1. June 2010
Development of Sustainable Cities
- Issues & Solutions -
H. Kwon

2. I Busan Metropolitan City
II u-City Busan
III Business Model
IV Le gal Perspectives
V Suggestions

3. Busan Metropolitan City
Se lf-sufficient Market
Busan

4. u-City Busan : Overview
The City Innovation Project : Future-oriented City Development
Innovations with U-IT Technology
• To create a new growth engine for the city
• To improve the quality of life for all citizens

5. u-City Busan : Progress
Initiated 28 Projects in 5 Core Areas
• Total Investment : USD 74.33 million (Gov’t 52.4%, City 41.1%, Private 6.5%)
Emission Reduction
• Land Fill Gas Power Plant (2,775㎡)
- Power Generation Capacity : 5 MW/hr (1MW/hr x 5)
- Project Cost : USD 7.92 million → Wholly invested by private investor
- Project Period : 2001~2020
- Electricity Generation & Sales (2009) : 20,178 MW, USD 1.93 million
- Benefit to the City (2009) : USD 87,000, LFG Reduction
u-Infra
• Wi-Fi Zones (24) : Wireless Internet Access (Free of Charge)
• CCTV Integration System Phase I, II
• Multi-dimension Urban Space Information Service System New City!
• Busan Information Highway : 319 organizations, 1,278㎞
u-Fire Service : Multi-service Provisioning Platform
• High Speed Broadband Communications Network → Transmission speed ↑100 times
Issues to be solved
• Fail to appeal to the public • Short-term based projects
• Small scale projects → Lacking durability
• Difficult to secure profitability → Difficult to attract private investments

6. Business Models : Green u-City Development
Busan Green u-City
• Purpose : Green u-City for Green Growth
• Objective : 67.8% Low Carbon City , 70,000 Knowledge-based jobs
• Area : 50㎢
• Project Cost : USD 500 million
• Unit Projects
M ultipurpose
- Smart Community (Public Administration, Medical Services, Education)
Logistics
♦ Integrated Video Call Center, Mobile Treatment, Video-based Green u-Education
Complex
- User-friendly Public Transportation
♦ Green u-Bike, Smart Transportation Station, Eco-Pass
- Recycled Energy / Resource 20㎢
Industrial
♦ Green Integrated Data Center, Smart Building Management, Eco-Milage
Com plex
- Integrated Intelligent Disaster Prevention / Safety Management
♦ Smart Video Controlling System, Integrated City Management
9㎢
- Green u-Logistics
♦ Real-time Logistic Information Infrastructure, Green Logistic Management
GB 50㎢ Knowledge-based
City
4㎢

7. Green u-City Development : Budget
Project Type Characteristics Projects (No.) Budget (est.)
• Integrated Intelligent
Efficiency
Productivity Crime Prevention /
Gov’t Lead Facility Management (5) USD 98 million
• Green Urban Mobility (3)
Experience, Speedy Process
• Green u-City Network
Profitability
Attractiveness • Smart Community (3)
• Green Urban Mobility (2)
Private USD 146 million
Partnership • Energy/Resource Mgmt (1)
Precise Business Model, • Green u-City Integrated
Global Promotion
Control Center
Visionary
Collaboration • Green u-Logistics (3)
Innovative USD 208 million
• Energy/Resource Mgmt (2)
Projects
Global Test-bed,
New Projects USD 452 million

8. Green u-City Development : Investment Barriers
Basic Planning Stage • Competing projects / facilities
- Strategy, execution,
u-Experience projects • Short-term Contracts
City • Financing Cost
Gov’t
• Difficult to receive gov’t funds / subsidies
• Project Feasibility
Investment of • Initial Investment vs. Production Payment
$452 Mil.
• Project / Payment Guarantee
Province innovation • Technology
projects to balanced
Ubiquitous Infra • Human Resource
development
- Public services,
fee based projects • Rules & Regulations
• Culture

9. Green u-City Development : Shared Investment
Land Lease
Developer
Lease Fees / Profit Sharing
Land release /
City and/or Co-development /
Responsible Authority Investment
Land Lease
JV / SPC / AMC
Lease Fees / Profit Sharing

10. Legal Perspectives : Public & Private Infrastructure Investment
Private Participation in Infrastructure – PPP Act
• August 1994 Enactment of Act
The Promotion of Private Capital into Social Overhead Capital Investment Act
• Jan. 1999 Revision of Act The Act on Private Participation in Infrastructure
- Risk Sharing, Minimum Revenue Guarantee
• Jan. 2005 Amendment of Act Expansion of investor profile & facility types
- Introduction of BTL Scheme, Diversification of PPP Project
Purpose of Act : To enhance efficiency & transparency
• To provide infrastructure & public services by creating cooperation and partnership
between public & private sectors
Track Records – 475 Projects
• Completed 97 Return-oriented and 33 Lease-based projects
Investment Issues : High Risk, Low Profitability, Evaluation Procedures
PPP Scheme
Ubiquitous Urban Infrastructures

11. Legal Perspectives : Foreign Investment
Foreign Investment Promotion Act – FDI
• September 1998 Enactment of Act
- 55 Amendments since enactment
• Investment Methods
- Purchasing stocks, extending a long-term loan, contributing to a non-profit corporation
Foreign Investment Zones
• 2-types : Stand-alone, complex
Restriction of Special Taxation Act
• Reduction of or exemption of taxes : Corporate, Income, Acquisition, Registration, Property
• Exemption from customs duties, special consumption tax, VAT
• Tax reduction or exemption for capital increase
Other Incentives : Cash Grants, National/Local Property Lease & Rent Reduction
Investment Issues : Foreign Investment Restrictions (Schools, Postal Service, etc)

12. Legal Perspectives : Ubiquitous City Development
Ubiquitous City Construction Act
• March 2008 Enactment of Act
- 5 Amendments since enactment
• Purpose of Act
- To develop u-City by improving the general urban infrastructures through
convergences with the advanced information, communication technology
- To develop competitive city & to promote sustainable growth
- To develop u-City that provides u-Services
Target Projects
• New city development or urban rehabilitation/urban improvement of existing cities
u-City Developer
• Central /local government, Korea Land & Housing Corporation, Public Corporation
(Local), Private Partners
Investment Issues : Financing Plan, Subsidy/Loans

13. Suggestions
1 Risk Diversification
2 Business and/or project convergence
3 Export / Sell, Import / Buy Technologies
4 Create demands, work with technology,
get a long term commitment
5 Business Model Development

14. Thank You.