Have you heard? Up to 3.2 trillion won will be saved as a result of the restructuring of Subway Line 9. As part of the restructuring effort, Seoul Metropolitan Government will sell citizens’ fund worth 100 billion won from November 20 to November 26. I proposed the idea when the controversial matter concerning the hike of subway fare arose in 2012.
On October 23, Seoul Metropolitan Government announced the adoption of the Seoul-type, private capital-based projects reform model concerning Subway Line 9, including the replacement of existing shareholders such as Macquarie, return of the right to decide on the subway fare on Line 9 to Seoul Metropolitan Government, conversion of the existing Minimum Revenue Guarantee (MRG) method into the minimum cost compensation (MCC) method, lowering of the rate of profit guaranteed for the shareholders to 4.86%, and saving of up to 3.2 trillion won in public fund.
The official name of the citizens’ fund introduced to the market this time is Shinhan BNPP Seoul Metropolitan Government Subway Line 9 Special Asset Investment Trust (Loan). The fund is divided into four types depending on the maturity. Each type of fund will be sold for at up to 25 billion won. A person can purchase up to 20 million won.
Said fund will be sold through branches of six financial institutions in Seoul. The expected profit rate is 4.19%~4.5% per annum, which is higher than that offered by commercial banks. Investment profit will be paid to the designated bank accounts on a quarterly basis. Unlike other investment funds, its investment stability is high since it is a product guaranteed by NH and Woori Bank.
We plan to list the fund on Korea Exchange to make up for its demerit of impossibility of redemption until maturity as a closed-type fund.
In connection with the aforesaid reform model, said citizens’ fund is expected to set an example for finding a solution to problems in administrative areas together with the people.