£ LES C Pgj Document of The World Bank IFOIR OIFFC1AL USE ONLY Report No. P1977-KO REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN TO THE AGRICULTURAL DEVELOPMENT CORPORATION WITH THE GUARANTEE OF THE REPUBLIC OF KOREA FOR THE YONG SAN GANG IRRIGATION PROJECT STAGE II January 10, 1977 TDDIS d nimmenmt has a resatjted lsbdumoon ad mty be used by redplents only li the perfornmnce Of theAir o1eld uIdes. lts contents may nor o1berwwse be disdeased withont World aBnh anthorwintion. CURRENCY EQUIVALENTS Currency Unit = Won Won 485 = US$1O00 Won 1,000 = US$2.06 Won 1,000,000 = US$2,061.86 ABBREVIATIONS ADC - Agricultural Development Corporation NACF - National Agricultural Cooperative Federation FLIA - Farm Land Improvement Association MAF - Ministry of Agriculture and Fisheries NACF - National Agricultural Cooperative Federation ORD - Office of Rural Development OSROK - Office of Supply, Republic of Korea GOVERNMENT OF KOREA FISCAL YEAR January 1 - December 31 FOR OFFICIAL USE ONLY INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT REPORT AND RECOMMENDATION OF THE PRESIDENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN TO THE AGRICULTURAL DEVELOPMENT CORPORATION FOR THE YONG SAN GANG IRRIGATION PROJECT STAGE II 1. I submit the following report and recommendation on a proposed loan to the Agricultural Development Corporation (ADC), with the guarantee of the Republic of Korea, for the equivalent of $95.0 million to help finance the Yong San Gang Irrigation Project Stage II in the southwest part of Korea. The loan would have a tertm of 17 years, including three and one-half years of grace, with interest at 8.5 percent per annum. PART I - THE ECONOMY 2. The latest Economic Report ("Current Economic Position and Prospects of the Republic of Korea") was distributed under cover of SecM75-437 dated June 9, 1975. A Basic Economic Mission visited Korea in June/July 1976; its report is being prepared. The Country Data Sheets are attached as Annex I. Recent Developments and the Adjustment Process 3. In the 1970s, the Korean economic situation has been subject to sudden and sharp changes (see Economic Reports distributed under cover of R74-42 dated March 4, 1974 and SecM75-437 dated June 9, 1975). Following a period of rapid growth the Government undertook a stabilization program during 1970-72 as a result of which real investment did not increase and the growth of real GNP slowed to about 8 percent per year. In 1973, international demand grew rapidly and Korea took full advantage of its opportunities. As a result, there was an unprecedented boom: real GNP grew by 16.5 percent and export volume by 57 percent; national savings rose to 22 percent of GNP, and foreign savings financed only about 15 percent of total investment. 4. The transition from the boom of 1973 to the difficulties encoun- tered in 1974 and 1975 reflects the impact of the twin shocks of the rise in food, oil,and other import prices and the recession in the industrial countries. The Korean economy was 'particularly vulnerable to both of these because of its heavy dependence on imported energy, raw materials, and food- stuffs, and on exports to the developed countries. Paragraphs 3-23 are identical to those contained in the corresponding section of the President's Report (No. P-1931-KO) on the Second Loan to the Korea Development Bank (Loan 1338-KO) which was approved on November 16, 1976. This document has a restricted distUibution anI may be used by recipients only in the performance of their official duties. Its contents may not Gtherwism be disciosed without World Bank authorization. -2- 5. From the last quarter of 1973 to the middle of 1974, the prices of imports rose very rapidly. The immediate impact of the oil price increase alone was to raise the import bill by more than twice the entire current account deficit in 1973 ($309 million). The higher prices of food- grains added another $300 million to the import bill. Further, during 1974, the average unit value of other imports rose by-45 percent while the unit value of Korea's exports rose by only 27 percent. The adverse shift in the terms of trade was aggravated by the sudden recession in industrialized countries. The United States and Japan, which took 70 percent of Korea's exports in 1973, suffered a decline of about 2 percent in real GNP in 1974. As a result, Korea's merchandise export volume, which had grown by 57 percent in 1973 (and by over 29 percent in each of the preceding five years), rose only 9 percent in 1974 and 23 percent in 1975. The volume of exports to Japan actually declined by about 12 percent in 1974 and increased by only 1 percent in 1975. 