Korea - Jeonju Regional Development Project : Loan 2388 - Press Release - Conformed

FOR IMMEDIATE RELEASE World Ba.nk 1818 H Street, N.W., Washington, D.C. 20433, U.S.A.* Telephone: (202) 477-1234 BANK NEWS RELEASE NO. 84/48 Contact: Pushpa Schwartz March 15, 1984 (202) 477-3691 THE WORLD BANK SUPPORTS REGIONAL DEVELOPMENT PROJECT IN KOREA The World Bank is supporting a proiect of the Korean government to promote economic development in the midwestern region of Jeonju, the poorest area in Korea. The project includes urban and tourism development, road construction, and technical assistance. The Bank's Board of Directors this week approved a loan of $60 million for the project. Under urban development, the project includes the development of 66 hectares of industrial land in Jeonju City and 46 hectares in Iri City to the northwest. A 20-hectare housing estate in Iri, with about 610 low-income residential lots, will be developed. A water reservoir and about 21 kilometers of distribution pipes will be established in Jeonju City, and the drainage system in Iri City will be improved. Tourism development includes the upgrading of two mountain roads, totalling about 44 kilometers, in the Mt. Jiri National Park, to the south of Jeonju, and the development of a 43-hectare tourist facility in Namweon near the park. About 16 kilometers of road in the Mt. Naejang National Park in the west will be built to link two major tourist attractions, the Naejang and Baejyang Temples. Two pedestrian bridges and jetties in Seonyu Island will be constructed to improve access for tourists and residents. Under transportation, an 11-kilometer road will be built in Iri City to allow traffic from the area's industrial estate to bypass the city center. A bridge at Woonam, just south of Jeonju will he built and a road from Namweon going south to Gurye will be paved to facilitate the marketing of agricultural products among neighboring areas. Technical assistance will be provided for a review of local government planning, the financing and preparation of projects, and overseas training. Korea's rapid economic growth since the early 1960s has been accompanied by a concentration of economic activity and population in the capital, Seoul. The government has implemented measures to encourage a more even distribution of development and population around the country, by constructing hiphways, water supply systems, industrial complexes, and other infrastructure. It has also NOTE: Money figures are expressed in U.S. dollar equivalents. - 2 - offered tax incentives to encourage industries to locate in areas outside Seoul. During the 1970s, the government initiated regional development projects to promote growth in the poorer areas of Korea. The Gwanju Region in the southwest, previously the country's poorest, was the first to benefit fr6m these projects, which were supported by the World Bank with two loans totalling $80 million. The Jeonju Region, which experienced economic growth rates of about half the national average, is currently the poorest region in Korea. The government's blueprint for the development of the region includes diversifying the economy through the development of manufacturing and tourism, and improving infrastructure and living conditions in the major urban areas. The industrial estates in the cities of Jeonju and Iri are expected to meet demand for land up to 1989. When fully occupied, they will create an additional 7,500 jobs. The development of the estates is designed to help reduce future congestion in Iri City, meet some of the area's growing shelter needs, and help resolve the city's perennial flooding problem. About 1,500 jobs are expected to be created on the Namweon tourist site. The implementation of the project itself will generate iver 7,000 man-years in construction jobs. The project is expected to be completed by 1988, at an estimated cost of $143 million. The Government of Korea is providing financing of $59 million, while the cities in the project area will contribute a total of $24 million. The cost will be recovered through the sale of land and charges for use of the facilities and services to be provided under the project. The $60 million World Bank loan is for 15 years, including three years of grace, at an annual interest rate linked to the cost of Bank borrowings. It also carries an annual commitment charge of 0.75 percent on undisbursed balances and a front-end fee of 0.25 percent on the amount of the loan.