 - - 1988 Olympics super highway 2 lanes Songnam-P'angyo 8.2 1985-86 16.6 - 8.0 8.6 2 lanes Widening Seoul-Pup'yong 15.2 1983-84 21.2 - 10.6 10.6 - 4 to 6 lanes Seoul-Suwon 26.5 1984-85 30.4 - - 15.2 15.2 4 to 6 lanes Daejon-Chonju 79.5 1984-86 54.7 - - 11.4 14.5 28.8 2 to 4 lanes Chinju-Masan 51.6 1986-87. 8.0/b - - - - 8.0 2 to 4 lanes Total 291.4 38.5 52.3 117.5 37.7 45.4 /a Total investment is 182.5, taking into account 22.5 billion spent in 1981. /b Total investment is 35.1, taking into account 27.1 billion to be spent in 1987. Source: (1) Fifth Five-Year Economic and Social Development Plan - Transportation Sector Plan (1982-1986), Transportation Sector Planning Task Force, MOT, Korea, p. 75. (2) MOC and mission to Korea. - 182 - Table 2.19 KOREA TRANSPORT SECTOR Road Development Financing Plan (1982-86) (Unit: Billion Won) Project Project Amount of name period investment 1982 1983 1984 1985 1986 National Roads Improve- ment and Paving IBRP 4th 1979-83 165.2 82.6 82.6 - - - (258.4)/a APE 5th 1983-86 90.9 - 2.5 22.5 26.2 39.7 IBRP 5th 1984-88 46.0 - - 3.3 22.9 19.8 (121.7)/b Domestic funding 1982-86 138.1 9.3 8.8 26.0 43.5 50.5 Subtotal 440.2 91.9 93.9 51.8 92.6 110.0 Provincial Roads Paving IBRD 4th 1979-83 5.7 2.9 2.9 - - - (6.2)/a IBRD 5th 1984-88 20.0 - - 2.6 9.4 8.0 (40.9)/b Subtotal 25.8 2.9 2.9 2.6 9.4 8.0 Total 466.0 94.8 96.8 54.4 102.0 118.0 /a Total investment is 264.6 billion won, taking into account 93.2 billion won to be spent on national roads and 0.5 billion won on provincial roads paving in the 1979-81 period. /b Total investment is 162.6 billion won, taking into account 75.7 billion won to be spent on national roads and 20.q billion won on provincial roads paving in the 1987-88 period. Source: (1) Fifth Five-Year Economic and Social Development Plan - Transporta- tion Sector Plan (1982-1986), Transportation Sector Planning Task Force, MOT, Korea, p. 78. (2) MOC and mission to Korea. KOREA TRANSPORT SECTOR Paving Program by Road Class (1981-86) (Oct 1980) 1982-86 Total 1981 1982 1983 1984 1985 1986 Total network Total length Total length Total length Total length Total length Total length additional length Paved Paved Paved Paved Paved Paved length km km % km % km % km % km % km % km Expressways 1,245 1,245 100.0 1,245 100.0 1,245 100.0 1,420 100.0 1,420 100.0 1,428 100.0 National highways 12,190 6,646 54.5 7,291 59.8 7,737 63.5 7,903 64.8 8,324 68.3 8,885 72.9 (320) (645) (446) (166) (421) (561) (2,239) Special city roads 9,304 5,905 63.5 6,305 67.8 6,705 72.1 7,105 76.4 7,525 80.9 7,955 85.5 (300) (400) (400) (400) (420) (430) (2,050) Provincal roads 10,065 1,071 10.6 1,255 12.5 1,557 15.5 1,828 18.2 2,123 21.1 2,421 24.1 (276) (184) (302) (271) (295) (298) (1,350) City roads 6,204 1,970 31.8 2,150 34.7 2,360 38.0 2,590 41.7 2,840 45.8 3,110 50.1 (150) (180) (210) (230) (250) (270) (1,140) County roads 11,479 633 5.5 683 5.9 896 7.8 1,109 9.7 1,322 11.5 1,536 13.4 (87) (50) (213) (213) (213) (214) (903) Total 50,487 17,470 34.6 18,929 37.5 20,500 40.6 21,955 43.3 23,554 46.5 25,335 50.0 (1,133) (1,459) (1,571) (1,280) (1,599) (1,773) (7,682) Note: Figures in ( ) indicate paving lengths for each year. Source: (1) Fifth Five-Year Economic and Social Development Plan - Transportation Sector Plan (1982-86), Transportation Sector Plan Task Force, MOT, Korea, p.76-77. (2) MOC. - 184 - Table 2.21 KOREA TRANSPORT SECTOR Regular Bus Route Development Plan for Remote Areas /a (1982-85) Province 1982 1983 1984 1985 Total Gyeonggi 14 - - - 14 Gangweon 3 2 5 7 17 Chungbug 7 6 5 12 30 Chungnam 6 7 5 3 21 Jeonbug 18 9 9 - 36 Jeonnam 28 21 20 8 77 Gyeongbug - 2 3 21 26 Gyeongnam 11 15 25 26 27 Jeju 2 1 - - 3 Total 89 63 72 77 301 /a Serving villages of over 100 households. Source: MOT, October 1982. Table 2.22 KOREA TRANSPORT SECTOR Road Authorities and Agencies Toll National Provincial City/county highways roads roads /a (gun) roads Planning MOC MOC 9 Provincial City/county Construction Construction Bureaus (PCB)/b Divisions (CCD) Construction Design and super- MOC/Korea High- MOC, through PCB /b CCD vision way Corporation its 5 Regional (KHC) Construction Offices (RCO's) Financing MOC/KHC /c Provinces with City/county Ministry of with provincial Home Affairs grants (MOHA) grants; also from MOC budget for special projects Maintenance Execution authority/ agency Paved KHC MOC Id PCB CCD Unpaved PCB PCB CCD Financing KHC MOC Provinces with City/county MOHA grants with provincial grants /a The Special Cities of Seoul and Busan (City Construction Bureaus) have functions similar to Provincial Authorities (Provincial Construction Bureaus). /b The MOC has so far handled the planning, design and supervision of construction or major improvement of a number of provincial roads, particularly those for which external financing is involved. /c KHC was established in January 1969, but has not so far financed any construction. 7h MOC has responsibility for maintenance of all national roads; it directly maintains paved national roads through its 19 National Highway Maintenance Offices (NHMO'q) under its 5 Regional Construction Offices (RCOs); it delegates maintenance of the unpaved national roads to the provinces (PCBs) with financial grants from the MOC's budget, and assistance provided by its TCMOs. Source: Ministry of Construction. KOREA TRANSPORT SECTOR Expressway Traffic and Toll Revenue by Routes (1970-81) (Unit: Vehicles: 000-s, Toll Revenue: Million Won) Seoul-Busan Seoul-Incheon Daejeon-Jeonju Jeonju-Busan Daegu-Masan Singal-Gaareung Total Route Number Number Number Number Number Number Number of Toll of Toll of Toll of 'roll of Toll of Toll of Toll Year vehicles revenue vehicles revenue vehicles revenue vehicles revenue vehicles revenue vehicles revenue vehicles revenue 1970 3,689 1,564 3,530 423 3 7,222 1,987 1971 5,152 2,941 4,553 557 695 58 10,458 3,498 1 1972 6,302 3,982 3,834 545 777 277 693 192 11,606 4,996 F 1973 7,914 5,070 4,423 683 905 325 779 198 14,021 6,276 X 1974 7,565 5,498 4,237 757 969 403 773 229 13,544 6,887 1975 8,909 8,210 4,340 946 1,123 609 1,063 425 15,435 10,190 1976 10,581 11,358 5,253 1,259 1,317 836 1,177 433 1,481 644 19,809 14,530 1977 13,089 13,339 7,094 1,581 1,635 998 2,750 1,082 1,992 915 26,560 17,915 1978 17,918 17,348 10,693 2,390 2,110 1,228 7,034 3,350 41 16 2,796 1,276 40,592 25,608 1979 20,962 24,458 11,318 3,680 2,508 1,689 10,425 5,978 2,510 1,151 3,794 2,286 51,517 39,242 1980 20,318 28,450 10,416 4,404 2,630 1,988 9,785 6,650 2,467 1,295 3,845 2,624 49,461 45,411 1981 21,419 37,001 9,654 5,626 2,777 2,518 11,428 9,370 2,580 1,613 4,105 3,457 51,963 59,585 Source: KHC, Korea. H - 187 - Table 2.24 KOREA TRANSPORT SECTOR Expressway Traffic and Toll Revenue by Vehicle Categories (1970-81) Number of Vehicles (000's) Toll Revenue (million Won) Auto- Auto- Year mobile Bus Truck Total mobile Bus Truck Total 1970 3,831 789 2,602 7,222 649 673 664 1,986 (53.1%) (10.9%) (36.0%) (100%) (32.7%) (33.9%) (33.4%) (100%) 1971 4,689 1,221 4,549 10,459 847 1,417 1,234 3,498 (44.8%) (11.7%) (43.5%) (100%) (24.2%) (40.5%) (35.3%) (100%) 1972 4,384 1,725 5,496 11,605 1,078 2,256 1,661 4,995 (37.8%) (14.9%) (47.3%) (100%) (21.6%) (45.2%) (33.2%) (100%) 1973 4,974 1,910 7,138 14,022 1,327 2,635 2,314 6,276 (35.5%) (13.6%) (50.9%) (100%) (21.2%) (42.0%) (36.8%) (100%) 1974 3,842 2,059 7,643 13,544 1,226 2,928 2,734 6,888 (28.4%) (15.2%) (56.4%) (100%) (17.8%) (42.5%) (39.7%) (100%) 1975 4,317 2,440 8,677 15,434 1,479 4,257 4,453 10,189 (28.0%) (15.8%) (56.2%) (100%) (14.5%) (41.8%) (43.7%) (100%) 1976 5,655 3,057 11,098 19,810 2,159 6,072 6,299 14,530 (28.6%) (15.4%) (56.0%) (100%) (14.9%) (41.8%) (43.3%) (100%) 1977 7,973 3,698 14,889 26,560 3,056 6,837 8,022 17,915 (30.0%) (13.9%) (56.1%) (100%) (17.1%) (38.2%) (44.7%) (100%) 1978 12,779 5,063 22,749 40,591 5,196 8,623 11,789 25,608 (31.5%) (12.5%) (56.0%) (100%) (20.3%) (33.7%) (46.0%) (100%) 1979 16,651 6,835 28,032 51,518 9,365 12,178 17,699 39,242 (32.3%) (13.3%) (54.4%) (100%) (23.9%) (31.0%) (45.1%) (100%) 1980 14,589 7,749 27,124 49,462 9,777 15,392 20,242 45,411 (29.5%) (15.7%) (54.8%) (100%) (21.5%) (33.9%) (44.6%) (100%) 1981 15,057 8,723 28,183 51,963 12,607 20,288 26,690 59,585 (29.0%) (16.8%) (54.2%) (100%) (21.2%) (34.1%) (44.7%) (100%) Source: MOT, KHC, Korea. KOREA TRANSPORT SECTOR KHC Income and Expenditure (1977-86) (Unit: Million won) Actual Forecast /a Total Total Item 1977 1978 1979 1980 1981 1982 1977-82 1983 1984 1985 1986 1983-86 Income Toll revenue 17,915 25,608 39,242 45,411 59,585 76,801 264,562 95,525 104,183 112,517 121,519 433,744 Other income 5,633 3,397 2,657 3,572 2,033 1,956 19,248 2,269 2,439 2,633 2,843 10,184 Reserve fund: Appropriation fund for retirement 1,402 1,519 3,085 3,580 3,287 5,067 17,940 5,729 6,564 7,524 8,625 28,442 1 Appropriation fund for deprecia- tion 769 834 1,693 1,966 1,804 2,781 9,847 3,145 3,604 4,130 4,734 15,613 O Debt and others 4,782 10,727 10,068 10,170 18,443 6,747 60,937 70 226 162 65 523 Total 30,501 42,085 56,745 64,699 85,152 93,352 372,534 106,738 117,016 126,966 137,786 488,506 Expenditure Expenses for highway management and maintenance 12,837 13,027 19,941 26,052 28,433 42,807 143,097 63,481 68,524 71,763 73,594 277,362 Expense for construction /b - 6,606 20,033 19,858 19,889 3,000 69,586 20,300 65,550 82,455 81,280 249,585 Expense for highway improvement 5,616 9,690 12,164 13,264 22,182 23,879 86,795 14,311 16,941 20,459 25,731 77,442 Repayment of loan and debt 12,048 12,762 4,607 5,525 14,648 23,666 73,256 8,646 6,601 6,289 6,081 27,617 Total 30,501 42,085 56,745 64,699 85,152 93,352 372,534 106,738 157,616 180,966 186,686 632,006 (Deficit) (40,600) (54,000) (48,900) (143,500) /a In 1983 current prices and based on 8% p.a. increase in traffic volume. 