6. These developments had a variety of effects on the economy. First, as a consequence of the 18 percent deterioration in the terms of trade, Korea suffered a real income loss of 4 percent of GNP in 1974./i Adjusting for this, real gross national income rose by only 4.2 percent in 1974, following increases of 6.7 percent and 15.2 percent in the previous two years. Second, the higher import prices accelerated domestic inflation. The rate of increase of wholesale prices rose to 42 percent in 1974 from an average of 7 percent in the previous four years. Two-thirds of the increase in prices was attri- butable to increases in the cost of imported commodities. In an effort to prevent the emergence of untoward distortions, the Government allowed import price increases to be fully reflected in domestic prices (with the exception of basic foodstuffs and fertilizers). Domestic prices of petroleum products rose nearly 300 percent from August 1973 to December 1974. In general, the burden of the adjustment was borne directly by consumers as evidenced by the increase in the prices of electric power and transportation. Consequently, wholesale prices rose by 42 percent in 1974 and at an annual rate of nearly 30 percent in the first half of 1975. In the second half of 1975, however, the index increased by only about 5 percent as domestic prices completed the process of adjustment to international inflation, and the program of monetary restraint instituted by the Government began to take effect; during 1975, the increase in the wholesale price index was 20.2 percent. Third, the current account deficit on the balance of payments grew from $309 million in 1973 to $2.02 billion iti 1974 and net foreign exchange reserves dropped from $1.1 billion to $0.3 billion. About half of this deficit was due to the terms of trade loss, the balance being primarily due to the recession in the economies of Korea's trading partners. Finally, part of the adjustment was made by a slackening in the pace of domestic economic activity. The annual GNP growth rate slowed from 16.5 percent in 1973 to 13.8 percent in the first half of 1974 and 4.3 percent in the second half. Import volume grew by only 4 per- cent in 1974, compared with an average increase of 16 percent per year in /1 At 1970 prices and exchange rates. -3- the previous five years. Industrial production fluctuated sharply from month to month but showed little gain after the first quarter of 1974. Employment rose by only 3.4 percent and was able to absorb only three-quarters of the increase in the labor force in the year. 7. The slowdown in domestic production would have been greater but for various government measures to sustain employment. In December 1974 the currency was devalued by 17.5 percent. Special credits were extended through the banking system to enable industry to accumulate inventories, and the Government purchased excess inventories of finished goods from industries particularly hard hit by the fall in export demand. Subsidized credit was extended to small firms and exporters to ease their financial situation. The purpose of these policies was two-fold: (a) to sustain employment levels, thereby easing the adjustment of the economy to the permanent and sizeable loss of real incomes resulting from the terms of trade movement; and (b) to prevent too precipitate a decline in investment and production levels of export industries in response to a temporary recession in export markets. In support of Korea's long-term goals, it was held desirable to maintain a minimal economic momentum and to remain poised to take rapid advantage of the anticipated recovery in export demand. This policy was predicated on the belief, then shared by many economists and policy makers throughout the world, that the world recession would be relatively shallow and shortlived. 8. Contrary to expectations, the recession in industrialized countries continued well into 1975, with the GNP of OECD countries falling by about 2 percent. Despite the unfavorable demand conditions, Korea's export volume expanded by about 23 percent in 1975. However, as a result of reduced demand and increased international competition, particularly for iron and steel and clothing exports, Korea's export prices declined by about 7 percent and its terms of trade deteriorated by about 10 percent. This, together with rising payments on freight and interest obligations, has been principally responsible for a continued large deficit in the balance of payments of $1.9 billion in 1975 compared with $2.02 billion in 1974. 9. Korea suffered heavy balance of payments losses in 1974 and 1975 due to an exceptional combination of adverse events. The average loss in the two years on account of terms of trade movements alone was about 7 percent of GNP (at 1970 prices and-exchange rates). The alternative to incurring size- able balance of payments deficits would undoubtedly have led to large-scale unemployment and a loss of growth momentum, which would have had severe consequences for Korea's long-term -development. The essence of Governmental policy has been to smooth the process of adjustment, while making steady progress toward effecting a long term improvement in the balance of payments. To this end, the Government intensified measures adopted earlier in the decade to tackle longer term structural problems in its balance of payments and to increase the availability of investment resources. 10. The severity of Korea's balance of payments problems in 1974 drew attention to the sensitivity of a trade-oriented economy to the economic fluctuations of its trading partners. Because Korea is poorly endowed with natural resources and its principal comparative advantage is a skilled and energetic labor force, a relatively high degree of trade orientation is unavoidable; however, the Government has embarked on strenuous efforts to - 4 - reduce the vulnerability to international fluctuations by diversifying the commodity composition of, and markets for, exports as well as reducing import dependence. 