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Universal Studios project likely to fall through

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By Yoon Ja-young

A plan to build a Universal Studios theme park in Hwaseong, Gyeonggi Province, is facing rough going as negotiations aren't proceeding smoothly within the consortium.

According to the Korea Water Resources Corporation (K-Water), the parties to the project are having difficulties reaching an agreement on some issues including how much of a stake each will have in the project.

"We previously announced that the deal would be signed by the end of June, but it is likely to be delayed until August," said a K-Water spokesman.

The statement follows a local media report that the project, which was one of President Park Geun-hye's election pledges, is about to fall through.

K-Water announced back in December that it selected the USK Consortium as the preferred bidder for the project.

The consortium is composed of Universal Studios Korea Property Holdings, Daewoo Engineering & Construction, Dohwa Engineering of Korea and the China State Construction Engineering Corporation. K-Water, Gyeonggi Province, Hwaseong and the Korea Development Bank (KDB) are also participating in the consortium.

K-Water had said that by the end of June they would sign an agreement to open the theme park, which is to be the fifth Universal Studios park, by 2020.

The 5 trillion won project includes a Universal Studios theme park, a golf resort, a water park, a shopping center and condominiums on a 4.2 square kilometer plot.

The project drew attention as it could attract an increasing number of foreign tourists because it is located about an hour from Seoul by car and is close to Incheon International Airport.

According to a media report, however, those participating in the consortium are concerned with uncertainties. Investors doubt the plan will build momentum as the Park Geun-hye administration is heading toward the end of its five-year term.

KDB is also facing restructuring pressure from shipbuilding and shipping companies, for which it is the main creditor, and is sitting on snowballing debt.

The K-Water spokesman said that members of the consortium are having problems reaching a consensus, but stressed that this doesn't mean the project will fall through.

"We expect that a detailed plan will be set in August. It will be announced after the appointment of our new CEO that month. If construction begins around the end of this year as planned, it will open in 2021."

K-Water's former CEO Choi Gye-woon suddenly quit in May, six months ahead of the end of his term. The sudden resignation prompted suspicion that he was pressured to quit so that the post could be taken by a governing Saenuri Party politician who lost in the April 13 general election.

Analysts say that this contrasts with other countries where governments are giving full support to attract global theme parks, such as Shanghai Disneyland and Tokyo Disneyland.

Economists estimate the opening of Disneyland in Shanghai will have a 35 billion yuan (6.2 trillion won) economic effect on China's tourism industry, raising Shanghai's regional GDP by 0.8 percent.

The Universal Studios project in Hwaseong was first led by Lotte Group, but it backed out in 2012 after failing to reach an agreement on the land price with K-Water. "Back then, Lotte had to buy land from K-Water due to regulations, which was too burdensome for Lotte amid the global financial crisis. With a revision of the law, K-Water is now providing the land as an investor," the K-Water spokesman said.

Experts point out that the government should note that theme parks are a major part of tourism infrastructure, instead of pressuring them with a myriad of regulatory hurdles.

Yoon Ja-young


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