7T Funded by MOC. Source: KHC, Korea. I' KOREA TRANSPORT SECTOR Road User Charges (1966-81) (Million Won) Third FYP Fourth FYP Revenue 1966 1971 1972 1973 1974 1975 1976 1972-76 1q77 1978 1979 1980 1981 1977-81 National Taxes Fuel taxes 2,887 29,083 27,717 36,582 83,717 95,016 114,874 357,906 133,082 120,536 210,606 362,714 356,124 1,183,062 Gasoline tax (1,840) (21,185) (19,593) (25,821) (57,236) (60,026) (72,185) (234,861) (94,149)/a (104,209)/a (184,352)/a (310,394)/a (290,122)/a (983,226)/a Diesel tax (1,047) (7,898) (8,124) (10,761) (26,481) (34,990) (42,689) (123,045) (38,933)7a (16,327)/- (26,254)7a (52,320)Ta (66,002)7i (199,836)7a Transport tax 2,421 14,641 16,000 18,801 13,484 16,868 21,262 86,415 15,054 7 - - - - - Commodity tax /c 348 4,465 3,535 6,613 7,499 11,764 16,642 46,053 9,330 /b 28,279 35,798 20,600 19,184 128,245 Subtotal 5,656 48,189 47,252 61,996 104,700 123,648 152,778 490,374 157,466 148,815 246,404 383,314 375,308 1,311,307 Local Taxes Vehicle tax (inc. surcharge) 1,081 6,393 7,191/d 7,866 12,016 12,353 14,137 53,563 17,900 26,518 51,416 60,866 61,014 217,714 License fee /d - - - 1,804 1,784 2,092 2,388 9,729 3,949 7,735 7,845 8,340 8,665 36,534 Acquisition tax /e 181/e 1,799/e 1,661/e 1,622 2,643 3,708 4,636 12,609 6,143 15,388 21,110 19,393 19,005 81,039 Subtotal 1,262 8,192 8,852 11,292 16,443 18,153 21,161 75,901 27,992 49,636 80,371 88,599 88,734 335,058 m Tolls - 3,498 4,995 6,276 6,887 10,189 14,531 42,878 17,915 25,608 39,242 45,411 59,585 187,761 Total 6,918 59,879 61,099 79,564 128,030 151,990 188,470 609,153 203,373 224,059 366,017 517,324 523,627 1,834,100 Overall expendi- tures on road /f 68,300 68,000 83,800 149,400 145,900 515,400 229,470 265,040 362,571 504,560 561,453 1,923,054 /a Special excise tax excluding Value Added Tax (VAT). r'b These taxes were incorporated in the newly adopted Value Added Tax from July 1, 1977 when Lhe Korean Tax system was changed. Th Estimated 10% of total commodity tax (from 1972-1980). /d Both license fee and acquisition tax figures are estimates of the portion of the revenues from these taxes attributable to road vehicles. /e Including license fee and acquisition tax. 7T Economic Statistics Yearbook 1982, The Bank of Korea, pp. 86-87. Sources: Ministry of Construction, Ministry of Finance, Ministry of Home Affairs and BCEOM. - 190 - Table 3.1 KOREA TRANSPORT SECTOR Railways' Network and Fleet (1961-80) Multiplier Unit 1961 1966 1971 1976 1980 (1961-80) Total route-km /a km 3,021 3,062 3,199 3,144 3,135 104 Single track km 2,439 2,480 2,537 2,522 2,368 97 Double track km 457 457 537 575 720 158 Narrow track km 125 125 125 47 47 38 Electrified track km - - - 416 428 - Total rail prolongation km 4,630 5,049 5,582 5,653 6,007 130 Number of stations unit 492 545 589 566 585 119 Steam locomotives unit 350 251 95 68 30 9 Diesel locomotives unit 95 173 337 386 425 447 Electric locomotives unit - - - 69 90 - Diesel-powered cars unit 18 163 157 123 130 722 Electric-powered cars unit - - - 128 286 - Passenger cars unit 1,303 1,418 1,621 1,806 1,901 146 Box cars unit 9,455 11,454 15,189 16,055 16,702 177 Heater cars unit 44 67 136 140 163 371 Crane unit 6 6 10 16 14 233 Number of employees persons 27,943 30,078 34,481 33,481 33,477 120 /a Of which 428 km is electrified track. Sources: (1) Fifth Five-Year Economic and Social Development Plan, Transporta- tion Sector Plan (1982-86), December 1981, Transportation Sector Planning Task Force, MOT, Korea, p. 42. (2) Statistical Yearbook of Railroad - 1981, KNR, Korea, p. 4, p. 26, pp. 934-935. KOREA TRANSPORT SECTOR Railways Rolling Stock by Age (end-1981) Diesel Diesel Electric Electric Steam Passen- Electric loco- rail loco- rail loco- ger Freight Heater car (2nd motives cars motives cars motives cars cars cars Crane class) By Age 1- 5 years 45 10 21 194 - 684 3,344 25 3 20 6-10 years 50 2 69 126 - 244 4,062 20 6 - 11-15 years 214 4 - - 506 5,351 60 5 - 16-20 years 29 108 - - - 629 912 20 - - 21-25 years 93 2 - - - 14 159 - - 26-30 years 3 - - - 2 47 1,812 - - - Over 31 years - - - - 18 27 925 20 - - Total 431 126 90 320 20 2,151 16,565 145 14 20 Exceeding age limit 93 2 - - 18 74 2,737 20 - - Under age limit 338 126 90 320 2 2,077 828 125 14 20 Average age 13.8 15.8 8.0 5.5 37.7 10.9 13.3 15.8 9.0 1.5 Endurance age - limit (year) 20 20 40 20 30 25 25 - - - Source: (1) Statistical Yearbook of Railroad - 1982, KNR, Korea, p. 90. (2) The Fifth Five-Year Economic and Social Development Plan - Transportation Sector Plan (1982-1986), Transporation Sector Planning Task Force, MOT, Korea, p. 46. H (D w. - 192 - Table 3.3 KOREA TRANSPORT SECTOR Train and Engine Performance by Type of Traction (1961-81) ('000 km) Coal/ Elec- Traction anthra- Elec- Diesel tricity Years type: cite Oil B/C Diesel tricity rail car rail car Total Train-km 1961 4,933.5 2,952.2 11,170.2 - 1,003.6 - 20,059.5 1966 5,412.9 2,300.1 17,924.4 - 6,441.0 - 32,078.4 1971 308.4 667.4 35,425.8 - 5,824.2 - 42,225.8 1976 4.1 41.4 41,325.5 5,475.3 4,661.9 3,884.7 55,392.9 1981 - 15.4 48,382.9 7,037.9 4,072.3 7,736.0 67,244.7 () - - 72.0 10.5 6.1 11.4 100.0 Engine-km 1961 6,762.6 5,266.7 13,567.2 1,080.7 - 26,677.2 1966 7,750.8 5,430.5 21,203.1 - 10,149.8 - 44,534.0 1971 847.4 3,668.5 43,122.4 - 12,285.5 - 59,923.8 1976 317.2 734.5 51,250.7 6,508.9 11,640.7 23,306.9 93,758.9 1981 - 17.5 59,089.9 9,339.0 12,326.1 55,046.8 135,819.4 (M) - 43.5 6.9 9.1 40.5 100.0 Source:(l) Statistical Yearbook of Transportation - 1982, MOT, Korea, pp. 88-89. (2) Statistical Yearbook of Railroad - 1981, KNR, Korea, pp. 754-757. - 193 - Table 3.4 Page 1 of 2 KOREA TRANSPORT SECTOR Rail Freight Traffic: 1966-80 Actual and 1981-86 Forecast (Million tons) Major commodities Others Ferti- Sub- General Private car Con- Mili- Years Coal Cement Ore Oil lizer Grain total cargo return tainer tary KNR Total Actual 1966 10.0 1.7 1.1 0.9 1.2 1.2 16.6 4.4 - - 2.1 0.9 24.1 Second FYP 1967 11.2 2.2 1.4 1.4 1.2 1.3 18.7 5.6 - - 2.3 0.8 27.4 1968 9.7 3.2 1.7 1.7 1.5 1.6 19.4 5.9 - - 2.8 1.0 29.1 1969 10.4 4.4 1.7 2.1 1.2 1.4 21.2 5.6 - - 2.7 1.2 30.7 1970 12.1 4.9 1.8 2.4 1.1 1.3 23.6 5.0 - - 2.1 1.0 31.7 1971 12.0 5.8 1.6 2.5 1.1 1.4 24.6 4.6 - - 1.9 0.9 32.0 Third FYP 1972 11.3 6.0 1.5 2.2 1.3 1.6 23.9 4.6 - - 2.4 0.7 31.6 1973 13.6 7.5 2.3 2.7 1.5 1.6 29.2 5.5 - 0.2 1.7 1.0 37.6 1974 15.1 7.8 2.9 2.7 1.9 1.3 31.7 5.1 - 0.2 1.3 1.1 39.4 1975 16.7 9.0 3.0 3.1 2.2 1.0 35.0 3.5 1.5 0.2 1.4 1.1 42.7 1976 16.1 10.2 3.4 3.1 1.8 1.3 35.9 3.2 1.6 0.3 1.5 1.3 43.8 Fourth FYP 1977 17.5 10.3 3.2 3.5 2.1 1.2 37.8 4.6 1.9 0.5 1.5 1.3 47.6 1978 17.9 10.9 3.1 3.8 2.2 1.2 39.1 4.8 2.0 0.6 1.5 1.6 49.6 1979 18.0 11.2 3.4 4.3 2.1 1.1 40.1 4.7 2.0 0.6 1.5 2.0 50.9 1980 18.0 9.0 3.4 3.1 1.7 1.0 38.4 4.8 1.8 0.4 1.4 2.2 49.0 1981 21.4 8.4 3.9 3.2 1.9 0.6 39.4 4.4 1.6 0.5 1.3 1.6 48.8 Fifth FYP - Forecast 1982 21.3 9.1 4.1 3.5 2.0 0.7 41.2 4.6 1.7 0.8 1.5 1.7 51.5 1983 22.3 9.6 4.3 3.7 2.1 0.8 42.8 5.0 1.8 1.0 1.5 1.8 53.9 1984 22.7 10.4 4.6 3.9 2.2 0.9 44.7 5.2 1.8 1.2 1.5 1.8 56.2 1985 23.1 11.3 4.9 4.2 2.3 1.0 46.8 5.4 1.9 1.4 1.5 1.9 58.9 1986 23.5 12.3 5.2 4.5 2.4 1.1 49.0 5.6 2.0 1.6 1.5 2.0 61.7 Note: Since 1977 General Cargo includes slag and gypsum previously included under Ore. Slag and gypsum accounted for 0.8 million tons in 1977 and 1.1 million tons in 1979. Return of private cars, mostly oil tankers, are now shown separately from General Cargo. KNR charges the tare weight at Class III freight rate for this traffic. Source: KNR and Bank estimated forecast, June 1982. - 194 - Table 3.4 Page 2 of 2 KORFA TRANSPORT SECTOR Rail Freight Traffic: 1966-80 Actual and 1981-86 Forecast (Million ton-kmn) Major commodities Others Ferti- Sub- General Private car Cor- Mili- Years Coal Cement Ore Oil lizer Grain total cargo return tainer tary KNR Total Actual 1966 2,077 476 269 238 187 328 3,575 1,180 - - 403 29 5,450 Second FYP 1967 2,306 565 335 423 202 338 4,169 1,472 - - 454 83 6,178 1968 2,125 845 368 589 312 406 4,645 1,577 - - 548 97 6,867 1969 2,397 911 402 624 330 384 5,048 1,602 - - 553 125 7,328 1970 2,785 1,003 453 641 312 402 5,595 1,526 - - 439 148 7,709 1971 2,861 1,222 435 648 344 403 5,913 1,281 - *- 449 198 7,841 Third FYP 1972 2,613 1,126 347 574 347 402 5,337 1,172 - - 575 157 7,241 1973 3,194 1,344 568 568 420 381 6,475 1,414 - 72 433 197 8,591 1974 3,396 1,336 751 579 525 334 6,921 1,433 - 85 357 209 9,005 1975 3,677 1,437 760 625 590 256 7,345 960 304 92 385 207 9,293 1976 3,654 1,804 889 638 516 352 7,854 858 280 110 399 227 9,728 Fourth FYP 1977 3,933 1,781 785 732 561 289 8,081 1,290 308 232 383 215 10,509 1978 3,963 1,846 741 868 595 338 8,351 1,338 358 275 376 228 10,926 1979 3,829 2,085 817 931 525 351 8,538 1,240 382 254 411 256 11,081 1980 3,943 2,018 1,798 833 461 310 8,363 1,249 352 179 406 249 10,798 1981 4,413 1,793 963 660 488 158 8,475 1,257 303 229 374 177 10,815 Fifth FYP - Forecast 1982 4,578 1,911 984 718 510 193 8,894 1,311 323 344 420 196 11,488 1983 4,683 1,968 1,032 759 536 220 9,198 1,400 342 320 420 207 11,987 1984 4,767 2,080 1,104 800 561 248 9,560 1,430 342 492 420 207 12,459 1985 4,851 2,223 1,176 861 587 275 9,973 1,485 361 560 420 219 13,018 1986 4,935 2,397 1,248 923 612 303 10,358 1,540 380 640 420 230 13,568 Note: Until 1975, return of private cars and containers were included in general cargo. Source: KNR and Bank estimated forecast, June 1982. - 195 - Table 3.5 KOREA TRANSPORT SECTOR Rail Freight Traffic: 1966-80 Actual and 1981-86 Forecast (Average distance in km) Major commodities Others Total Ferti- General Private car Con- Mili- aver- Years Coal Cement Ore Oil lizer Grain cargo return tainer tary KNR age Actual 1966 208 284 250 344 160 267 268 - - 192 170 227 Second FYP 1967 206 257 239 302 168 260 263 - - 197 104 1968 219 264 216 346 208 254 267 - - 196 97 1969 321 207 236 297 275 274 286 - - 205 104 1970 230 205 252 267 284 309 305 - - 209 148 1971 233 211 265 293 303 289 279 - - 234 113 245 Third FYP 1972 232 188 231 265 267 244 258 - 446 242 150 230 1973 235 179 247 239 273 238 255 - 439 260 147 228 1974 226 171 255 240 278 265 262 - 440 273 151 227 1975 221 160 257 223 268 256 279 185 439 270 144 217 1976 228 177 261 224 287 273 276 170 439 270 148 223 Fourth FYP 1977 225 171 251 224 258 251 279 169 440 258 131 221 1978 221 170 242 229 262 277 277 183 440 260 139 220 1979 213 187 239 217 254 305 264 190 438 269 127 218 1980 212 205 238 213 270 315 264 194 440 283 112 220 1981 206 213 247 206 257 263 286 189 458 288 111 222 Fifth FYP - Forecast 1982 210 210 240 205 255 275 285 190 430 280 115 223 1983 210 205 240 205 255 275 280 190 420 280 115 222 1984 210 200 240 205 255 275 275 190 410 280 115 222 1985 210 195 240 205 255 275 275 190 400 280 115 221 1986 210 190 240 205 255 275 275 190 400 280 115 220 Source: KNR and Bank estimated forecast, June 1982. KOREA TRANSPORT SECTOR Intercity Passenger Rail Traffic: 1966-80 Actual and 1981-86 Forecast No. of passengers (millions) Passenger-kim (millions) Average