11. In 1971 and 1972, 75 percent of Korea's exports went to the United States and Japan. This proportion dropped to 56 percent in 1975. In the same period, the share of exports to Europe more than doubled from 9 percent to 18 percent, and the share of other countries (excluding the United States, Europe and Japan) increased from 16 percent to 26 percent. Commodity exports to Middle Eastern countries have increased very rapidly from a small base, and amounted to $319 million in 1975. Similarly, the commodity -concentration of exports has declined significantly; four major categories of exports (textiles, clothing, plywood and miscellaneous manu- factures) accounted for 60 percent of exports in 1970 but only 47 percent in 1975. During this period there was a particularly rapid growth of exports of iron and steel, electronics, electrical machinery and appliances and ships. During the last year, Korea has also been highly successful in winning construction contracts in the Mfiddle East. The development of new exports and the upgrading of the quality and design of traditional exports are the major means by which Korea hopes to diversify its exports and to further reduce its dependence on the Japanese and United States markets. 12. These developments suggest that Korea will be able to sustain a rate of growth of exports that is rapid compared to other countries, although not as high as it was prior to 1974. Global projections indicate that the volume of manufactured exports by developing countries is likely to grow about 12-15 percent per year for the rest of this decade. Con- sidering that 90 percent of Korea's exports now consist of manufactured goods, that its links with the Japanese and U.S. economies remain strong, that successful efforts are being made to penetrate new markets and that some progress has already been made in diversifying the industrial structure, the long-term prospects for Korea's exports are markedly better than for developing countries as a whole. Provided measures continue to be taken to maintain price competitiveness, Korean exports may be expected to grow at 20-25 percent per year in terms of current prices (allowing for inter- national price inflation of 5-6 percent per year). 13. The potential for reducing imports significantly is limited. Of total imports in 1975, 30 percent consisted of raw materials for exports and a further 27 percent was capital goods, categories in which substantial import savings are unlikely to be compatible with maintaining international competitiveness of export industries. More than half of the remaining 43 percent of imports consisted of petroleum and foodgrains. The scope for restraining petroleum imports (18 percent of the total) is very limited; because domestic energy sources are limited to low quality coal, firewood and limited hydroelectric power, petroleum supplies about half of Korea's energy needs and is utilized almost entirely for essential industrial and transportation purposes. The number of private automobiles is relatively small and home heating needs are met by coal and wood. Despite these factors, the rate of growth of petroleum consumption has been severely curtailed - from 1.8 times GNP growth in 1968-73 to about the same rate as GNP growth in the following two years. 14. In order to reduce dependence on imported foodgrains, there has been an energetic effort to increase agricultural productivity. In 1972-73 imports of grain accounted for about 30 percent of consumption and about 11 percent of total imports. Since then, the rate of growth of value added in agriculture has nearly doubled (from about 3.5 percent to about 6 percent per year). This was partly the result of good weather, but also reflects the use of improved inputs and the assurance of high grain prices. The pro- portion of land under high yielding varieties of rice has increased from 16 percent in 1972 to an estimated 48 percent in 1976. Despite the very severe topographical limitations (only a quarter of the land area is culti- vable), there is a growing promise that Korea will be able to achieve self- sufficiency in its staple foodgrains - rice and barley. It is anticipated that imports of foodgrains (mainly wheat) will amount to only about 6 percent of total imports. 15. The Government set itself two major economic goals for 1976: restraining inflation to a rate of 10 percent and reducing the balance of payments deficit on current account to $1.4 billion (from $2.0 billion in 1975). Present indications are that these objectives will be met. The current deficit for 1976 is now forecast at about $1.1 billion as a result of buoyant exports and strong measures to restrain domestic demand. Export earnings are expected to rise to about $7.2 billion, 45 percent ahead of 1975, primarily because of the economic recovery in the industrialized coun- tries; and GNP is expected to rise by about 11 percent. Despite this, the rate of increase in wholesale prices is being held at around 10 percent. In part, this is the result of reduced Government deficits and a slowdown in investment due to the severe restriction of banking credit to the private sector. The significant improvement in Korea's economic performance in 1976 will provide a strong base for the Fourth Development