Legal Framework for Dry-Port Development and Operation in Korea

ChoongYeol (Peter) Ye

Chief Director for Global Transport ResearchThe Korea Transport Institute

Second Meeting of the Working Group on Dry Ports

14 - 15 November, 2017

I. Introduction

II. Scope of Research

III. Theoretical Background and Methodology

IV. Empirical Findings

V. Discussion & Conclusion

Contents

I. Introduction

1-1. Challenges of Seaport

Emerging Economy

International Trade Supply Chain Social Demand

Increased Import

IntegrationIncreased Export

Sophistication

Congestion

Pollution

Demand for

Increased Capability of Sea Port

The rise of emerging economies has been marked by a transformation in transportation and logistics toward integration and sophistication of functions in supply chains.

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I. Introduction

AB

CD

E

A

B

C

D

E

Shippers RoadSeaport Rail Dry Port Hinterland

1-2. Definition of Dry Port

A logistics center connected to one or more modes of transport for the handling, storage and regulatory inspection of goods moving in international trade and the execution of applicable customs control and formalities.

Customs Clearance Railroad and/or Road Freight Forwarding

Consolidation

Dry Port

(ICD)

Warehousing

Shipping Line

Repair Facilities

Container Packing

Storage Customer Service

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I. Introduction

1-3. Importance of Dry port

Port Capability

Long-Term Mid-Term Short-Term

New-Building

TechnologyExpansion

Equipment

Organization

Conventional Measures

Economical and Effective Measure

ICD Dry Port CFS

Cost

A

E

B

C DC

Long-TermMid-TermShort-Term

Po

rtC

ap

ab

ilit

y

A: OrganizationB: EquipmentC: Dry PortD: Port ExpansionE: New Port Building

Dry Port can be an economical and effective measure to complement international and domestic transportation services with intermodal connectivity.

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I. Introduction

Container Yard, Container Freight Station

Dry Port ,Inland Container Depot (ICD)

Value Added Logistics Center

Export and Import Processing Zone,Industrial ComplexSpecial Economic Zone

1-4. Dry Port Functionality

The role of dry port varies depending on country and region.Many dry ports have shown a consistent pattern of their evolution.

Functional Evolution of Dry Ports.Reference: UNESCAP(2006a)

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II. Scope of Research

2-1. Acts and Factors of Dry Port

Development and operation of dry port shall be implemented with related law and institution which is the basis for other factors that influence implementation of a dry port.

Dry Port

(Inland Container Depot)

Factors that influence implementation of a dry port

Environment

Infrastructure

Land Use

Actors that are influenced by a dry port

Law and Institution

Shippers

Seaport

Rail operators

Road operators

SocietyPolitical and Economical Decision

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III. Theoretical Background and Methodology

3-1. Theoretical Background

The importance of institutions in economic development has been well established. (North, 1990; Williamson, 2000; Hall, 2003; Acemoglu and Robinson, 2008)

Law and Institution

Economic Development

International Trade

Logistics

InfrastructureSectoral

Arrangement

Acemoglu, D., Robinson, J., 2008. The role of institutions in growth and development, Working Paper No. 10, Commission on Growth and Development, The World Bank Group, Washington, DC.

Hall, P.V., 2003. Regional institutional convergence? Reflections from the Baltimore Waterfront. Economic Geography 79 (3), 347-363

North, D., 1990. Institutions, Institutional Change and Economic Performance. CUP, Cambridge

Williamson, O.E., 2000. The new institutional economics: taking stock, looking ahead. Journal of Economic Literature 38 (September), 595-613

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III. Theoretical Background and Methodology

3-2. Methodology: Case Study

- implementation of the laws and institutions by Korean government.

Case Study

Institutional

Framework Legal Framework

Government

Organization

A Case of Uiwang ICD Development & Operation

Implications from Korea’s Experience

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IV. Empirical Finding

4-1. Uiwang ICD Development

Korean government decided to develop Uiwang ICD with social demand with growing economy in 1990’s. The laws for the development were relevantly introduced.

Central Government

Municipal Government

Concessionaire

Facilities OperationLand Use Infra

PPP

BTO BTL BOT BOO

Act on the Development and Management of Logistics Facilities

Act on Public-Private Partnerships in Infrastructure

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4-2. Legal Framework of South Korea

Act on the development and management of logistics facilities and act on public-private-partnership in infrastructure consist of legal framework for dry port development and operation.

IV. Empirical Finding

Dry Port (ICD)

Planning Operation Authorization Financing

Act on the Development and Management of Logistics Facilities

Act on Public-Private-Partnerships in Infrastructure

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4-2. Legal Framework of South Korea

IV. Empirical Finding

Article 7 (Registration of Complex Logistics Terminal Businesses)Guidelines for registration of complex logistics Terminal Businesses

Article 20 (Support for Development of Logistics Terminals)Financial, landing and infrastructure support from Government

Article 20-2 (Supports for Activation of Logistics Terminals)Granting authorization for revision to the execution of project including the installation of

a manufacturing facilities and its ancillary facilities

Article 30 (Authorization, Permission, etc. Deemed Granted)Guidelines for authorization, permission, etc. and deemed granted

Article 1 (Purposes) Rationally laying out and

management of logistics facilities

Article 2 (Definitions)Logistics Facilities, Logistics TerminalsComplex Logistics Terminal Businesses

Support and guide for development and management of dry port and ICD

Act on the Development and Management of Logistics Facilities

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4-2. Legal Framework of South Korea

IV. Empirical Finding

Ministry of Land, Infrastructure and Transport

Authorization, Permission, etc. Deemed Granted under Other Act

Approval Public Announcement

Construction Plan by Logistics Terminal Operator

Construction Plan Changes in Construction Plan

Dry port operators shall be deemed granted the relevant authorization, permissions, etc., after it gets approval on its plan for

construction from MOLIT.