distance (km) Cor- Long dis- Mili- Con- Long dis- Mili- Corn Long dis- Mili- Years muter tance tary Total muter tance tary Total muter tance tary Total Actual 1466 38.4 98.0 1.9 138.3 830 7,288 546 8,664 21.6 74.4 285.0 62.7 Second FYP 1967 41.6 108.4 1.9 151.9 883 8,150 543 9,576 21.2 75.2 288.9 63.6 1968 38.7 110.6 1.6 150.9 828 9,280 482 10,590 21.3 83.9 301.2 70.1 1969 37.9 114.8 2.0 154.7 799 9,680 598 11,077 20.0 84.0 304.0 71.0 1970 38.2 91.4 1.7 131.3 854 8,425 539 9,818 22.4 92.2 299.4 74.8 1971 41.4 85.2 1.6 128.2 940 7,300 510 8,750 22.7 85.7 320.0 68.3 Third FYP 1972 26.3 109.2 1.6 137.2 629 8,914 519 10,062 23.9 81.6 324.4 73.3 1 1973 22.5 118.9 1.6 143.0 552 9,681 487 10,720 24.5 81.4 304.4 75.0 1974 20.6 117.6 1.6 139.8 481 9,581 471 10,533 23.4 81.4 294.4 75.3 > 1975 15.1 122.0 1.4 138.6 326 10,626 434 11,386 21.6 87.1 310.0 82.1 1976 17.2 130.1 1.3 148.6 367 11,678 395 12,440 21.3 89.8 303.8 78.6 Fourth FYP 1977 17.4 143.5 1.3 162.2 380 13,782 401 14,563 21.8 96.0 308.5 89.8 1978 18.2 155.7 1.7 175.6 402 15,670 516 16,588 22.1 100.6 306.0 94.5 1979 19.6 162.1 1.3 183.0 434 16,253 399 17,086 22.2 100.3 318.9 93.4 1980 18.9 164.9 1.3 185.0 428 16,376 400 17,204 22.7 99.3 319.5 93.0 1981 18.0 153.5 1.2 172.8 410 15,740 403 16,553 22.8 102.5 310.0 95.8 Fifth FYP - Forecast 1982 18.3 164.6 1.4 184.3 421 17,246 448 18,115 23.0 105.0 320.0 198.3 1983 19.1 176.2 1.4 196.7 439 19,240 448 20,127 23.0 109.0 320.0 102.3 1984 19.9 182.8 1.4 204.1 458 20,418 448 21,324 23.0 112.0 320.0 108.4 1985 20.8 191.4 1.4 213.6 478 21,381 448 22,307 23.0 112.0 320.0 104.4 1986 21.7 199.7 1.4 222.8 499 22,388 448 23,335 23.0 112.0 320.0 104.7 Average annual growth rate (%) (1982-86) 3.5 4.0 0.0 3.8 3.5 5.4 0 5.2 0.0 1.3 0.0 1.3 Source KNR and Bank estimated forecast, June 1982. Q|a. o.3 KOREA TRANSPORT SECTOR Long-Distance Intercity Rail Passenger Traffic by Type of Service 1971-80 Actual and 1981-86 Forecast Number of passengers (millions) Passenger-km (millions) Average distance (Inm) Ltd. express Ltd. express Ltd. exp. Spec. Non Sub- Ord. Spec. Non Sub- Ord. Spec. Non Ord. exp. A/C A/C total exp. Ord. Total exp. A/C A/C total exp. Ord. Total exp. A/C A/C exp. Ord. Total Actual 1971 0.3 - 3.8 3.8 - 81.7 85.8 117 - 1,071 1,071 - 6,112 7,300 393 - 285 - 75 85.7 Third FYP 1972 0.4 - 5.9 5.9 - 102.9 109.2 147 - 1,653 1,653 - 7,115 8,914 383 - 283 - 69 81.6 1 1973 0.5 - 7.6 7.6 - 110.8 118.9 183 - 2,105 2,105 - 7,393 9,681 374 - 277 - 67 81.4 FJ 1974 0.6 - 8.8 8.8 4.4 103.8 117.6 234 - 2,224 2,224 940 6,183 9,581 367 - 254 213 60 81.4 ° 1975 0.8 - 11.5 11.5 4.7 104.8 122.0 298 - 2,862 2,862 1,004 6,463 10,627 359 - 250 203 62 87.1 1976 1.3 - 15.0 15.0 5.4 108.3 130.1 465 - 3,673 3,673 1,025 6,516 11,678 352 - 245 190 60 89.8 Fourth FYP 1977 1.6 0.4 27.4 27.8 8.5 105.6 143.5 550 122 6,291 6,413 1,357 5,463 13,782 344 282 229 160 52 96.0 1978 1.9 1.6 34.4 36.0 9.4 108.4 155.7 645 461 7,852 8,313 1,287 5,425 15,670 333 282 228 137 50 100.6 1979 2.4 2.0 36.1 38.1 8.7 112.9 162.1 772 530 8,252 8,782 1,207 5,492 16,253 327 268 228 138 49 100.3 1980 2.5 3.0 34.3 37.4 9.0 116.1 164.9 797 727 7,739 8,466 1,230 5,883 16,376 325 242 225 137 51 99.3 1981 2.2 8.8 30.9 39.7 5.3 106.3 153.5 722 2,040 6,793 8,833 616 5,569 15,740 328 232 220 116 52 102.5 Fifth FYP - Forecast 1982 2.6 16.6 30.0 46.6 5.6 109.8 164.6 845 3,725 6,450 10,185 616 5,600 17,246 325 225 215 110 51 105.0 1983 2.9 25.5 31.0 56.1 5.6 111.6 176.2 928 5,522 6,510 12,032 700 5,580 19,240 320 220 210 125 50 109.0 1984 3.2 32.9 33.0 65.9 - 113.7 182.8 1,008 7,074 6,765 13,839 - 5,571 20,418 315 215 205 - 49 112.0 1985 3.5 37.8 34.0 71.8 - 115.8 191.4 1,085 7,938 6,800 14,738 - 5,558 21,381 310 210 200 - 48 112.0 D3 X 1986 3.8 43.3 35.0 78.3 - 117.6 199.7 1,159 8,877 6,825 15,702 - 5,527 22,388 305 205 195 - 47 112.0 aO v; Source: KNR and Bank estimated forecast, June 1982. Ih a - 198 - Table 3.7 KOREA TRANSPORT SECTOR Seoul Urban Passenger Traffic (SMESRS) /a 1974-80 Actual and 1981-86 Forecast Number of passengers (millions) 'Passenger-km Average distance Years Commuter Noncommuter Total (millions) (km) Actual 1974 5.9 22.7 28.6 545 19.1 1975 17.1 65.3 82.4 1,540 18.7 1976 19.1 80.5 100.2 1,865 18.6 Fourth 'FYP 1977 25.9 113.5 139.4 2,536 18.2 1978 38.3 157.1 195.4 3,466 17.7 1979 50.2 190.5 240.7 4,300 17.9 1980 50.1 195.7 245.8 4,436 18.0 1981/a 56.2 212.2 268.4 4,998 18.6 Fifth FYP - Forecast 1982 64.8 244.7 309.5 5,726 18.5 1983 75.7 283.3 359.0 6,606 18.4 1984 87.5 323.1 410.6 7,514 18.3 1985 100.3 366.5 466.8 8,496 18.2 1986 113.7 411.2 524.9 9,501 18.1 /a Seoul Metropolitan Electrified Suburban Railway System. Source: KNR and Bank estimated forecast, June 1982 VXI.1 °9sgR' " orra1 > CR H r > r , c A 77.07 H A X 7 '@00 7 77H '07.0 7 H77 Ss$Ss 77OHH7J O7 77 U..O 1. Cl x oO 7 7':_ 7 _ 7H77 _ - H 7 .0 H07 H I c 0 HO r weF ~~r >> 0 I :: 7 r. HHr.77 _ 7~ 77 g - e ~ F 4 0i r _ w o sD w S 4 r ~ r ~ ~ S r n 1 7 707s ~ 7 w7.7~7 -0 0 Fo JowiNrX I r~~~~~~- H 7.0 7 r0 r c >~~~~~~7 77r r 07 z1 r . r r r r = 70<7n A~~~~~~0 . |70 .0 _N_ATF 70707 H70 707 G r | r w 77 7 7 7 H o - 7 o rwF - r 0 F FF°0s a|| H | 77077 777 o77 7 _. 0 r , 77 7.7H 777 0.o w 7 , 0 - 7 °t 77777 o07 o00- 7 r ~ ~ ~ ~ ~ ~ ~ A S o __w0 <0r> 7 r H7H7 73 __ _uSwr -7777 r77 1777_ S >>wD 77.7..7 _ 7H r0777__Nr _1 jg rf0 _ - .W r - 200 - Table 3.9 KOREA TRANSPORT SECTOR Traffic Revenues and Operating Costs (1967-80) (Won billion; current prices) 1967 1971 1976 1980 Traffic Revenues Passenger 10.7 17.4 52.8 165.1 Freight 1.4 11.6 45.0 101.7 Baggage 1.0 1.2 3.3 8.0 Others 0.5 0.9 2.8 8.7 Total 19.6 31.1 103.9 283.5 Operating Expenses /a Staff - 13.2 44.6 110.1 Materials - 11.2 38.5 89.5 Fuel - (3.9) (15.3) (35.7) Others - (7.3) (23.2) (53.8) Other costs - 3.4 14.5 17.7 Total - 27.8 97.6 217.3 /a 1980 figures for operating expenses have been revised from original budget. Sources: (1) Statistical Yearbook of Railroad - 1981, KNR, Korea, p. 702. (2) Bank's mission estimates. KOREA TRANSPORT SECTOR KNR Railway Passenger Demand Forecast (1980-86) (Unit: "000 passengers; million pass-km) Average annual increase (%) 1980 1981 1982 1983 1984 1985 1986 (1982-86) Passengers General 184,997 195,916 207,187 218,692 230,835 243,551 256,670 (% increase) (1.1) (5.9) (5.8) (5.6) (5.6) (5.5) (5.4) 5.6 Capital region 245,776 274,838 316,686 367,163 420,096 477,514 537,032 (% increase) (2.1) (11.8) (15.2) (15.9) (14.4) (13.7) (12.5) 14.3 Total 430,773 470,754 523,873 585,855 650,931 721,065 793,702 (% increase) (1.7) (9.3) (11.3) (11.8) (11.1) (10.8) (10.1) 11.0 I Passenger-km General 17,204 18,477 20,030 21,685 23,607 25,548 27,529 (% increase) (0.7) (7.4) (8.4) (8.3) (8.9) (8.2) (7.8) 8.3 Capital region 4,436 4,924 5,624 6,492 7,397 8,410 9,461 (% increase) (3.2) (11.0) (14.2) (15.4) (13.9) (13.7) (12.5) 14.0 Total 21,640 23,401 25,654 28,177 31,004 33,958 36,990 (% increase) (1.2) (8.1) (9.6) (9.8) (10.0) (9.5) (8.9) 9.6 Average Transport Distance (kim) General 93.0 94.3 96.7 99.2 102.3 104.9 107.3 Capital region 18.0 17.9 17.8 17.7 17.6 17.6 17.6 Source: "Draft" for preparation of Fifth Five-Year Social and Economic Plan -- Transportation Sector, Aug. 1981, MOT. Korea, pp. 20-21. - 202 - Table 3. 11 KOREA TRANSPORT SECTOR Railway Investment Plan Summary (1982-86) (Unit: Billion won; US$ million; in 1980 prices) Funds required Local Foreign Grand 2 of Project category/project details 1982 1983 1984 1985 1986 Total 1982 1983 1984 1985 1986 Total total total New Line Construction 3.5 3-7 - - 83.4 90.6 - - - - 191.2 191.2 207.2 15.7 High-speed line (Seoul-Daejeon, 160 km) - - - - 83.4 83 - - 4- 191.2 191.2 200.0 Cunsan port line (Cunsan-Port, 10.4 km) 3.5 3.7 - - - 7.2 - - - - - - 7.2 Electrification 16.7 4.7 1.0 5.3 7.6 35.3 - - 11.4 - 3.0 14.4 44.1 3.3 Gveongweon line (Seongbug-Euijeongbu, 13.1 km) 16.7 4.7 - - - 21.4 - 21.4 Jungang line (Jecheon-Yeongju, 64 km) - - 1.0 5.3 5.4 11.7 - - 11.4 - - 11.4 18.7 Taebaeg line (Jecheon-Yeondang, 25.3 ki) - - - - 2.2 2.9 - - - - 3,0 3.0 4.0 Increase in Station and Line Capacity 68.5 87.4 108.6 70.0 25.1 359.6 - 63.3 46.1 13.0 13.0 135.4 442.2 33.2 Double tracking 35.0 34.2 34.2 18.6 4.0 126.0 - - - - - - 126.0 Honam litne (Iri-Songjeongri, 101.2 km) 35.0 34.2 34.2 16.6 - 120.0 - - - - - - 120.0 Taehaeg ltne (Jecheon-Yeondang, 25.3 km) - - - 2.0 4.0 6.0 - - - - - - 6.0 Sn-in line (gauge widening) - 12.3 19.0 5.5 5.1 41.9 - 13.1 13.1 13.1 13.0 52.3 73.8 Suweon, electric train turning-back line (Suweon-Pyeonsdong, 4.1 km) - 3.3 6.3 6.8 2.4 18.8 - - - - - - 18.8 Installation of crossing loops (10 places) 2.n 1.3 1.3 1.3 0.8 6.7 - - - - - - 6.7 Marshalling yards 2.5 4.2 8.3 - - 15.0 - - - - - - 15.0 Station yards 3.2 3.2 3.2 3.2 3.2 16.0 - - - - - - 16.0 Freight terminals 10.5 11.8 11.8 10.5 1.4 46.0 - - - - - - 46.0 Extension of crossing loops 1.7 2.1 2.5 1.2 0.8 8.3 - - - - - - 8.3 Station installation 8.5 2.7 2.7 2.7 3.2 19.8 - - - - - - 19.8 Additional crossings 1.3 2.0 2.0 0.7 0.7 6.7 - - - - - - 6.7 Signaling 3.8 10.3 17.3 19.5 3.5 54.4 - 50.1 33.0 - - 33.1 105.1 ITarovement of Way and Structures 18.4 18.6 20.0 31.6 38.6 127.2 18.7 18.7 18.7 18.7 18.3 93.1 184.0 13.8 Main-line improvement - - - 13.0 17.1C 30.0 -- - - - - 300 Rail renewal (750 km) 1.3 1.3 1.3 1.4 1.4 6.7 9.2 9.3 9.2 9.2 8.9 45.7 34.6 Continuous welded rail (300 km) 0.8 0.8 0.8 0.8 0.