Plan for the period 1977-81. Longer-Term Prospects and Program 16. The preparation of the Fourth Five Year Plan for the period 1977-81 has afforded an opportunity for a comprehensive review of Korea's economic problems, prospects and priorities. Its longer-term goals are "growth with enhanced self-sufficiency" and greater "equity and social development". Self-sufficiency is interpreted principally in terms of a strengthened balance of payments rather than autarky. It is the firm inten- tion of the Korean Government to achieve a maximum rate of growth consistent with a sound balance of payments and also with the maintenance of internal financial stability. Although investment is expected to continue at about 26 percent of GNP over the Plan period which will enable the achievement of a rate of growth of GNP of about 9 percent (slightly lower than the average of 10 percent attained during the last-decade), the current account deficit, which is now about 6 percent of GNP, is to be eliminated by 1981. National savings are expected to finance a h4gher proportion of total investment than the 72 percent figure during the Third Plan period. -6- 17. Growth and stability are not the only objectives. Enhanced equity and greater social development are of equal importance in the Korean scheme of things. The main emphasis is on providing adequate employment opportuni- ties for the rapidly growing labor force to prevent aggravating the unemploy- ment problem /1 and on achieving a wider distribution of the benefits of growth. Productivity and earnings will be increased by the provision of increased facilities for vocational and in-plant training. Health outlays will increase as a proportion of total investment with special stress on pre- ventive care and an innovative health delivery system to service low income families. The family planning program will be strengthened. 18. The achievement of these goals would not require a change in the basic development strategy of export-led growth, which Korea has followed so successfully. The ratio of total exports to GNP is expected to rise from the current level of about 27 percent to about 42 percent in 1981, with the manufacturing sector continuing to provide about 90 percent of total exports. This demands the achievement of further gains in efficiency and productivity. Korea's comparative advantage lies in manufactures, such as machinery, elec- tronics and shipbuilding, which require relatively more skilled labor. It is also necessary to achieve some import substitution in steel and chemicals to ensure an adequate supply of the intermediate inputs for the export industries. These changes in the industrial structure will require intensive efforts to improve the mechanisms for the transfer of foreign technology and the develop- ment of appropriate indigenous technology. 19. The successful implementation of the Plan will depend largely on Korea's ability to marshall the required resources. Strong policy measures are envisioned in the Plan to increase the mobilization of domestic resources. Success in restraining inflation is, as already noted, expected to have a favorable effect on increasing private savings. In the past, private savings have fluctuated with the movement of the terms of trade and the rate of inflation. No further adverse movement in the terms of trade is expected in 1976 and the rate of inflation is estimated at 10 percent. This situation is expected to continue through the Fourth Plan period. The Government is taking measures designed to channel the higher private savings likely to be generated by these developments to an increasing extent into the financial system, and thereby, into more effective use for productive investments. In addition to restoring a positive real rate of return on financial forms of savings, the Government is taking steps to increase the supply of government and corporate securities to the public and to provide more attractive schemes for savings mobilization by commercial banks. 20. These measures are being supported by fiscal action to increase public savings. The defense tax surcharge imposed in 1975 is to be continued and a value-added tax introduced. The extent of the subsidization of farmers /1 Although the rate of population growth has declined to below 2 percent, the rate of growth of the labor force will continue to be around 3 per- cent a year over the next decade because of the baby boom following the Korean War in the early 1950s. -7 - and urban consumers through the Grain Management Fund and the Fertilizer Fund is to be reduced so as to eliminate the operating deficits on these accounts. This will remove the substantial burden which these Funds had imposed on Government finances (in 1975, the borrowing from the Central Bank on the two accounts was W 350 billion, or nearly 4 percent of GNP). The.increased resource mobilization and the strong restraint on current expenditures will result in substantial budgetary current surpluses which could be used to finance capital expenditures. 