South Korean Government is planning to conduct a public recruitment for a private-public SPC (Special Purpose Company) that will be responsible for the smart city national pilot city this month. It is hoping to select a SPC in June and accelerate the process of building smart cities. The National Pilot Smart City will also be centered on collaboration between the private sector and the public sector just like the Smart Challenge project.
Employees from Ministry of Land, Infrastructure and Transport (MOLIT) have recently been looking for companies that show interests in the project and they had held 7 SPC briefing sessions over the course of one month for platform providers, SI (System Integration) companies, and a group of companies that are interested in smart city.
SPC selected in June will go through an incorporation by the end of this year and it will be responsible from construction to operation of a pilot smart city within a leading district. It will build a leading district within a national pilot city until 2024 and it will be responsible for the operation for the following 15 years. As a result, the project period will be 20 years.
◊The National Pilot Smart City to be led by the private sector just like the Smart Challenge project
Smart City Challenge project is seen as a national project that has received high praises recently. When the South Korean Government started a public recruitment for the preliminary project of Smart City Challenge Project last year, it received participations from 48 consortiums (47 local governments). Even selecting the final candidate out of 6 preliminary candidates was intense. Although step-by-step competitive recruitments played a role in the fierce selection process, fact that local governments formed consortiums with private companies played a role as well. Although local government recruits a participant and generally goes into a management mode when target area is selected, local government and the private sector had played important roles for the past year and demonstrated and prepared services. Residents had also participated in the Smart City Challenge project.
Due to the positive responses, South Korean Government has combined projects that turn a current city into a smart city with Smart Challenge Project.
Roles of private companies will also be extremely important for the smart city national pilot city where innovative services that were not implemented before will be introduced. Although the South Korean Government will continue to provide institutional support, it is difficult for the government to continue to put in government expense into construction and operation of national pilot cities. Business models are a must for sustainability and this is the reason why private companies need to participate as the overseers of the project. Because various projects need to be done, the South Korean Government has decided to select a SPC that is based on a consortium of companies and public agencies rather than a private company.
While MOLIT is going to have both the private sector and the public sector invest in a SPC, it is going to have the private sector have more shares. It is planning to limit the amount of shares that the public sector can have in Busan and Sejong to 34% and 20% respectively.
◊National pilot city to be led by private companies for sustainability
Although private opinions have been collected through a MP (Master Planner) for the smart city national pilot city, the South Korean Government has led from basic planning to implementation. However, the private sector will be an overseer of the smart city national pilot city through a SPC from now on.
The National Pilot Smart City was implemented in order to create a smart city from scratch and apply new services from the beginning and test them. Since a pilot smart city is built from scratch, there have been criticisms towards the National Pilot Smart City as it goes against a basic philosophy of a smart city that is led by citizens since a pilot smart city will not have “citizens” that can be seen as a basic premise.
Smart city indicates a city where issues are solved through smart technologies. One expert interpreted a smart city as a city that provides smart tools to citizens so that issues such as energy conservation, less traffic, and safety can be implemented. Because a pilot smart city does not have citizens when a smart city needs to provide services that citizens want, citizens who will live in a pilot smart city will be just “users” who use services that are provided.
Fact that the National Pilot Smart City is led by the private sector from construction to operation is one way to supplement “absence of citizens” issue. While U-city in the past was centered on building infrastructure such as network and its role would be completed when infrastructure is built, smart city is different. Smart city is maintained as it continues to solve new issues that it faces. Although the National Pilot Smart City does not give decision-making rights to citizens and private companies that carry out their businesses within a pilot smart city, it can overcome limitations by having the private sector participate in operation.
◊Small and medium-sized companies and startups to receive opportunities as well in smart city projects
Whether a smart city is successful or not depends on participation from the private sector and its residents. SPC will be established based on such philosophy. However, some are concerned that SPC can be a barrier that prevents other private sectors from participating. It will be difficult for companies that cannot participate in a SPC in early phase or do not receive subcontracting to participate in smart city projects.
Although the South Korean Government is planning to designate and implement 7 key smart city innovative services, there is a chance that these services will not be innovative after five years. Openness is a key in order to develop innovative services that can resolve urban issues continuously. In order for the private sector to attempt new services even when a smart city is built and goes into an operation phase, there needs to be an area that surpasses SPC. The public sector needs to emphasize open operation even within SPC.
“If small and medium-sized companies participate as venders that supply solutions to the SPC, there will be limitations in operating an innovative smart city.” said Bae Seong-ho who is the head of MOLIT’s Urban Economy Department. “We are planning to create a separate track from SPC and carry out a public recruitment for small and medium-sized companies and startups.”
He also added that MOLIT will discuss with the SPC and decide on where public recruitments will take place.
Staff Reporter Mun, Bokyung | okmun@etnews.com