- 4.1 3.5 3.4 3.4 3.4 3.3 17.1 14.5 Sleeper renewal (200,000) 1.7 1.7 1.6 1.6 1.5 8.1 - - - - - - 8.1 Ballast (250,000 cu m) 0.6 0.6 0.6 0.6 0.5 2.9 - - - - - - 2.9 Separation of rail/road at crossing 5.0 5.0 5.0 5.0 5.0 25.0 - - - - - - 25.0 Track renewal (100 km) 2.3 2.3 2.3 2.3 2.4 11.6 1.1 1.1 1.2 1.2 1.1 5.7 15.1 Point and crossings (500 sets) 0.9 1.0 0.9 1.0 1.0 4.8 - - - - - - 4.8 Tunnel strengthening (51) 1.0 0.9 1.0 0.9 1.0 4.8 - - - - - - 4.8 Bridge strengthening (50 spans) 1.5 1.6 1.5 1.6 1.6 7.8 - - - - - - 7.8 Track material workshop 0.3 0.3 2.0 0.3 2.8 5.8 4.9 4.9 4.9 4.9 5.0 24.6 20.8 Water supply (34) 0.2 0.2 0.2 0.2 0.3 1.1 - - - - - - 1.1 Station facilities (12) 0.5 0.4 0.5 0.4 0.5 2.3 - - - 2.3 -vel crossing barriers (100) 0.2 0.2 0.2 0.2 0.2 1.0 - - - - - - 1.0 Right-of-wav improvement - earthwork (55 places) 0.6 0.7 0.6 0.7 0.7 3.3 - - - - - - 3.3 Fence (79 places) 0.3 0.4 0.3 0.4 0.4 1.8 - - - - - - 1.8 Safety sidings (32) 0.3 0.3 0.3 0.3 0.3 1.5 - - - - - - 1.5 Right-of-way improvement 0.9 0.9 0.9 0.9 1.0 4.6 - - - - - - 4.6 Motive Power, Rolling Stock and Equipment 23.4 48.3 43.4 45.2 46.7 207.0 24.4 67.5 2 48.2 68.0 273.9 374.1 28.1 Motive power 21.2 42.1 36.4 39.6 39.2 178.5 8.5 10.6 4.6 0.5 0.7 24.9 193.7 New 9.5 25.7 33.5 33.6 38.9 141.2 - - - - - - 141.2 Improvement 11.7 16.4 2.9 6.0 0.3 37.3 8.5 10.6 4.6 0.5 0.7 24.9 52.5 New passenger car (464) 0.2 2.9 3.2 2.1 3.1 11.5 3.6 36.7 39.5 27.1 38.4 145.3 100.1 Passenger car - improvement, installation of air-conditioning devices on existing limited express coach (425 cars) - 0.8 2.0 1.6 2.0 6.4 - 3.6 9.7 8.0 10.0 31.3 25.5 New freight cars (3,465) 2.0 2.5 1.8 1.9 2.4 10.6 12.3 16.6 12.0 12.6 19.0 72.4 54.8 Rolling Stock Maintenance and Manufacturing 12.6 7.4 0.6 0.2 0.3 21.1 3.1 1.3 1.3 1.2 0.7 7.5 25.7 1.9 Daejeon workshop 10.0 4.3 - - - 14.3 - - - - - - 14.3 Improvement, existing workshops 1.9 2.5 - - - 4.4 1.8 - - - - 1.8 5.5 Sheds - improvement 0.4 0.3 0.3 - - 1.0 - - - - - - 1.0 Machineries 0.3 0.3 0.3 0.2 0.3 1.4 1.3 1.3 1.3 1.2 0.7 5.7 4.9 Telecommunications, Power and Others 15.9 9.8 8.5 9.6 9.7 53.5 - - - - - - 53.5 4.0 Telecommunications 10.1 3.1 8 - 14.14. Power facilities 1.3 2.2 2.4 0.3 0.4 6.6 - - - - - - 6.6 Buildings and others - - - 4.8 4.8 9.6 - - - - - - 9.6 Welfare 2.5 2.5 3.3 2.5 2.5 13.3 - - - - - - 13.3 Office furniture and other 2.0 2.0 2.0 2.0 2.0 10.0 - - - - - - 10.0 Total 159.0 179.9 182.1 161.9 211.4 894.3 46.2 150.8 143.3 81.2 294.1 715.6 1,330.8 100.0 Source: KNR, April 1982. - 203 - Table 3.12 KOREA TRANSPORT SECTOR /a Status of Investment for SMESRS (1972-86) Fixed Installations Investment periods (W mln) Lines Sections Items 1972-76 1977-81 1982-86 Past Investments Gyeongin line Guro-Incheon Electrification 5,045 - - Gyeongbu line Seoul-Suweon Electrification 3,420 Gyeongweon line Yongsan- Electrification 1,197 - Seongbug Gyeongbu line Double tracking - 36,010 Other facilities Railcar depot, signal & etc. 15,522 - - Planned Investments Gyeongweon line Seongbug- Electrification - - 21,400 Euijeongbu Rolling Stocks Past Investments 1974 1975 1976 1977 1978 1979 1980 1981 No. of railcars in fleet 126 126 128 171 215 252 286 320 Planned Investments 1982 1983 1984 1985 1986 No. of railcars in fleet 320 340 362 414 445 /a Seoul Metropolitan Electrified Suburban Railway System. Source: KNR, April 1982. KOREA TRANSPORT SECTOR Maior Constraints for Operating Longer Trains by Line Passenger Freight Length of No. of No. of crossing loops Line cars Meters cars Meters Up (m) Down (m) Major constraints Improvement plan Gyeongbu Pass. train: weak traction power to attain Installation of CTC between Suweon and Daejeon Maximum 17+1 375 35+1 500 440 440 high speed. (5th plan). Average 10+1 229 255+1 363 Frequent train: crossing loop and frequency Construction of new high-speed line (1986 and of pass. train. beyond). Honam Inferior track (speed) and single line. Double tracking between Iri and Sonjeongri Maximum 11+1 250 35+1 500 341 341 Short crossing loops (2 stations). 1981-85). Average 8+1 187 24+1 349 Additional crossing loops (1 station between Songjeongri and Mogpo). Jeonra Shortage of traction power due to bad align- Upgrading through realignment and track Maximum 12+1 271 14+1 212 264 275 ment and sharp grade. strengthening (5th-6th plan). Average 7+1 166 13+1 198 Short crossing loops. Add l crossing loops (2 stations in 5th plan). Jungang Bad alignment and sharp grade. Electrification between Jecheon and Yeongju Maximum 13+1 292 28+1 404 418 407 Short crossing loops (south of Jecheon). (64 km, 5th plan). Average 8+1 187 26+1 376 Capacity limit. Add'l crossing loops (2 stations in 5th plan)- Taebaeg Bad alignment and sharp grade. Installation of CTC between Jecheon-Baegsan Maximum 11+1 250 27+1 390 308 308 Capacity limit. (107 km, 5th plan). C Average 8+1 187 26+1 376 Partial double tracking between Jecheon- Yeondang (5th plan). Janghang Shortage of traction power due to bad align- Upgrading through realignment and track Maximum 9+1 208 28+1 404 286 264 ment. strengthening (5th-6th plan). Average 7+1 166 17+1 253 Short crossing loops. Add'l crossing loop (1 station in 5th plan). Yeongdong Electrification between Yeongju-Cheolam (6th Maximum 11+1 229 27+1 390 209 209 Same as above. plan). Average 7+1 166 23+1 335 Extension of crossing loops. Donghaenambu Short crossing loops. Additional crossing loop (1 station). Maximum 7+1 166 27+1 390 242 242 Capacity limit. Double tracking (beyond 6th plan) Average 6.5+1 156 21+1 308 Gyeongjeon Bad alignment. 1 additional crossing loop. Maximum 7+1 166 20+1 294 242 242 Short crossing loops. Extension of crossing loops. Average 6+1 140 17+1 253 Gyeongbug Bad alignment and sharp grade (between Same as Gyeongjeon line. Maximum 6+1 140 14+1 212 363 363 Jeomchon-Gimcheon). Average 5+1 125 13+1 198 Short crossing loops. Source: KNR, April 1982. KOREA TRANSPORT SECTOR Railway Capacity Requirements Forecast (Unit: runs per day) Present Requirements Post-action Line name Section capacity 1982 1983 1984 1985 1986 Action planned capacity Gyeongbu Seoul-Suweon 133 150 168 183 282 221 Build Double-Double Track 266 (Seoul-Busan) Suweon-Chonan 101 95 115 123 135 145 Increase CTC & ABS 145 Chonan-Chochiwon 95 82 104 112 122 132 Increase CTC & ABS 136 Chochiwon-Daejeon 102 79 91 98 106 115 Increase CTC & ABS 136 Jungang Jecheon-Todam 29 29 31 33 34 37 Electrification and improvement 40 of signals Todam-Yongju 31 21 23 24 26 27 Build a new interchange station 37 Tongju-Tongcheon 30 29 29 30 32 32 Build a new interchange station 32 Honam Iri-Songjeongri 33 26 29 31 35 37 Change to Double track 61 Songjeongri-Mogpo 27 22 23 25 27 29 Build a new interchange 30 station Jeonra Chonju-Suncheon 24 20 21 22 25 26 Build a new interchange station 26 Taebaeg Jecheon-Ssangyong 47 44 47 45 50 53 CTC between Chechon-Cholam 113 Ssangyong-Yongweol 32 31 36 41 43 44 ( Double-track electric line 83 Yongweol-Paeksan 29 28 31 33 33 35 ( Chechon-Yondang 35 Donghaenambu Busan-Ulsan 22 22 20 20 22 23 Build a new interchange station 28 Ulsan-Gyeongju 26 27 27 28 30 31 Build a new interchange station 36 Gyeongjeon Hwasun-Gwangju 19 18 18 19 21 21 Build a new interchange station 23 Janghang Daecheon-Janghang 19 19 22 23 24 26 Build a new interchange station 45 Gyeongin Yonggok-Munsan 26 22 23 24 25 27 Build a new interchange station 30 Gyeongweon Seongbuk-Eijongbu 28 27 29 32 36 38 Double-track electric line 67 Source: The Fifth Five-Year Economic and Social Development Plan - Transportation Sector Plan (1982-1986), 1981, Transportation Sector Planning Task Force, MOT, Korea, p. 44. - 206 - Table 3.15 KOREA TRANSPORT SECTOR KNR Financing Plan (1982-86) (Unit: Billion Won) 1982 1983 1984 1985 1986 Total Funds Required 222.8 310.9 314.4 269.5 444.7 1,559.3 For investment 187.2 271.9 269.5 211.4 390.8 1,330.8 For debt repayment 35.6 39.0 41.9 58.1 53.9 228.5 Current Account Earnings 419.0 461.9 508.4 549.9 593.7 2,532.9 Expendlitures 399.4 421.4 447.2 483.4 497.6 2,249.0 Usable funds 19.6 40.5 61.2 66.5 96.1 283.9 Shortage of funds 167.6 231.4 208.3 144.9 294.7 1,046.9 Funding Measures Own capital 71.0 97.0 122.5 145.7 172.8 609.0 Net profit per period 24.7 45.8 65.9 83.5 103.6 323.5 Depreciation allowances 36.8 41.6 47.0 52.6 59.6 237.6 Sale of assets 9.5 9.6 9.6 9.6 9.6 47.9 Borrowing 74.4 71.9 54.5 37.0 6.8 244.6 Foreign credit 28.2 92.0 87.4 49.5 179.4 436.5 Subsidy 49.2 50.0 47.0 37.3 85.7 269.2 Source: The Fifth Five-Year Economic and Social Development Plan - Transporta- tion Sector Plan (1982-86), Transportation Sector Planning Task Force, MOT, Korea, p. 65. 207 - Table 3.16 KOREA TRANSPORT SECTOR Korean National Railroad (KNR) Summarized Forecasted Financial Statements (Won billion) 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 Traffic Passengers (million pass-km) 21,343 22,464 23,443 24,478 25,705 26,862 28,071 29,334 30,654 32,033 Freight (million ton-km) 10,383 10,833 11,601 12,415 12,953 13,600 14,281 14,995 15,744 16,532 Total (million traffic units) 31,726 33,297 35,044 36,893 38,658 40,462 42,352 44,334 46,398 48,565 Income Statement Gross operating revenue 404.6 471.0 546.2 614.4 684.8 709.6 862.8 967.2 1,084.2 1,217.0 Working costs 357.5 379.3 410.7 445.6 479.7 515.6 569.4 628.6 704.7 791.0 Depreciation 46.2 51.0 56.7 63.1 70.4 75.0 81.0 88.0 94.0 100.0 Net Operating Revenue /a 0.9 40.7 78.8 105.7 134.7 179.0 212.4 250.6 285.5 326.0 Net nonoperating revenue 3.0 3.0 3.1 3.2 3.3 3.5 4.0 4.5 5.0 5.5 Interest charges 80.6 92.0 104.1 117.0 125.5 136.9 156.7 164.8 179.i 191.4 Net Profit (Loss) (76.7) (54.3) (22.2) (8.1) 12.5 45.6 59.7 90.3 111.4 140.1 Ratios (%) Working 88.0 81.0 75.0 73.0 68.0 67.0 66.0 65.0 65.0 65.0 Operating 100.0 91.0 86.0 83.0 80.0 77.0 75.0 74.0 74.0 73.0 Sources and Applications of Funds Sources Cash generated by KNR 55.1 100.7 145.1 179.5 216.8 267.0 308.4 355.6 399.4 447.5 Government contributions 18.0 27.5 40.0 70.0 60.0 60.0 65.0 70.0 75.0 80.0 Subsidies against operating losses 34.8 35.4 65.0 65.0 50.0 - - - - - Borrowing 178.0 184.2 134.7 233.2 185.3 218.0 273.0 228.0 205.0 200.0 Total Sources 285.9 347.8 384.8 547.7 512.1 545.0 646.4 653.6 679.4 727.5 Applications Investments 176.1 208.5 231.2 257.8 275.9 300.0 325.0 350.0 375.0 400.0 Debt services 121.5 134.8 146.6 217.9 227.1 199.1 272.6 237.2 259.0 280.6 Total Applications 297.6 343.3 377.8 475.7 503.0 499.1 597.6 587.2 634.0 680.6 Annual variations in working capital (11.7) 4.5 7.0 72.0 9.1 45.9 48.8 66.4 45.4 46.9 Ratios Debt service coverage Balance Sheet Assets Working capital (92.6) (88.1) (81.1) (9.1) 0.0 45.9 94.7 161.1 206.5 253.4 Net fixed assets 2,105.4 2,318.6 2,553.3 2,814.1 3,097.5 3,390.4 3,721.3 4,077.3 4,455.4 4,864.4 Other assets 70.1 70.1 70.1 70.1 70.1 75.0 77.0 80.0 85.0 90.0 Total Assets 2,082.9 2,300.6 2,542.3 2,875.1 3,167.6 3,511.3 3,893.0 4,318.4 4,746.9 5,207.8 Liabilities Long-term debt 844.4 988.8 1,084.5 1,220.3 1,308.0 1,463.8 1,620.9 1,776.5 1,901.6 2,012.4 Equity equivalent 1,238.5 1,311.8 1,457.8 1,654.8 1,859.6 2,047.5 2,272.1 2,541.9 2,845.3 3,195.4 Total Liabilities 2,082.9 2,300.6 2,542.3 2,875.1 3,167.6 3,511.3 3,893.0 4,318.4 4,746.9 5,207.8 Ratios Average net fixed assets in use 1,861.0 2,068.0 2,271.0 2,501.0 2,756.0 3,035.0 3,341.0 3,674.0 4,032.0 4,415.0 Rate of return on average net fixed assets in use (%) - 2.0 3.5 4.2 4.9 5.9 6.4 6.8 7.1 7.4 Debt to