21. The fruits of growth are to be spread more equitably among all segments of the population. The continued adoption of a high-growth stra- tegy and emphasis on labor intensive production is expected to generate adequate employment opportunities to absorb the increment in the labor force during the Plan period. Rural incomes are expected to increase as a result of a further improvement in the agricultural terms of trade and increased opportunities for non-farm employment (primarily through the Saemaeul Movement). The quality of life in the rural areas is to be fur- ther improved by the provision of infrastructure facilities. 22. The Plan's priorities, strategy and programs are sound. The con- tinued emphasis on relatively rapid growth is essential in the light of the employment objective and the predominant role the export sector is expected to play is appropriate in view of Korea's limited natural resources. More- over, Korea has the manpower and the entrepreneurial capacity to implement the proposed investment program. 23. However, the main impediment to the successful implementation of the Plan is likely to be the difficulty Korea may encounter in raising the necessary resources. The domestic savings targets are somewhat ambitious while the projected import requirements may turn out to be too low. The ability to obtain foreign capital in adequate amounts and on reasonable terms will continue to be a challenge. The servicing of the sizeable foreign borrowing required should not pose serious difficulties given the present debt service ratio /1 and the prospects for continued export growth, provided, however, that the proportion of external debt incurred on shorter- term and at high interest rates is not excessive. Assuming the capital inflows will be forthcoming on reasonable terms, the debt service ratio is expected to peak below 15 percent by the end of the decade and subse- quently decline steadily as exports continue to expand. PART II - BANK GROUP OPERATIONS 24. As of November 30, 1976, Korea had received 29 Bank Loans (including one Third Window Loan) and 8 IDA Credits, amounting in total to $1,172.8 million in loans and $106.9 million in credits (taking into account cancel- lations and the refinancing of one IDA Credit in a subsequent Bank Loan). /1 Around 12 percent on an cutstanding medium and long-term debt of $5.7 billion at the end of 1975. -8- 25. A substantial part of Bank financing has been for the transport sector - $219.7 million for railways, $191.5 million for highways and $80 million for ports. $194.5 million has been lent for agriculture projects. The Korea Development Finance Corporation (KDFC) has received $150 million, the Korea Development Bank (KDB) $60 million /1, and the Medium Industry Bank (MIB) $30 million in Bank loans for relending to private industry. A total of $80.3 million has been provided for three education projects; $25.0 mil- lion for a tourism project; $15.0 million for a secondary cities project; and $60.0 million for a rural infrastructure project. In addition, two Program Loans amounting to $175.0 million have also been granted to Korea. 26. As of November 30, 1976, $524.2 million of the total Bank lending remained undisbursed on effective Loans and Credits, mostly from commit- ments in the past eighteen months. Annex II contains a summary statement of Bank Loans, IDA Credits, and IFC Investments as of that date and Notes on the execution of ongoing projects. As indicated in the Notes, progress on project implementation is generally satisfactory. 27. Excluding one project that was subsequently cancelled, IFC had by November 30,1976, entered into sixteen commitments totalling $69.3 million (net of participations and cancellations). Under advanced consideration is a further investment in electrical and electronic products; under preliminary consideration are projects in cement distribution, special steels, petro- chemicals, construction materials and in leasing. 28. Korea's ambitious industrial development programs require large capital expenditures and further loans to the three major development banks are planned to meet this need. This will enable the continuation of assist- ance to a wide spectrum of industries, including small- and medium-sized enterprises. With the closer relationship established as a result of recent promotional efforts, we expect IFC's activities also to continue expanding rapidly. IFC would seek projects that would: (a) result in foreign exchange revenues or savings; (b) contribute to modernize or deepen the industrial structure; and (c) increase value added in manufacturing. 29. The emphasis which the Government places on agricultural and rural development is reflected in the program for FY77. The proposed project was preceded by the Miho Watershed Area Development Project and the Second Agricultural Credit Project which were approved by the Executive Directors in July and September 1976, respectively. 30. The further development of the industrial and agricultural sectors and the anticipated growth of exports will require concurrent infrastructural development. Although the transport sector will be given relatively less emphasis than in the past, the investments required are large, and thus there is considerable support for this sector in the proposed program. 