Government legislation ministry says Jeju shipping pact needs investment review

The Ministry of Legislation and Government Affairs said June 16 that a new shipping route agreement between Jeju Special Self-Governing Province and a foreign carrier requires a mandatory investment review. The ministry determined the pact falls under off-budget obligations, necessitating an assessment of its necessity and viability before local council approval.

The classification stems from the agreement's provision to compensate the shipping company for operating losses. While related ordinances allow for some financial support, they do not specify the exact scope of such liabilities. Because the potential cost is not fixed at signing and could impose future financial burdens, the ministry concluded the deal triggers the review requirement under the Local Finance Act.

The ministry reasoned that existing laws and ordinances merely authorize the governor to provide necessary expenses within budget limits but do not legislatively fix the specific obligation amounts found in the contract. Consequently, the duty to cover losses was established only through the agreement itself, exceeding what was anticipated by the ordinances and requiring a pre-signing check on the province's funding capacity and economic efficiency.

The ruling clarifies that obtaining prior consent from the provincial council under the Ordinance on Business Partnerships does not exempt the administration from this specific investment screening. The ministry rejected arguments that council consent alone was sufficient, warning that such an interpretation would undermine the Local Finance Act's intent to secure fiscal soundness by filtering out unnecessary burdens before they are finalized.