equity 41/59 43/57 43/57 42/58 41/59 42/58 42/58 41/59 40/80 39/61 ia Compensation for losses on ordinary trains and commuters not included in the net operating revenue. Source: KNR and Bank Staff. Date: February 1983. - 208 - Table 3.17 Page 1 of 2 KOREA TRANSPORT SECTOR KNR's Programs to Reduce Uneconomic Services (1974-86) A. Closing Uneconomic Lines Length Line Section (km) Date Actual, 1974-81 Danginri Seogang-Danginri 2.4 Mar 1980 Kimpo Bucheon-Kimpo 9.2 Jul 1980 Jinsam Sacheon-Samcheonpo 18.6 Oct 1980 Planned, 1982 and Beyond Anseong Cheonan-Anseong 28.4 Apr 1982 Hwasun Hwasun-Bogam 11.1 Ogku Gunsan-Oggu 11.8 Jinsam Jinju-Samcheonpo 29.1 R. Discountinuing Local Trains (1974-81) Line Section No. of trains Date Gyeonghu 1 Nov 1974 Seoul-Cheonan 2 Nov 1974 Jungang 2 Nov 1974 Daegu Daegu-Pohang 2 Jan 1977 Daegu-Gyeongju 2 Jan 1977 Daegu-Yeongcheon 2 Jan 1977 Jinsam Jinju-Samcheonpo 2 Nov 1980 Donghaenambu Pohang-Gyeongju 1 Jan 1977 Gyeongju-Busan 2 Jan 1977 Ulsan-Busan 2 Jan 1977 Busan-Gyeongju 1 Nov 1977 Gyeongju-Pohang 1 Nov 1981 - 209 - Table 3.17 Page 2 of 2 C. Adjustment of Train Class Actual (1974-81): No. of Line Section trains Date Past class New class Jungang Cheongryangri- Andong 2 Nov 1976 Local Local express Chungbug Seoul-Jecheon 2 Nov 1976 Local Ltd. express Taebaeg Cheongryangri- Bugpyeong 2 Nov 1980 Ltd. express A/C Ltd. express Gyeongbu Seoul-Busan 8 Nov 1980 Ltd. express A/C Ltd. express Jungang Cheongryangri- Andong 2 Nov 1980 Ltd. express A/C Ltd. express Taebaeg Cheongryangri- Gangneung 2 Dec 1980 Local Ltd. express Jungang Cheongryangri- Busan 2 Dec 1980 Local Ltd. express Gyeongehun Cheongryangri- Chuncheon 4 Nov 1980 Local express Ltd. express Gyeongbu Seoul-Busan 4 Mar 1981 Ltd. express A/C Ltd. express Jungang Cheongryangri- Andong 2 Mar 1981 Local express Ltd. express Jungang Yeongju- Dongdaegu 2 Mar 1981 Local express Ltd. express Gyeongchun Cheongryangri- Chuncheon 4 Jul 1981 Local Ltd. express Jungang Cheongryangri- Guyeolri 2 Oct 1981 - New A/C Ltd.exp. Gyeongjeon Busan-Mogpo 2 Oct 1981 - New A/C Ltd.exp. Total 40 Planned (1982-86): Gyeongbu Daegu-Busan 6 1982 Ord. express Ltd. express Throughout network 6 1983 Local Local 12 1983 Ord. express Ltd. express - 1983 Ltd. express A/C Ltd. express Suin Operating ratio: 4 1984 Local Closing Jinhae 300 and above 4 1984 Local Closing Samcheog 2 1984 Local Closing Gyeongchun 4 1984 Local Closing Gyeongjeon 2 1984 Local Closing Gunsan 4 1984 Local Closing Gyeongbug 2 1984 Local Closing Mungeong 4 1984 Local Closing Chungbug 4 1984 Local Closing Throughout network - 1985 Ltd. express A/C Ltd. express Throughout network - 1986 Ltd. express A/C Ltd. express Source: KNR, April 1982. KOREA TRANSPORT SECTOR Subway Investment Plan by Year (1982-86) (Unit: Billion Won) (1980 prices) Distance Construc- Amount of Subway line Area covered (km) tion period investment 1982 1983 1984 1985 1986 Seoul No. 2 line City hall-City hall (loop line) 48.8 1978-83 440.4 207.4 233.0 - - - No. 3 line Kupabal - Yangjae Dong 27.0 1 } 1980-85 889.7 191.1 202.6 218.0 278.0 - No. 4 line Sangkye Dong - Sadang Dong 30.0 } Pusan H No. I line Stadium - Chongyong Dong 25.3 1980-85 215.4 57.0 57.0 50.7 50.7 - No. 2 line Kamjeon-Samkori - Suyong 20.8 1985-89 90.0 - - - 45.0 45.0 Total 1,635.5 455.5 492.6 268.7 373.7 45.0 Source: The Fifth Five-Year Economic and Social Development Plan - Transportation Sector Plan (1982-1986), 1981, Transportation Sector Planning Task Force, MOT, Korea, pp. 92-93. - 00 - 211 - Table 3.19 KOREA TRANSPORT SECTOR Subway Investment Financial Plan (1982-86) (Unit: Billion Won) (1980 prices) Capital required Financial sources Domes- Foreign Govern- Project tic (US$ M) Total ment Private Period Seoul #2 City hall-City hall (Loop line) 425.6 24.3 440.4 317.6 122.8 1978-83 Seoul 3 + 4 Kupabal-Yangjae Dong 659.8 376.8 889.7 320.0 569.7 1980-85 Sangkye Dong-Sadang Dong Busan #1 Stadium-Chongyong Dong 169.1 75.9 215.4 125.1 90.3 1980-85 Busan #2 Kamjeon-Samkori-Suyong 70.0 32.8 90.0 45.0 45.0 1985-89 Total 1,324.5 509.8 1,635.5 807.7 827.8 Source: The Fifth Five-Year Economic and Social Development Plan - Transporta- tion Sector Plan (1982-1986), 1981, Transportation Sector Planning Task Force, MOT, Korea, pp. 218-221. KOREA TRANSPORT SECTOR Comparative Rail and Road Tariffs for Selected Commodities (As of March 20, 1982) (Won per ton) Railroad Road /a Road /b Road /c Dis- Line Line Line Line Commo- tance haul Other haul Other haul Other haul Other dity Section (km) rates charges/d Total rates charges Total rates charges Total rates charges Total Steel Goedong-Oryudong 432 6,453 11,510 17,963 22,206 2,038 24,244 18,875 2,038 20,913 11,000 2,038 13,038 Con- Busanjin-Yongsan 420 6,453 4,046 10,499 10,633 - 10,633 tainer Cement Ssangyong-Yongsan 246 4,134 5,754 9,888 15,320 1,528 16,848 13,022 1,528 14,550 - - Grain Jeongeub-Yongsan 297 3,780 8,453 12,233 17,370 1,019 18,389 15,630 1,019 16,649 - - -I /a Authorized rates. /b Discounted rates (15%, for distance beyond 170 km). /c Dumping rates (applied by most companies now). /d Handling and delivering charges invoiced by trucking companies. Source: KNR, April 1982. KOREA TRANSPORT SECTOR Occupancy Ratio of Passenger Trains (January 1982) Saemaul A/C limited express Limited express Local express Local Total Pass. Pass. Pass. Pass. Pass. Pass. capaci- capaci- capaci- capaci- capaci- capaci- ty by No. of ty by No. of ty by No. of ty by No. of ty by No. of ty by No. of Line coach pass. Ratio coach pass. Ratio coach pass. Ratio coach pass. Ratio coach pass. Ratio coach pass. Ratio Gyeongbu 36.5 77 53.0 78 78.5 112 53.4 47 75.6 66 66.2 68 Jungang 14.2 30 47.8 71 63.7 91 - - 81.7 72 65.3 67 Honam 21.6 45 40.8 60 61.3 89 75.7 66 76.5 67 61.4 63 Jeonra 7.1 15 31.1 46 44.5 64 14.1 12 46.0 40 43.4 45 Chungbug 28.6 41 - 61.7 54 52.0 53 Suin - - - - 50.0 21.3 43 Janghang 50.0 74 61.6 88 - 63.2 55 60.6 62 Gyeongeui 59.7 52 59.7 61 Gyeongweon 36.1 52 27.4 24 27.6 Gyeongchun 57.6 83 36.2 32 41.5 43 Gyeongbug 79.3 70 44.6 39 48.7 50 Yeongdong 20.1 30 56.7 81 - 46.6 41 49.9 51 Taebaeg 57.9 86 53.3 76 - 62.4 55 58.6 60 Donghaenambu 53.2 76 18.4 16 75.9 67 67.8 69 Daegu 15.4 32 - 36.8 53 - 57.8 51 45.6 47 Gyeongjeon 21.4 45 30.2 45 41.8 60 39.0 34 59.4 52 50.7 52 Total 47.7 34.5 72 67.7 50.6 75 69.8 68.6 98 114.0 49.8 44 114.0 63.9 56 97.6 61.3 63 Source: KNR, April 1982. KOREA TRANSPORT SECTOR Operating Patterns of SMESRS /a (1974-82) August 1974 January 1976 April 1978 July 1979 January 1981 January 1982 Headway Headway Headway Headway Headway Headway Number of trains Rush Nor- No. of Rush Nor- No. of Rush Nor- No. of Rush Nor- No. of Rush Nor- No. of Rush Nor- No. of and headway (min.) hour mal trains hour mal trains hour mal trains hour mal trains hour mal trains hour mal trains Section Seongbug-Cheongryangri 40 40 27 11 125 85 7 8 127 6 8 135 6 8 127 6 8 129 Cheongryangri-Guro 10 10 105 5.5 6 165 3.5 4 250 3 4 270 3 4 260 3 4 263 Guro-Incheon 20 20 54 11 12.5 88 7 8 132 6 8 139 6 8 137 6 8 140 Guro-Suweon 40 40 27 22 25 42 14 24 52 12 24 56 12 16 69 12 16 70 Yongsan-Seongbug 18 24 24 18 24 45 18 24 45 18 24 70 Occupancy Ratio 1977 1978 1979 1980 1981 No. of passengers ('000) 139,386 195,397 240,718 245,776 268,364 Passenger-km ('000) 2,536,321 3,466,229 4,299,766 4,435,714 4,976,136 Passenger car-km ('000) 26,426 36,357 42,008 43,085 53,068 No. of passengers per car 96 95 102 103 94 Regular capacity (seating 54, standing 102) 156 156 156 156 156 Occupancy ratio (%) 62 61 65 66 60 Number of Cars per Train Increased from 6 to 8: January 12, 1981. 6 trains December 1, 1980: 14 trains April 1, 1981 11 trains March 13, 1981 : 7 trains Total: 38 trains /a Seoul Metropolitan Electrified Suburban Railway System. a Source: KNR, April 1982. w M) - 215 - Table 4.1 KOREA TRANSPORT SECTOR Korean Ports System Commercial ports Fishing ports Others 1st 2nd Industrial 1st 2nd 3rd Without basic class class ports class class class facilities Busan Yeongpyeongdo Pohang Incheon Gwangcheon Changwon Kunsan Daecheon Onsan Mokpo Daeheugsando Bukpyung Yeosu Wando Yochun Masan Geomundo Samcheonpo Ulsan Narodo Ogpo Mukho Hanrim Ulsan Cheju Seongsanpo Jugdo Janghang Hwansun Anjeon Seogwipo Gujora Jisepo Chungmu Busan Southern Port Aaan Samcheonpo Gampo Jinhae Guryongpo Jangseungpo Weolpo Ogpo Gangu Pohang Dodong Samil Hupo Bugpyeong Jugbyeon Sogcho Imwon Samcheog Jumunjin Geojin Total 21 22 12 37 344 24 1,409 GRAND TOTAL 1,869 403 Source: KMPA. - 216 - Table 4.2 KOREA TRANSPORT SECTOR Ports Cargo Handling Capacities (1961-80) ( 000 M/T) 1961 1966 1971 1976 1980 General Ports Busan 3,950 4,990 5,740 7,000 14,000 Incheon 1,300 1,420 1,420 8,720 8,720 Kunson 520 540 540 540 1,540 Mokpo 320 443 443 515 515 Yosu 610 681 698 2,998/a 4,722 Masan 670 670 703 1,433 2,033 Ulsan - 500 1,312 1,466 2,390 Mukho 980 2,450 4,420 4,500 6,500 Cheju 150 150 236 593 800 Others /b 160 2,446 2,909 1,210 5,465 Subtotal 8,660 14,290 18,421 28,975 46,685 Industrial Ports Pohang 360 360 360 5,025 22,160 Bukpyung - - - - 10,070 Subtotal 360 360 360 5,025 32,230 GRAND TOTAL 9,020 14,650 18,781 34,000 78,915 /a Cargo Handling Capacity of Samil Port are included with Yosu Port. /b Includes also industrial ports. Sources: Handbook of Korean Economy - 1980, EPB, Korea, pp. 365-366. - 217 - Table 4.3 KOREA TRANSPORT SECTOR Ports Cargo Traffic (1961-81) ('000 Revenue Tons) Entered Cleared ' Total Ocean- Oceanr Ocean- going Coastal going Coastal going Coastal Year vessels vessels Subtotal vessels vessels Subtotal vessels vessels Total 1961 2,450 1,158 3,608 964 1,073 2,037 3,414 2,231 5,645 First FYP 1962 3,700 1,489 5,189 803 1,593 2,395 4,503 3,082 7,585 1963 4,396 1,527 5,923 861 1,694 2,555 5,257 3,221 8,478 1964 4,163 1,598 5,761 1,061 1,912 2,973 5,224 3,510 8,734 1965 5,174 2,271 7,445 1,577 2,282 3,859 6,751 4,553 11,304 1966 6,772 2,406 9,178 1,663 2,184 3,847 8,435 4,590 13,025 Second FYP 1967 9,732 4,186 13,923 1,786 4,159 5,945 11,523 8,345 19,868 1968 13,542 5,657 19,199 2,253 5,548 7,801 15,795 11,205 2,7000 1969 17,109 8,063 25,172 2,891 8,164 11,055 20,000 16,227 36,227 1970 18,695 10,477 29,172 3,589 10,544 14,133 22,284 21,021 43,305 1971 24,257 11,264 35,521 4,192 11,261 15,453 28,449 22,525 50,974 Third FYP 1972 24,699 8,916 33,615 6,010 8,657 14,667 30,709 17,573 48,282 1973 31,798 9,747 41,545 7,964 9,747 17,711 39,762 19,494 59,256 1974 