31. The share of the Bank Group in Korea's total external debt (dis- bursed) outstanding at the end of 1975 was about 8.7 percent, and the share /1 A second Loan of US$82.5 million to the Korea Development Bank was approved by the Executive Directors on November 16, 1976, and was signed on December 23, 1976. - 9 - of debt service was of the order of 4.6 percent at that time. These ratios are expected to increase to around 18 percent and 11 percent by the end of the present decade. PART III - THE AGRICULTURAL SECTOR 32. The extraordinary expansion of Korea's export-oriented manufactur- ing sector in recent years has, to a certain extent, obscured the tangible and impressive, albeit less spectacular, gains made by the country's agri- cultural sector; over the 1962-74 period its output increased by about 3.5 percent per annum (a rate comparable with that attained by Thailand, Indo- nesia and the Philippines). Korea's agricultural exports rose from about $70 million equivalent in 1967 to approximately $423 million in 1974 and were over $600 million in 1975. These achievements are all the more commend- able in view of the fact that only about a quarter of Korea's total land area of about 10 million hectares is cultivable. 33. The average farm size in Korea is 0.9 ha, of which 0.5 ha is paddy land, while upland crops, such as barley, maize, soybeans, fruit, vegetables, tobacco, mulberries and other cash crops are cultivated on the remainder. Nearly two-thirds of farm households have less than 1 ha of cropland but only 4 percent of farm households are landless largely as a result of the Farmland Reform Law of 1950 which imposed a ceiling of 3 ha of cultivated land per household. 34. About 84 percent of all paddy land is irrigated and the average use of fertilizer reached 272 kg per ha of the cropped area in 1975. The use of agricultural chemicals is also widespread. The extensive use of modern farming techniques and the development of local adaptations of high yielding varieties of rice have enabled a steady increase in yields. In 1975, average rice yields exceeded 3.6 tons per ha and yields up to 6.0 tons per ha were not uncommon. These yields are amongst the highest in Asia (exceeded only in Japan). However, the growth of agricultural output, in recent years, has not kept pace with domestic requirements. This has caused the Government to be increasingly concerned with the need to raise productivity in the agricultural sector and to devote additional resources for its development. More than three times the funds budgeted for agricul- ture in the Second Five-Year Plan (1967-71) were included in the Third Plan (1972-76) and the proposed investment in agriculture in the Fourth Plan (1977-81) is about 50 percent higher than in the previous Plan. 35. The Government accords high priority to expanding foodgrain output with the objective of minimizing the propcrtion of domestic requirements met from imports. The provision cf irrigation facilities, improved water control and the wider use of high yiJelding varieties of rice and barley, wlhich cover two-thirds of the total crop area, will be crucial in meeting this aim. Another major strand of the Goverunment's agricultural development strategy is the expansion of the output of fruits, vegetables, tobacco, mutlberry and livestock to incretase farm incomes and utilize labor more fullv. - 10 - 36. The Bank Group's lending for the agricultural sector in Korea has been aimed at assisting in the achievement of these objectives. Of the $194.5 million lent, to date, for agricultural projects, $122 million was provided for the Pyongtaek Kumgang Irrigation Project (Loan 600-KO), the Yong San Gang Irrigation Project Stage I (Loan 795-KO, Credit 283-KO) and the Miho Watershed Area Development Project (Loan 1319-KO); $30.5 million has been made available for two Agricultural Credit Projects (Credit 335-KO and Loan 1328-KO); a $7 million Loan (942-KO) has been made for a Seeds Project; $13 million has been lent for the Integrated Agricultural Products Processing Project (Loan 994-KO); and a $7 million Credit (234-KO) and a $15 million loan (1193-KO) for two livestock projects. In addition, a $20 million Bank Loan and a $40 million Third Window Loan (1216-KO & 1218T-KO) are helping finance a Rural Infrastructure Project. A short description of these Projects and their current status is given in Annex II. 37. The proposed project is the second stage of a plan for irrigation, drainage and land reclamation in the lower reaches of the Yong San Gang in the southwestern part of Korea (see attached map). A first-stage development, to benefit 33,000 ha is being financed under Loan/Credit 795/283-KO. It will be completed in 1978, about 18 months later than anticipated at appraisal. The delay was caused by difficulties in maintaining the required level of budget allocations in a period of rapid inflation. Apart from this problem, which has now been overcome, ADC's engineering and administration of project implementation have been of a high standard.The proposed project is located in a predominantly agricultural area (the Gwangju region) which in the past has not shared in the benefits of Korea's industrial growth. Income levels were among the lowest in the country which led to a high out-migration of its population in the late sixties and early seventies. The region's economic backwardness was partly attributable to its lack of accessibility to the Seoul-Daejeon-Daegu-Busan corridor, along which economic activity was concen- trated after the end of the Korean War. This changed with the opening of the Chonju-Busan Highway (financed