Korea industry ministry says it will complete adequacy review of Honam chip cluster funding

South Korea's industry ministry said Monday it will promptly complete a statutory review of the scale and efficiency of its 6 trillion won ($4.49 billion) semiconductor cluster support program, after a news report said the review had not been finished when the project was granted a fast-track exemption.

The Hankyoreh daily reported Monday that the ministry had not completed the project-adequacy review required under the National Finance Act for major projects that were exempted from preliminary feasibility studies to speed them up, including the Honam semiconductor cluster support program.

The program commits 1.5 trillion won ($1.12 billion) a year for four years to a fund for the integrated regional government, an incentive tied to the planned merger of South Jeolla Province and Gwangju. In January the government set out a policy of providing up to 5 trillion won ($3.74 billion) a year to integrated special cities, and the southwestern region's support follows the same principle.

The exemption itself was granted by the Cabinet in August under Article 38, Paragraph 2, Item 10 of the National Finance Act, the ministry said.

"Even if the preliminary feasibility study is waived, the National Finance Act requires us to carry out a project-plan adequacy review examining the appropriate project scale and efficient alternatives and to reflect the results in the budget, and we plan to proceed with the related procedures promptly," the ministry's semiconductor division said.

The fund's programs will be decided by the special city of South Jeolla Province and Gwangju, which will draw up their own fund management plans, to be finalized through deliberation by a support committee for the integrated special city and a vote by the regional council.

"While respecting local governments' autonomy in execution, we will establish a system that secures fiscal accountability by closely examining the appropriateness of project implementation and the efficiency of fund management through the support committee," the semiconductor division said.

The government's position is that it will abide strictly by the law while working to ensure the project is carried out efficiently, the ministry said.

The ministry's statement did not say when the adequacy review would be finished.