33,830 10,827 44,657 8,258 10,827 19,085 42,088 21,654 63,742 1975 35,142 11,541 46,683 9,986 11,540 21,526 45,128 23,081 68,209 1976 41,447 13,532 54,979 14,311 13,532 27,843 55,757 27,064 82,822 Fourth FYP 1977 51,498 15,816 67,314 16,814 15,816 32,830 68,312 31,632 99,944 1978 61,843 16,827 78,670 16,039 16,827 32,866 77,882 33,654 111,536 1979 72,992 18,759 91,751 17,828 18,759 36,587 90,820 37,518 128,338 1980 71,400 18,900 90,300 22,700 18,900 41,600 94,100 37,800 131,900 1981 79,000 21,850 100,850 26,300 21,850 48,150 105,300 43,700 149,000 Average Annual Growth Rate (%) 1962-67 12.8 10.1 12.1 15.7 6.5 9.9 13.4 8.3 11.4 1967-72 20.1 22.0 20.5 18.6 29.9 21.0 19.8 22.0 20.4 1972-77 10.9 8.7 10.3 19.0 9.4 13.7 12.7 9.0 11.4 1977-81 8.9 6.7 8.4 9.4 6.7 8.0 9.0 6.7 8.4 Sources: (1) Handbook of Korean Economy - 1980, EPB, Korea, p. 359. (2) KMPA. - 218 - Table 4.4 KOREA TRANSPORT SECTOR Comparison of Stevedoring Capacity and Requirement (end-1981) ('000 M/T/year) Maximum Berthing Stevedoring Stevedoring Excess (+) vessel size capacity capacity requirement deficiency (-) ('000 DWT) (ships) (A) (B) (B-A) General Ports Busan 50 52 15,000 25,985 -10,985 Incheon 50 30 9,700 15,955 -6,255 Kunsan 20 6 1,540 1,624 -84 Mokpo 10 4 1,000 759 +241 Yosu 6 7 1,698 1,202 +496 Masan 20 11 2,130 2,271 -141 Ulsan 40 15 2,657 5,160 -2,503 Mukho 10 6 6,530 3,230 +3,300 Cheju 5 6 843 1,287 -444 Others - 18 6,824 4,721 +2,103 Total 155 47,922 62,194 -14,272 Industrial Ports Pohang 100 20 23,815 24,105 -290 Changwon 20 4 1,200 1,850 -650 Onsan 20 1 1,190 750 +240 Bukpyung 50 10 10,600 6,882 +3,718 Yochun 50 12 4,024 3,032 +992 Total 240 47 40,829 36,819 +4,010 GRAND TOTAL 202 88,751 99,013 -10,262 Capacity and requirement ratio (A/B) 0.896 Sources, (1) "Draft" for Preparation of the Fifth Five-Year Social and Economic Plan - Transportation Sector Plan, August 1981, MOT, Korea, p. 49. (2) Transport Plan - Sea Transport and Ports, September 1, 1981, The 2nd Planning Section, MOT, Korea, p.5 - 219 - Table 4.5 KOREA TRANSPORT SRCTOR Comparison of Stevedoring Capacity and Requirement (1961-86) ('000 M/T/year) Stevedore Stevedore Excess (+) Requirement Capability Deficiency (-) Actual 1961 5,645 9,020 3,375 1966 10,080 14,650 4,750 1971 20,312 18,751 -1,561 1976 48, 509 34,000 -14, 509 1980 83,400 82,261 -1,139 1981 99,013 88,751 -10,262 Forecast 1982 112,051 102,026 -10,025 1983 122,644 113,780 -8,864 1984 134,584 119,010 -15,574 1985 149 ,115 120,987 -28,128 1986 164,941 133,640 -31,301 Sources: (1) The Fifth Five-Year Economics and Social Develop- ment Plan - Transportation Sector Plan (1982-1986), December 1981, Transportation Sector Planning Task Force, MOT, Korea, p. 106. (2) "Draft" for preparation of the Fifth Five-Year Social and Economic Plan - Transportation Sector Plan, August 1981, MOT, Korea, p. 49. (3) KMPA. KOREA TRANSPORT SECTOR Evolution of Marine Fleet (1961-80) (Unit: -000 G/T) By tonnage of vessels By type of movement Freight coverage rate by native ships Passenger Cargo Tanker Others Grand total Coastal Ocean-going Korean No. Ton- No. Ton- No. Ton- No. Ton- No. Ton- No. Ton- No. Tori- Total flag Cover- Shipping nage nage nage nage nage nage nage freight coverage age income -- (000 tons) -- (%) (US$ mln) 1961 215 12 711 134 58 17 1,069 79 2,053 242 - 64 - 178 4,126 920 22.0 1966 234 17 691 215 145 19 489 19 1,559 270 1,461 50 98 219 8,435 2,067 25.0 19.9 IQ 1971 211 18 1,570 582 278 347 861 30 2,920 977 2,785 235 135 742 28,449 6,543 23.0 85.0 1 1976 155 17 1,511 1,779 437 1,229 1,220 47 3,323 3,072 2,896 165 427 2,9 07 55,757 21,578 38.7 424.8 1980 148 27 1,338 3,536 440 1,824 1,971 49 3,897 5,436 - 261 - 5,175 94,035 46,450 49.4 1,884.7 Sources: (1) Handbook of Korean Economy - 1980, EPB, Korea, p. 358. (2) The Fifth Five-Year Economics and Social Development Plan - Transportatiort Sector Plan (1982-1986), December 1981, Trans- portation Sector, Planning Task Force, MOT, Korea, p. 101. (3) "Draft" for Preparation of the Fifth Five-Year Social and Economic Plan - Transportation Sector Plan, Aug. 1981, MOT, Korea, p. 45. - 221 - Table 4.7 KOREA TRANSPORT SECTOR Coastal Shipping Fleet by Type (end-1981) Passenger ship Cargo ship Tanker Total Tonnage No. Tonnage No. Tonnage No. Tonnage No. Tonnage Over 10,000 GT - - - - 1 11,791 1 11,791 5,000-10,000 GT - - - - 3 19,911 3 19,911 1,000- 5,000 GT 3 7,808 17 49,204 24 57,261 44 114,273 500- 1,000 GT 4 3,128 34 23,012 28 20,686 66 46,826 300- 500 GT 11 4,445 64 23,511 23 8,954 98 36,910 100- 300 GT 49 7,444 72 14,863 31 6,641 152 28,948 Under 100 GT 91 5,291 26 4,065 43 1,881 160 11,237 Bare boat - - - - 1 17,285 1 17,285 Chartered vessel - - - - 1 2,494 1 2,494 Total 158 28,116 213 114,655 155 146,924 526 289,675 Source: KMPA. - 222 - Table 4.8 KOREA TRANSPORT SECTOR Coastal Shipping Fleet by Age (end-1981) Passenger ship Cargo ship Tanker Total Ship's age No. % No. % No. % No. Less than 5 years 64 40.5 83 39.0 28 18.1 175 33.3 Less than 10 years 56 35.4 45 21.1 27 17.4 128 24.3 Less than 15 years 25 15.8 53 24.9 33 21.3 111 21.1 Less than 20 years 12 7.6 17 8.0 32 20.6 61 11.6 Less than 25 years 1 10.7 9 4.2 13 8.4 23 4.4 More than 25 years - - 6 2.8 22 14.2 28 5.3 Total 158 100.0 213 100.0 155 100.0 526 100.0 Note: Ships over 20 years are small. Among 28 cargo ships and tankers more than 25 years, only 2 are above 5,000 GT. Source: KMPA. - 223 - Table 4.9 KOREA TRANSPORT SECTOR Coastal Cargo Traffic by Major Commodities (1966-81) (Million tons-km) 1971-81 average 1966 1971 1976 1981 annual (%) (%) (%) (%) growth Freight share Freight share Freight share Freight share rate (%) Oil 151 23 3,581 77 3,812 69 5,680 72 4.7 Cement 3 - 563 12 935 17 882 11 4.6 Coal 206 31 382 8 510 9 566 8 4.0 Others 312 46 127 3 276 5 705 9 18.7 Total 672 100 4,653 100 5,533 100 7,928 100 5.5 Combined % of oil + coal + cement 54 97 95 93 Sources: (1) Statistical Yearbook of Transportation - 1976, MOT, Korea, p. 31. (2) Statistical Yearbook of Transportation - 1982, MOT, Korea, pp. 42-43. - 224 - Table 4.10 KOREA TRANSPORT SECTOR Port Traffic Forecast by Major Commodities (1980-86) (Million revenue tons) 1982-86 average 1980 1981 1986 annual growth Actual Forecast Actual Forecast rate (%) Grains (I) 5.5 5.4 7.3 6.0 -2.3 Logs (I) 5.4 8.5 5.1 11.0 16.6 Fertilizer, raw Material (I) 1.7 2.9 1.1 3.2 23.5 Coal (I,C) 11.0 13.3 12.6 29.6 18.6 Cement (E,C) 10.4 12.6 11.0 15.0 6.4 Iron ore (I,C) 9.6 13.0 12.4 19.0 8.9 Iron & steel (I,E,C) 8.8 7.7 11.1 13.5 4.0 Minerals (I,E,C) 3.2 4.7 4.3 6.9 9.9 Containerized (I,E) 10.8 12.0 14.1 24.0 11.2 Uncovered (I,E,C) 10.8 17.2 13.9 24.2 11.8 Petroleum (I,C,) 48.9 50.6 47.6 60.8 5.0 Subtotal 126.1 147.9 139.9 213.2 8.8 Others 5.6 7.0 9.1 10.1 2.2 Total 131.7 154.9 149.0 223.2 8.4 Note -t = Import, E = Export, C = Coastal trade. Source: KMPA. - 225 - Table 4.11 KOREA TRANSPORT SECTOR Ports Cargo Volume Forecast (1980-86) (O000 revenue tons) /b 1982-86 aver- age annual growth rate Port 1980 1981 1982 1983 1984 1985 1986 (x) General Ports Busan 29,563 31,254 32,409 35,137 37,210 39,949 42,946 5.8 Incheon 23,895 25,006 26,481 28,391 29,868 31,887 34,339 5.3 Kunsan 2,306 2,906 3,009 3,337 3,612 3,992 4,104 6.4 Mokpo 1,362 1,982 2,112 2,276 2,418 2,856 3,286 9.2 Yosu 1,610 1,728 1,864 2,029 2,240 2,436 2,594 6.9 Masan 2,915 3,282 3,729 4,198 4,631 5,266 6,090 10.3 Ulsan 22,871 23,175 24,694 26,279 27,538 24,462 29,673 3.8 Mukho 4,707 4,589 4,399 4,556 4,728 4,923 5,113 3.1 Cheju 1,443 1,735 1,853 1,982 2,124 2,277 2,441 5.7 Others/a 28,718 36,057 40,286 44,617 46,576 52,132 63,361 9.5 Subtotal 119,392 131,714 140,836 152,802 160,945 174,106 193,947 6.6 Industrial Ports Pohang 19,030 23,192 23,939 26,297 27,276 28,375 29,324 4.1 Total 138,422 154,906 164,775 179,099 188,221 202,481 223,271 6.3 /a Industrial cargo included, oil and timber included. /b A revenue ton is the larger of a metric ton in weight or a cubic meter (cu m) in volume. Sources: (1) Transport Plan - Sea Transport and Ports, September 1, 1981. The 2nd Planning Section, MOT, Korea, p. 45. (2) KMPA. - 226 - Table 4.12 KOREA TRANSPORT SECTOR Forecast of Coastal Shipping Fleet Requirements (1982-86) 1982-86 average annual growth Unit 1982 1983 1984 1985 1986 rate (%) Total trade volume '000 tons 43.7 47.4 51.1 55.7 60.4 6.7 Required merchant fleet '000 G/T 371 400 431 463 501 6.2 Additional tonnage required /a '000 G/T 12 29 31 32 38 /a Including 95% net additions to capacity. Source: KMPA. - 227 - Table 4.13 KOREA TRANSPORT SECTOR Ports and Maritime Investment Plan Summary (1982-86) (Unit: Billion Won) (1980 prices) Capital Requirement Financial Sources Name of Project Domestic Foreign Total Government Private (US$ M) --- 1980 prices --- Augmnentation of Shipping Tonnage (Increase of 5,153,000 G/T): Outbound ships (5,011,000 G/T) 1,107.0 1,315.4 1,909.4 - 1,909.4 Coastwise ships (142,000 G/T) 121.6 49.8 152.0 - 152.0 Subtotal 1,228.6 1,365.2 2,061.4 - 2,061.4 Port Construction Busan 102.2 147.6 192.2 192.2 - Incheon 67.6 64.1 106.7 106.9 - Cheju area 38.2 - 38.2 38.2 - Ulsan 32.0 - 32.0 32.0 - Kunsan 8.8 - 8.8 8.8 - Wando 3.1 - 3.1 3.1 - Sugcho 7.4 - 7.4 7.4 - Mokpo 10.7 - 10.7 10.7 - Other ports 44.6 - 44.6 44.6 - New ports development 2.5 - 2.5 2.5 - Mlaintenance, dredging, etc. 47.9 - 47.9 47.9 - Signs and signal facilities 5.6 - 5.6 5.6 - Subtotal 370.6 211.7 499.7 499.7 - Intensification of Shipping and Port Facilities Seamen's School and Training Institute 8.3 - 8.3 8.3 - Stevedore Equipment and Others 18.5 - 18.5 3.0 15.5 Subtotal 26.8 - 26.8 11.3 15.5 Debt Services 67.2 - 67.2 67.2 - GRAND TOTAL 1,693.2 1,576.9 2,655.1 578.2 2,076.9 Source: The Fifth Five-Year Economic and Social Development Plan - Transportation Sector Plan (1982-1986), Transport Sector Planning Task Force, MOT Korea, p.126, pp. 212-215. - 228 - Table 4.14 KOREA TRANSPORT SECTOR Vessels Tonnage Expansion Plan (1980-86) (Unit: '000 G/T) Average annual growth rate (%) 1980 1981 1982 1983 1984 1985 1986 1982-86 Coastal Vessels Passenger 27 28 29 30 31 32 33 3.3 Cargo 141 147 154 171 189 208 230 9.4 Tanker 93 96 100 111 123 135 150 9.4 Subtotal 261 271 283 312 343 375 413 8.8 Ocean-going Vessels Passenger Cargo 3,444 Tanker 1,731 Subtotal 5,175 5,810 6,383 6,987 7,667 8,495 9,397 10.1 Total 5,436 6,081 6,666 7,299 8,010 8,870 9,810 10.0 Source: (1) "Draft" for Preparation of the Fifth Five-Year Social and