[THE INVESTOR] Private investors will be allowed greater access to Korea’s largely state-run railway systems, the government said on July 6.

This move is aimed at making up for recent government budget cuts while ensuring the steady and speedy development of the railway system.

The move to attract up to 20 trillion won (US$17.2 billion) in private investment by 2025 was endorsed at a Seoul meeting chaired by Finance Minister Yoo Il-ho.

Under the approved plan, private investors and companies will be allowed to invest in or build any new railways that can also be connected to the country‘s existing railway system.

Currently, private investors are only allowed to build or operate new railways in the heavily populated capital region or stand-alone railways such as the Airport Railroad Express that connects Seoul with Incheon International Airport, according to the Ministry of Land, Infrastructure and Transport.

“It will offer a safe investment opportunity for the private sector while enabling the government to further develop the country’s railway system at an early date,” a ministry official said.

The government plan apparently seeks to utilize part of the growing funds held by the private sector.

Amid record low interest rates and growing market uncertainties, the country’s short-term floating money has reached a record high of over 945 trillion won as of the end of April, the Bank of Korea said earlier.

The plan seeks to attract 19.8 trillion won in private investment for railroad projects that will help create some 450,000 new jobs by 2025, the ministry said.

The government, however, drew a clear line that a rise in private investment does not mean privatization of the railroad system, adding that new investors will be allowed to build, maintain and even operate new railways but only in exchange for fees from the state-run Korea Railroad Corp., better known as KORAIL.

(theinvestor@heraldcorp.com)