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4-2. Legal Framework of South Korea

IV. Empirical Finding

The central or local governments can support developing and activating dry ports in both direct and indirect ways.

Supports for Development and Activation of Logistics Terminals

Logistics Terminals

Development Activation

Supports and Incentives from Government

(1) Granting Loans to Logistics Terminal Operators

(2) Providing Funds for installing Roads, Railroad, and Water Ways.

(3) Arrange of Request to the Competent Mayors or Governors inSecuring the Project Site or Installing Urban or Local Planning Facilities

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4-2. Legal Framework of South Korea

IV. Empirical Finding

Master Plan for PPP Projects Implementation of Infrastructure

Facilities Projects

Chapter1. General Provisions Purpose, Definitions, Composition and Operation of Committee

Chapter2. Infrastructure Facilities Projects Guidelines for implementation of PPP Projects

- Management and Operation of Infrastructure Facilities- Infrastructure Credit Guarantee Fund

- Investment and Financing Collective Investment Scheme

for Infrastructure Facilities

Chapter3. Supervision Chapter4. Supplementary Provisions

Support and guide for development & management of dry port and ICD

Act on Public-Private Partnerships in Infrastructure

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4-2. Legal Framework of South Korea

IV. Empirical Finding

Government should establish and publicize the master plan of the private investment project.

Master Plan by Government

Formulation Notification Public Announcement

PPP Projects PPP Facilities Project

Details of Mater Plan

(1) Direction of the Private Investment Policy(2) Scope of Investment(3) Methods and Conditions of the Private Investment Project

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4-2. Legal Framework of South Korea

IV. Empirical Finding

Concessionaire is deemed to be received the authorization, permission,

etc. set out in the related laws when the competent authority notifies the

implementation plan.

Competent Authority

Authorization, Permission, etc. Deemed Granted under Other Act

Approval Confirmation

Implementation Plan Construction Completion

Concessionaire must get approval of the implementation plan prior to the implementation of PPP project.

Concessionaire should submit a construction report to the competent authority.

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4-2. Legal Framework of South Korea

IV. Empirical Finding

The private investment facility project shall be managed and operated in

accordance with the provisions of the concessionaire agreement.

Concessionaire Agreement

Rights to Manage and Operate Infrastructure Facilities

Implementation Plan Construction Completion

Concessionaire must get approval of the implementation plan prior to the implementation of PPP project.

Concessionaire should submit a construction report to the competent authority.

(1)Concessionaire shall register its rights to manage and operate facility.

(2) Concessionaire shall be responsible for the proper maintenance.

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V. Discussion & Conclusion

The important function of the two acts for dry port development is to simplify legal steps and prevent legal conflict with authorization, permission, etc. deemed granted under other related acts.

5. Discussion

Act on the Development and Management of Logistics Facilities

Act on Public-Private Partnerships in Infrastructure

Authorization, Permission, etc. Deemed Granted under Other Act

Simplify the Legal Steps Prevent the Legal Conflict

Encourage Development of Dry Port with Organized Legal Framework

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V. Discussion & Conclusion

Legal framework affects entities which involves in dry port development.

It will be the guideline for government and private sectors to collaborate for dry port development and operation.

5-2. Conclusion

Private Sector

Legal Framework

Government

* National Logistics Master Plan* National Logistics Facilities Master Plan

* Act on the Development and Management of Logistics Facilities

* Act on Public-Private Partnerships in Infrastructure

* PPP Participation * Project Development Plan

Dry Port

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V. Discussion & Conclusion

Legal framework and institution for dry port development shall clearly state entity, roles, responsibility and relevant process for planning, authorization, operation and financing of dry port development.

5-2. Conclusion

Dry Port (ICD) Development and Operation

Legal Framework and Institution

Planning Operation Authorization Financing

Entity Roles Responsibility Process

Minimize Legal Conflict

Clarify Grey Area for Logistics Facility Development

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KOTI-EASTS Joint Research Project

KOTI and Eastern Asia Society for Transportation Studies started a joint research project on “Establishing Legal and Institutional Basis for Efficient Dry Port Development in East Asia”.

Establishing Legal and Institutional Basis for Efficient Dry Port Development in East Asia

1. Joint Research Period: 2017.09.08.~2018.03.31.

2. Joint Research Group: KOTI, EASTS, Experts from South East Asia

3. Joint Research Contents

- General information of the country

- Government organization

- Institutional and legal framework

- Diagnosis on current system for developing logistics infrastructure

- Conclusion and suggestion

Organizing Research Group

( South East Asia Country)

KOTI

Joint Research Planning

Project Management

EASTS

KOTI-EASTS Joint Research Project

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V. Discussion & Conclusion

We invite UNESCAP member countries to join in this research project.

- Government officials, civil experts, professors

Thank you

ycy@koti.re.kr