Economic Plan - Transportation Sector Plan, Aug. 1981, MOT, Korea, p. 45. (2) Transport Plan - Sea Transport and Ports, September 1, 1981, The 2nd Planning Section, MOT, Korea, p. 4. KOREA TRANSPORT SECTOR Development Plan of Port Stevedoring and Berthing Capacities (1982-86) (Unit: 000 ton/year; No. of ships) 1982 1983 1984 1985 1986 1982-86 Stevedor- Berth- Stevedor- Berth- Stevedor- Berth- Stevedor- Berth- Stevedor- Berth- Stevedoring Berthing ing ing ing ing ing ing ing ing ing ing A B A B General Ports Busan 19,600 54 19,600 54 19,600 54 19,600 54 30,500 70 10,900 9.3 16 5.3 Incheon 11,700 30 14,700 35 18,700 36 18,750 36 18,700 36 7,000 9.8 6 3.8 Kunsan 2,140 7 2,140 7 2,140 7 2,140 7 2,140 7 0 0 0 0 Mokpo 1,800 4 1,800 4 1,930 5 2,275 6 2,355 7 555 5.5 3 11.9 Yosu 1,698 7 1, 698 7 1,698 7 1, 698 7 1,698 7 0 0 0 0 Masan 2,130 11 2,130 11 2,430 10 2,630 15 2,920 7 790 6.5 -4 -9.0 Ulsan 2,657 15 5,057 16 5,057 16 5,927 18 6,677 20 4,020 20.5 5 5.9 Mukho 6,620 6 6,620 6 6,620 6 6,620 6 6,620 6 0 0 0 0 Cheju 923 6 963 6 963 6 963 6 1,263 9 340 6.5 3 8.5 Others 7,109 19 7,485 20 7,485 20 7,747 21 8,080 23 971 2.6 4 3.9 Subtotal 56,377 159 62,193 166 66,623 170 68,300 176 80,953 202 24,576 7.5 43 4.9 Industrial Ports Pohang 25,835 25 31,273 31 32,073 33 32,073 33 32,073 33 6,238 4.4 8 5.7 Changwon 1,600 5 21,000 6 2,100 6 2,400 7 2,400 7 800 8.5 2 7.0 Onsan 1,190 1 1,190 1 1,190 1 1,190 1 1,190 1 0 0 0 0 Bukpyung 13,000 10 13,000 10 13,000 10 13,000 10 13,000 10 0 0 0 0 Yochun 4,024 12 4,024 12 4,024 12 4,024 12 4,024 12 0 0 0 0 Subtotal 45,649 53 51,587 60 52,387 62 52,687 63 52,687 63 7,038 2.9 10 3.5 GRAND TOTAL 102,026 212 113,780 226 119,010 232 120,987 239 133,640 265 31,614 5.6 53 4.6 Note: A - Increment of capacity or unit. B - Average Annual Growth Rate (%). Source: "Draft" for Preparation of the Fifth Five-Year Social and Economic Plan - Transportation Sector Plan, Aug. 1981, MOT, Korea, p. 49. _ 230 _ Table 4.16 KOREA TRANSPORT SECTOR Ports' Capacity Expansion Plan and Estimated Requirements (1981-86) (Million revenue tons) 1981 Fifth plan 1986 Deficit(-) Port capacity addition Total forecast surplus(+) General Ports /a Busan 29.8 11.5 41.3 43.0 -1.7 Incheon 24.4 7.0 31.4 34.0 -2.6 Kunsan 2.0 0.6 2.6 4.1 -1.5 Mokpo 1.0 1.5 2.5 3.3 -0.8 Yosu /b 1.2 Masan 2.9 Ulsan 23.0 4.0 27.0 29.7 -2.7 Mukho 3.9 Cheju 1.4 0.7 2.1 2.4 -0.3 Others 34.4 Industrial Ports Pohang 25.0 /a Including oil and timber. /b Without Samil port. Source: KMPA. _ 231 _ Table 4.17 KOREA TRANSPORT SECTOR Industrial Ports' Capacity Expansion Plan (1982-86) (M M/T tons) Cargo Port Type of cargo Capacity volume Development plan Pukpyung Cement, coal, 8.9 7.3 A coal berth is under construction miscellaneous under KMPA; otherwise, no further expansion. Pohang Iron ore, coal, 23.8 29.0 13 more berths will be constructed miscellaneous to increase steel mill capacity from 8.5 to 9.6 million tons. Onsan Oil 1.19 4.0 No new developments planned. Ogpo Shipbuilding 1.0 - No new developments planned. Changwon Machinery 0.9 2.6 4 more berths will be added by (iMasan) 1983. Yocdrun Petrochemicals 4.0 4.0 One more berth will be ready by end of 1982 for LPG terminal. Ansan Oil Existing berths LNG berth will be added in the owned by private next five-year plan under MOC. companies Kwangyang Another steel mill will be constructed in the next five years; steel area company will prepare designs and submit it to MOC for approval and construction. Source: Ministry of Construction, Korea. KOREA TRANSPORT SECTOR Performance of Civil Air Transport (1961-81) /a Domestic International 1961 1966 1971 1976 1981 1961 1966 1971 1976 1981 No. of aircraft holdings 9 37 76 75 93 - - - - - No. of flight ('000) 3.8 9.6 39.2 15.4 14.3 1.2 2.3 11.9 15.4 27.6 kms flown (million) 0.8 2.8 9.8 5.2 5.0 1.5 2.6 12.8 44.7 77.6 Hours flown ('000) 3.3 11.6 32.7 14.2 12.3 4.0 5.3 23.2 63.2 107.6 Passenger ('000) 61.5 191.6 1,105.5 773.9 1,456.6 30.9 131.4 508.3 1,910.6 3,130.3 Pass-km (million) 18.0 62.4 314.0 267.0 517.9 42.2 152.3 572.5 4,106.9 10,853.1 Available seat -km (million) N.A. 52.6 523.1 377.1 754.4 N.A. 229.0 1,322.6 8,809.8 20,356.7 Pass-seat ratio (%) N.A. 58.5 60.0 70.6 68.6 N.A. 66.2 43.3 46.6 53.4 Ton-km (million) Passenger N.A. 4.2 20.2 17.4 33.5 N.A. 38.1 38.9 282.5 734.3 Cargo 0.1 0.5 2.2 1.9 6.0 1.4 9.0 27.1 431.6 1,115.7 Mail - - - - 0.1 2.4 4.5 5.7 10.4 34.3 Subtotal N.A. 4.7 22.4 19.3 39.6 N.A. 51.6 71.7 724.5 1,884.3 Available weight (million) N.A 11.2 136.8 78.8 89.4 N.A. 65.9 248.5 1,929.1 4,913.2 Load weight ratio (%) N.A. 42.6 16.4 24.4 44.3 N.A. 50.1 28.8 37.5 38.4 /a Scheduled flight only. Sources: (1) Economic Statistics Yearbook-1981, The Bank of Korea, Korea, p. 183. (2) Statistics Yearbook of Transportation-1973, MOT, Korea, p. 274-277. (3) Statistics Yearbook of Transportationr-1982, MOT, Korea, p. 277-287, p. 311. X (4) Major Economic Indicators (1961-1971), May 1972, EPB, Korea, p. 62. (5) Statistics Yearbook of Korea-1962, Bureau of Statistics, EPB, Korea, p. 71. : _233 _ Table 5.2 KOREA TRANSPORT SECTOR Aviation Investment Financial Plan (1980-86) (Unit: Billion Won) (1980 prices) Capital required Financial sources Domes- Foreign Govern- Project Scale tic (US$ M) Total ment Private Period Kimpo Airport Expansion 97.2 - 97.2 97.2 - 1982-87 Runway 4,000 m x 60 m Mooring area 4,000 sq m Taxiway 2,000 sq m International lines, passenger building 100,999 sq m Cargo hanger 26,000 sq m Land 345,000 sq m New International Airport 16.7 - 16.7 16.7 - 1982-86 Preliminary design Detailed design Land aquisition Kimhae Airport Expansion 17.5 - 17.5 17.5 - 1982-87 Runway overlay 122,000 sq m Taxiway overlay Runway 500 m x 45 m Taxiway 500 m x 30 m Mooring area 100,000 sq m 112,000 sq m Cheju Airport Expansion 14.4 - 14.4 14.4 - 1979-83 Runway 3,000 m x 45 m Mooring area 48,000 sq m Passenger building 15,000 sq m P'Yung land purchasing 222,000 sq m Other Airports 3.8 - 3.8 3.8 - 1982-86 Debt Services 13.8 - 13.8 13.8 - 1982-86 New Aircrafts B-747 (8) 12.0 687.0 431.1 - 431.1 1983-86 Z-X (7) Grand Total 175.4 687.0 594.5 163.4 431.1 Source: The Fifth Five-Year Economic and Social Development Plan - Transportation Sector Plan (1982-1986), 1981, Transportation Sector Planning Task Force, December 1981, MOT, Korea, pp. 216-219. _ 234 - Table 5.3 KOREA TRANSPORT SECTOR Expansion Plan of Three International Airports (1982-86) Facilities Present size Expansion After expansion Kimp'O International Airport Runway 3,200 sq m x 45 m 4,000 m x 60 m 4,000 m x 60 m 3,200 m x 45 m Taxiway 154,000 sq m 200,000 sq m 354,000 sq m Mooring area 400,000 sq m 400,000 sq m 800,000 sq m International lines passenger building 70,000 sq m 100,000 sq m 170,000 sq m Cargo hangar 14,000 sq m 26,000 sq m 40,000 sq m Land 1.4 mln pyong 0.35 mln pyong 1.75 mln pyong Cheju International Airport Runway 2,000 m x 45 m 3,000 m x 45 m 3,000 m x 45 m 2,000 m x 45 m Taxiway 7,000 sq m 12,630 sq m 19,630 sq m Mooring area 22,000 sq m 48,000 sq m 70,000 sq m Passenger terminal 6,500 sq m 26,000 sq m 32,500 sq m Land 0.37 mln pyong 0.29 mln pyong 0.66 mln pyong Kimhae International Airport Runway 2,700 m x 45 m 500 m x 45 m 3,200 m x 45 m Taxiway 2,700 m x 23 m 500 m x 30 m 3,200 m x 30 m Mooring area 100,000 sq m 100,000 sq m 100,000 sq m Loading bridge - 2 2 Land 67,000 pyong 75,000 pyong 142,000 pyong Source: The Fifth Five-Year Economic and Social Development Plan - Transportation Sector Plan (1982-1986), 1981, Transportation Sector Planning Task Force, MOT, Korea, pp. 133-135. KOREA TRANSPORT SECTOR Ministry of Construction: Organization Minister Vice Minister …--< - - - - - - - r- - - - T - - - - - - ~~~ea ~~~Korea Korea Korea Industriai Site & Highway i bU5ina ~~Water Resources Corporatotn iong8 Corporatibn Development (KHC) Vianagernent Corporation Metopoita BBureau of urau3 Buireau of Bureau of BurOu of CEnqauBrauo Metpiong Nationai Physica ILlrban Public Roads (BPR) Eouipment Olanninel RannIng Planning Director General Ma t Resr [ Metropoioltan National | DeputV National ilanning Plonning & Managerent - aiDirectorGogna Division DMsion O|ffice, (9) DeInscitute Dlrector (TCMO'S) W LA TerFtiorial Regional National Planning Congrmceon &t Planning Highay Dsionnaeent Divsion DM$o DMlnoffice (9) (TCMO`s) Lanid Use National Highwjay Naitenncei Planning -aint. Offices (19) Diiont Construction Division (NHM ors) DMsion Reseatrch I I I i'__ ______ JInsitute | nInoustrioi - WaTerwtina Construction | | Division | g aDlsion Division Center j I j lL_ _ _ _ _ _ _ I r--- --- industrial I Location Testin rTMinistration Divrsion Laboraton Division industrial G~~~~~~Ceneral Pource:MlnistryotConsructson Section iak24DMsion Source: Ministry of Construction World Bank-24485 KOREA TRANSPORT SECTOR Korea Highway Corporation: Organization P resident | Auditor Executv Vco Secretary Office Vice President 1~~~~~~~~~~~~1 LaSoratudy Re&ionol Rezional Reaiono Reaional ConstrEquipmn Planning & ~General Affairs STudyin & conigBsns mrec ane ce Electricity r,ning & EmerTriningPlnnyingt Cordnaio Dpatmnt Dearmet eprDepar teprmntDpent ntDprmnt Department OfficeDprten V Suweon Daejeon Daiegu Gwangiu Field Laboratory Regional Regional Regional Regional Construction tffice Office Office Office Office Field Field Field Field E.D P.S. l Maintenance Maintenance Maintenance Maintenance I Offic Ot ice (6) Office (5) Office (4) Office (4) Toll Office Toll Office Toll Office Toll Office (17) (18) (21) l (6) Source: KHC World Bank-24504 KOREA TRANSPORT SECTOR Ministry of Home Affairs: Organization Vi@Minister Inroector Ep~~~~~~~Ifomaiongnii Office ofOfficer Plffin e f ||A n taa National Police || Civil D fan e Mlanangemant Administration Heaquarteia HedVuMrteit _ ManagemrBnt _ _~~~~~~~~~~~~~~~~~rmooc . I _ iwci Ci General AdmOfinisraton Loalorioa Locaml Deartmoa oien 2IW Deentsnuea Affairs D~lanireto PanngDeeomntGiac Administration (5Dvsoalfr dqatr Lapegal GudneDvlomnHrsepartmntu Administration Finance a Burealu _ Bureau Sa9m ulAffsln;| Plannin Adrninistrative |S{ cial Dlvbon u l Diion I Dipwtmont} I ai Defense <~~~~~~~~~n Bugt = t Division Guianc Planin (5 tDivsons) BUw| 4 Director Di_visRoanq Divis ion 13 q Systern l -| Departme 4 s General Regiona ~ ~~~~~~~~~~~ Presarvtnl Ta DlBinire( D lJPThe Road Development Section is to be upgraded to a Road Management Division Source Ministry of Home Affairsn June 1982 