Since the introduction of local autonomy in 1995, various institutional improvements have been implemented over the past 30 years. However, the system governing local public investment projects remains largely centralized under the control of the national government. In addition, several inefficiencies persist within the institutional framework, such as ambiguous review criteria, redundant procedures, and the absence of an effective post-evaluation mechanism. These problems stem from structural factors such as a centralized review and management system, the limited discretion of local governments, and inconsistencies in evaluation standards across projects. Although the authority of local governments to conduct investment reviews has been increased, the corresponding legal basis, financial resources, and personnel support required to strengthen the professional capacity of Local Public Investment Management Centers remain insufficient. Consequently, concerns are growing over a possible decline in local fiscal soundness. Therefore, it is essential to reform the institutional framework to enhance local autonomy and accountability, while ensuring that on-site expertise is adequately reflected in institutional operations.
To enhance the efficiency and accountability of local public investment projects, this study conducted a comprehensive review of four major systems: the Local Fiscal Investment Review, the Feasibility Study under the Local Finance Act, the Preliminary Feasibility Study and Pre-Feasibility Study, and the redefinition of the role of Local Public Investment Management Centers. To this end, relevant laws and regulations were reviewed, and case studies on investment reviews and feasibility analyses were conducted in a systematic manner. In addition, interviews and expert consultations were conducted with central and local government agencies and related institutions. Furthermore, by comparing the legislative intent, operational status, and procedural structures of each system, this study identified their structural characteristics and the need for institutional improvement from various perspectives. Based on these analyses, this study proposes specific reform measures to strengthen local autonomy and accountability, and to enhance the professionalism, transparency, and efficiency of the overall institutional framework.
For the Local Fiscal Investment Review System, four institutional improvement measures were identified: adjustment of overlapping investment review procedures, revision of review criteria and simplification of project classifications, exclusion of public property values from the total project cost, and advancement of fiscal investment project history management. For the Feasibility Study System under the Local Finance Act, five improvement measures were proposed: expansion of designated professional institutions for feasibility studies, adjustment of project thresholds for feasibility studies, development of methodologies for economic analysis, improvement of overlapping or redundant institutional arrangements, disclosure of feasibility study reports. Regarding the Preliminary and Pre-Feasibility Study Systems, two institutional improvement measures were suggested: enhancement of the regional underdevelopment index used in preliminary feasibility studies and establishment of standardized criteria for pre-feasibility studies. Finally, for the role of Local Public Investment Management Centers, three improvement measures were identified: systematization and advancement of Local Public Investment Management Center operations, support for central and basic local governments in conducting investment reviews, institutional improvement through regular consultations between the Ministry of the Interior and Safety and Local Public Investment Management Centers.
The fourteen institutional improvement measures were classified into short-term and mid- to long-term measures by comprehensively considering the urgency, necessity, and feasibility of each reform. Seven short-term measures were selected from those expected to generate immediate policy effects, such as reducing administrative burdens, eliminating procedural redundancies, and enhancing the effectiveness of review criteria
Based on the prioritization derived from consultations with practitioners at Local Public Investment Management Centers nationwide, the highest priority was assigned to “Systematization and Advancement of Local Public Investment Management Center Operations,” which institutionalizes the participation of Local Public Investment Management Center experts in investment review committees. The second priority was “Institutional Improvement through Regular Consultations between Ministry of the Interior and Safety and Local Public Investment Management Centers”, which aims to establish regular consultation channels. The third priority was “Expansion of Designated Professional Institutions for Feasibility Studies,” whereby Local Public Investment Management Centers conduct feasibility studies for projects funded entirely by local governments. The fourth and fifth priorities were “Exclusion of Appraised Public Property Values from the Total Project Cost” and “Disclosure of Feasibility Study Reports,” respectively. The sixth priority was “Adjustment of Project Thresholds for Feasibility Studies,” which differentiates thresholds based on fiscal capacity and project characteristics and introduces construction cost criteria and simplified reviews. Finally, the seventh priority was “Adjustment of Overlapping Investment Review Procedures”, which exempts projects that have already undergone proposal review and eligibility assessment by the professional institution for private investment projects from the feasibility study and investment review requirements under the Local Finance Act.
The following efforts are needed to secure the practical effect of system improvement in the future. First, the Ministry of the Interior and Safety and the Ministry of Economy and Finance should take into account the findings of this study when revising relevant guidelines, thereby strengthening the legal and institutional coherence of the system. In addition, the results should serve as supporting evidence for joint proposals and policy recommendations prepared by the Nationwide Association of Local Public Investment Management Centers, enabling the aggregation and delivery of region-specific reform needs. Moreover, it is necessary to disseminate the findings to Local Public Investment Management Centers across the country and to the Association of Governors and Mayors, gather feedback from on-site practitioners, and relay these insights to central government bodies—such as Ministry of the Interior and Safety and the Presidential Committee for Decentralization and Balanced Development—to enhance the policy impact and practical acceptability of institutional reforms. Finally, the proposed improvement measures should be implemented gradually according to their priority levels, while continuously monitoring and refining their outcomes to ensure the stable effectiveness of the local public investment system.