GorlddeinatnDpt4t KOREA TRANSPORT SECTOR Ministry of Transportaifon: Organization Minister Vice Minister I I Assistant Korea Korea Minister National Ma1ttn- Planning & Railroad & Rrrt Management 1Adminkraton Safety Emergency Bureau of Buireau of Wae"Bureau of Bureau of 1 Inspection o 1 Planning Transport Land (Rad CMI Toukrism A|cklent Couirt Officer Officer Coordination Traspot IcaO Aviation Development (Central) MarItime L General Planning & Coordination Transport AJnrcts Accidnt courts Affairs Bukdget DMsion Plic~y CUorWitlon Busan DMsion DMslon DMsbon Office Wicheon Magpo Seoul Organization Transport Transport Regionl - Management Management Operation Avkatin | Division DMsion DMslon Management Bureau Busan L Legal officer L Survey & | hban L Regional Legal Offkcer | 8 Statistics Transport Avatin DMsion DMsion Management Bureau L Guidance | DMson Source: Ministry of Transportation World Bankc-24486 KOREA TRANSPORT SECTOR Actual KNR Functlonal OrganIzation l~ ~ ~ ~ ~ ~ ~ ~ ~~~~~~eea _ arqOrator n ~ ~ ~ ~ ~ ~ ~~~~~~Dsc |Piubilc hbfr. Deut ;emelr Office Administrator |Planning & |G|ni3usinea|rncenal | Rllineco CoordinEtion E.lecri ticA Afos Office Officru Bureau Mionfic Laboratore EnDP Training Contrul Busan & ReseErch i pOffice Center SUPbe MOtr Coach | u iata Balats vistitute Office~~~~~~~~~~~fic Bcshp C*So EureSe ng Eeectrie R | einance i Sdety . e Reg. Raiirroad Railroad | Ralroadi | Railiroad | Railirod Bureu Bureau n ureau Bureau oceaue Sourcea: KNR t ckd Bank-2450h i RSp KOREA TRANSPORT SECTOR Korea Maritime and Port Authorly (KMPA): Organizatilon Dlructa PL"ic ~ ~ ~ ~ ~ ~ ~ ~~~9M Dsrc FrWalTdbn _ Re&khntOfcer Offcr Londm, Now York 1-f--ti- ~~~~~~~~~~~~~~~~~dP OA&liat DirBctorD Genieral l l l _ | _ l . | _ | .~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ Aif DIt Ic Pknir-ng 8 beau of Pat Buleo d B u cdhbou d Pont Dtsirict hson DIst Buaud 8 Oertbs Maltmre Plnnn Sdrs F & Matr & tme 8 & DWtrkt Itirme hrOfficernaerrent Tronsport & FIp l Conniction l Port Authody PPrt Auffhot & PodAtxtts I to. Source. KM'PlnnigAor CeWtin ortd Auhrrrlt24 {npctH Budge Plnnn Por hxP1 f e 1m WftCC Off~~~ ~ ~~~~~~~Ir -IiD- II5§M:sion DviionDsxhsbk)nt YmD {>~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~Pr {<93{ho= HW .y, coasta * ln sion .9~~~~~ OpeatclUon Source.~~~~Diiso KMPAAdDMlnouo ofc KOREA TRANSPORT SECTOR Ministry of Energy and Resources: Organization | Minister | Public PnFormati oic Vice Minister Planning and Resources Management Policy Of fice | Office inspctr Emergency Petroleum Policy Rasources Mine 14 _ Inspector- _ Planning Coordination Deelopment Electric Power Mine Bureau Registration General Officer Officer Bureau B raau Office (Mine Sefety Office) General Services Planning and Petroleum Planning Electric Mine Policy Registration Yound Dong Division Budget Officer PDivisionl Division Pi Division Division Branch Administrative Crude Oil Energy Electric Po|wer Mining SurveY YoungSuh Management DiiinManagemet Development Produiction Sre on u j Office l -S P Divisio nd Diiin Dvco Pruton - Dppivision | Branch Officer Division Division Division Dvi Branch I Petroleum Produc- oal LeaOfficrs tion 4nd Marketing ReuoucesarviPone Production D~ivision BranchBo Officer ~ ~ Diison Division DivisionDisinrac Alternative Electricity Coal SupplySuBo Gas Division Energy Management and Marketing Brancho Division Division Division Bac Development Mine Safety Nam Boo | Division _| | Division Branch March 1982 World Bank-24395 - 242 - KOREA TRANSPORT SECTOR BIBLIOGRAPHY I. KOREAN Government Source A. Reports on the Five Year Development Plan 1982-1986: ECONOMIC PLANNING BOARD, A Summary Draft of the Fifth Five-Year Economic and SDcial Development Plan (1982-1986). September 1981, p. 157 ECONOMIC PLANNING BOARD, Investment Plan for Transport Sector, October 12, 1981 P. 47 MINISTRY OF TRANSPORTATION, Fifth Five Year Plan for Economic and Social Development _,Transport Sector Plan , December 1981, P. 232 MINISTRY OF TRANSPORTATION, The Fifth Five Year Economic and Social Development Plan (1982-1986) - Plan for Implementation in Transportation Sector, October 1981 P. 52 ECONOMIC PLANNING BOARD, Second Planning Section. Transport Plan: Sea Transport, Ports and Harbors, September 1, 1981 P. 57 KCOREA NATIONAL RAILROAD, Transport Sector Investment Strategies in the Fifth Five Year Economic and Social Development Plan (1982-1986) September 1981 P. 387 B. Transport Statistical Data: ECONOMIC PLANNING BOARD, Handbook of Korean Economy - 1980, November 10, 1980 P. 633 MINISTRY OF TRANSPORTATION, Statistical Yearbook of Transportation -1981 P. 383 KOREA MARITIME & PORT ADM., Statistics Yearbook of Maritime and Ports -1981, August 25, 1981 P. 396 KOREA NATIONAL RAILROAD, Statistical Yearbook of Railroad - 1981, August 1981 P. 1068 C. Other Transport Reports: MINISTRY OF CONSTRUCTION, The Second Comprehensive Natinnal Physical Plan [draft] (1982-1991), September 1981 P. 46 KOREA ADVANCED INSTITUTE OF SCIENCE AND TECHNOLOGY, Optimum Transport Sector Inivestment Study - Summary Report, July 1981 KOREA ADVANCED INSTITUTE OF SCIENCE AND TECHNOLOGY, Road Transport Analysis, June 1980 - 243 - KOREA MARITIME AND PORT ADMINISTRATION, Korea Port-Phase Three Development Study - Traffic Forecasts, Feb. 1981. Prepared by Lyon Associates, KIST, KECC and EIU. OFFICE OF MARINE TRANSPORTATION AND HARBORS, KMPA, Harbor Facilities Use Fees (Bulletin No. 30), May 1, 1981 P. 14 OFFICE OF MARINE TRANSPORTATION AND HARBORS, KMPA, Harbor Stevedoring Charges Tables - May 1, 1981 P. 26 II. WORLD BANK Source: A. Report Prepared by Transport Division (AEP): KOREA Transport Sector Brief, May 13, 1974 P. 16 Transportation Annex F, The Growth and Prospects of the Korean Economy, February 23, 1977 P. 41 Sector File Updates, March 1980, August 1981 Hank Yen, Korea Road Transport Report, August 21, 1981 P. 22 Korea: Appraisal of Second Port Project, March 25, 1977 P. 23 Korea: Staff Appraisal Report of a Fourth Highway Project, November 16, 1978 P. 28 Korea: Staff Appraisal Report of a Seventh Railway Project, April 1, 1980 P. 109 B. Reports Prepared by Other Departments or Consultants: Urban and Water Supply Division, AEP, Korea: Urban Transport Sector Study - Draft Report, June 1981 P. 115 Office Memorandum, from B. Chatelin- TRP to File, Road User Charges Study, Visit to Korea, July 16, 1979 P. 17 William B. Johnston, The Korean Automobile and Parts Industry: A report to IBRD, June 1981 P. 36 -' 1270 ~~~~~~~~~~~~~~~~~~~~~~~~1280 1290 uss R CHINA DEMOCRATIC PEOPLE'S REPUBLIC OF KOREA / -/lAPAN 38' 3e-~~~~~~~~~~~~~~~~~~~~11 -p ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ Ph .W6' 85 9oso A 5 3007L0nb507'j S '~~~~~~~~~~~~~~~~~~~~~~~~SN fh -cooeoec7 Th tedoosiHJoetdo-1w 7 lOoroel 000 of lIre Illeol Ro'A ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 4 2601105 ~ ~ 77~ B..eOolitto CorootA 65 75er7A-,t oHod 26111666012812660 6S0107 ooOA0Ho11000t269tfr 70706 Yooot,t von0,, OJtt to 00edooo~~~~~~~~~~~~G patt 1167726 056165 01006 1617 Ooe ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~~~~~~6 o*,ohea6bsceCmoaoo ( ji7 ~oG-etp Otor7040'r160r07 16676207010700 ~ ~ ~ ~ ~ ~ ~ ~ N 8 1 01so esor 105 50110,sos126Iol 9', MPUBLCrOFKORE 370 O16tAOtOOb&O 565100 ~ 10 .4Oi AMS, H Hr~ *'0 Conts 5050S H -~~ -i-- NAIOA ROD(NVD - 65 /~~~~~OO0 I Ao~~~~~oe~~ 4 C ~~PROVINCIAL OANDSCONTPRODSPROEC - -PROVINCIAL ROADSIUNPAHED) Hrostoosdo.Z ~~~~~~~PROJECT ROADS fF-rSPror- 769 KG Second P651c- 966KG CONSTRIIC7IDIH AND IMPROVEMENTS Third Projet 72C23 KO 17 1~~~~~~~~ F-ot Proj-c 1665 KG 300 j ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~PROVINCIAL AND COUN%TY ROADS - Loa 2228 KG 4 M~~~~~~~NAINTENANICER GRANJZA-RON IP LOT POOVINCRESI I ~~~~~~~RAILWAYS INTERNATIONAL AIRPORTS 1 ~~~~~~~~FIRST CLASS P'ORTE SECOND CLASS PORTS PROVINCIAL BOUNDARIES INTERNATIONAL SOURDARFES 0 *,,~ ~ ~ ~ ~ ~ ~ ~ ~ ~~~~~~~K4NE 'c-N Seoooqeowo4d~~~~~~~~~~~~~~~~~~~i li 12 BP/ I BRD 13134 RI '8 270 07 4330~~~~~~~~~~~~~~~~~~~~~~~~~~~1' 29 FEBRUARY 1083 U.S.S.R, CHINA ;¾ ~~~~~~~~~~~~~DEMOCRATIC PEOPLE'S REPUBLiC OF IKOREA I, ~~~S j~~ ' SINTANR] f,.- REP.0fKOREA E 08 ...JAPAN, 38-- UNSAN EON E80 YAGRI UH ~~~~SI8___ 00 *~~~~~~~~~~~~~~~~~~~~~~~~~~ GUJEOLRI 12'5- SAMHW ~~~~~~~~~~~~~~~~~~~~~~~~~~EN SO /N 0OCHEOG 4O02002010012040000R200,0000000000 380 1 01400001/N 370- MAIN LIONS i. E7NGJU 00000 0 eV N 5200" S- osoS X'CHEONA)' 0,000 00 LINE Yle4... gSri 300-0 MUN G 3000 00400 LINE 00,000,- JoOSlanO ,0~~~~~~~~~~~~~~~~AEo''I 00000 000 0100 00--,0 Y- gjNoN OLNONO COON 100 00040533 072o,ocOGMA 3000 A 0,0 0 Y20U 03 00-0 DAEJECDL~ /0 0000E04 0004 30 ON 0 AN0 oNi oSo 0o,'7'OVooo00 FANv 0000 0000 3000200 00201- 0000 0000 0,00 VeDno 04000p00MC 310 ON 0/,LIN Oaoan 0-000020A00 C G0 N o AN 00000 0,00 084004,4 04,0040 000408403,84I YEONMUDA 00000000HA 'A84 000200 080113 0,00oNEC 000N4CKL00E 0 I, ~~~PCII LINE Cl.o NO0-E0A-4I WNMIANGJ110 00000 0S, ~ ~ ~ ~ ~ ~ ~ ~ ~~~ >01O,OA 0 G.38401 w.N K04/1 h- K.o MASAN1. 0,040,l IE E,j-~ ~j3C.1 JI~, .,A'3'ONG GWALSG 0JU -35-~~~~~~~~~~~5 OOUBLE TRACK LINES SINGLE T0RACK LINES 001080DOUBL 0TRA0KUND04 CONSTRUCTION -340 AJNECONOMIC LINES ---- - -- MAJOR~~~~~~~~~~~~~~~~~~~~~~~~~~~~~C 100 STATIONS 'II -. -- ~~~~~~~~INTERNATI/ONAL B0U04A0 ES 30" ~~~~~~~~~~~ISLOMETERS 2,)' 1 o 0 141003 It o 4 82S0 l23~~~~~~~~~~~~~~~~~~~~~~~ 73)4 ~~~~~~~~~~~~~~12,8- 130 IBRD 13135R2 REPUBLIC OF KOREA 127"00' FEBRUARY 1983 TRANSPORT SECTOR SEOUL METROPOLITAN AREA RAIL AND SUBWAY NETWORK SMESRS LINES(KNR) To Gunnhwa Existing - - Extensions(Under construction and Proposed) SEOUL SUBWAY(Seoul City) *m..s... Existing -L en... Extensions(Under construction) - Other KNR Lines -Roads ienb A Rail Terminals 136 Seoul Special City Boundary - - Population(1,000 person) / :' KILOMETER8S ° 15 / - R~~~~~ ( MILES . A ) - 258 + 8,518 A , -UBL:C OF_Kimpo nr na / O nyan N 'R OUL-INCL INC >RESSWAY ~I Yeongdeung >\ '; ,E -" eo .09nL1 htrt I .C IX ^ raesniecuiet S'4 9 ODaeg 5 ._ t ~~-~ >5J%e t S oprbnTed4nmmai . .. . _Q-~ . _ _ ._ : 12 7 0 Jo u383 258 ~~~~~8,518 OCbi~OCRATIC PEOPLE'S ESSA Fi~PUELIC OF ~ TASSJI KORIEA l- t2~~~j~~~~~;4oui ~~~Banweor Ar a of Ma-p REPIUBLIC OF uo h ,l ak tfeI-l '\ KOREA 1/40W - ODaeJeor~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~res~ad ~l.,ey . h ,,, /4-> - ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~s ndoheS ,d,s,s~ t27~~~~~~OO' To prtThThjoadBok ndth