under the First Highway Project) in August 1973, which has dramatically lowered travel time between the region and major market centers as well as the ports of Masan and Busan. Communications within the region are also being improved, partly under the Bank's Second and Third Highway Projects. To accelerate the economic growth of the region the Government has planned the development of an industrial belt in the urban areas along its southwestern coast. The Secondary Cities Regional Project (Loan 1070-KO) is assisting with the provision of an organizational framework for regional investment planning and development which could be used as a model to further similar development in other areas in support of Government programs to disperse industry and to reduce migration to the already overcrowded cities of Seoul and Busan. PART IV - THE PROJECT 38. A report entitled "Yong San Gang Irrigation Project Stage II" (No. 1247-KO, dated January 3, 1977) is being distributed separately. A Loan and Project Summary is attached as Annex III. Supplementary Project data is given in Annex IV. Negotiations were held in Washington from November 11-17, 1976 with a Korean delegation led by Mr. Heung Koo Kang, Counselor at the Korean Embassy in Washington, D.C. 39. The proposed project would benefit 20,700 ha through irrigation, reclamation of 5,500 ha of uncultivated tidal flats and land development on 11,900 ha (land consolidation has already been carried out on 3,300 ha to be irrigated by the project). Rice would be the main crop in the summer, followed by a winter crop of barley on about 70 percent of the area. The principal features of the project are summarized below: (a) construction of an estuary dam across the mouth of the Yong San Gang, consisting of a 4,500 m long embankment, a 240 m wide concrete sluice and a navigation lock; (b) construction of a 4,000 m long sea dike; (c) construction of 16 pumping stations to serve a total area of 20,700 ha, including the land to be reclaimed and developed; (d) construction of about 315 km of main and secondary canals to serve an area of about 15,200 ha; (e) reclamation of about 5,500 ha of tidal land through land leveling and construction of canals, drains and farm roads; (f) land development comprising land consolidation on 3,200 ha of existing paddy, conversion of 3,250 ha of upland to irrigated paddy, development of 1,050 ha of upland for irrigation, and tertiary canals and drains on 4,400 ha of existing paddyland; (g) construction in the project area of office buildings, warehouses, access roads and a temporary pier required for the construction of the estuary dam; and (h) provision of the services of consultants to assist in project implementation and in preparation of feasibility studies for future development stages of the Yong San Gang Basin. The Project Area 40. The project area lies 300 km south of Seoul. It encompasses parts of four counties in the Jeonla Nam Province. The largest town in the project area is Mok Po with a population of over 200,000. The provincial capital of Gwangju, with a population of over 500,000, lies about 50 km to the northwest of the project area. The southern location of the project moderates the extremes of climate found further north in Korea. The sumner extends from May to September with temperatures reaching 300C. December ard January are the coldest montlhs with temperatures often below freezing. The project area has about 240 frost-free days. Annual precipitation averages aboutl 1,240 mm - 12 - with two-thirds occurring during the rainy season (May through September). Even in the summer, rainfall is unreliable, especially during the critical rice transplanting period (June). In addition, droughts occur sometimes in August and September. Irrigation is therefore required to obtain optimum yields from high-yielding varieties of rice. Detailed Features of the Project Estuary Dam 41. The estuary dam, which would be located about 10 km upstream of the river mouth, would exclude tides from the lower reaches of the Yong San Gang and thereby create a fresh-water reservoir to serve as a source of irrigation water for the project area. For most of the year, when river flows are low, the pool level upstream of the dam would be held at +1.0 m in contrast to the present situation in which the high tide levels are between +3 and +4 m. The lower water levels would permit reclamation of about 5,500 ha of tidal flats and allow better drainage of about 800 ha of cultivated land in low-lying areas. During floods, the level would rise above +1.0 m for short periods because flood waters would be stored during the upper part of the tidal cycle when tide levels downstream of the dam are higher than the pool level. The main embankment closing the river channel would be about 2,000 m long with a maximum height of 20 m above the river bed. The downstream portion of the dam would consist of dumped rock and the upstream portion would consist of sand protected with a layer of rock. An 8 m wide road would be located on a 20 m wide berm on the upstream side of the dam. Sea Dike 42. A sea dike, extending downstream of the estuary dam along the left bank of the river, would be constructed to reclaim 830 ha of tidal flats. The dike would be 4,000 m long and about 6 m high. A sluice would be constructed at the downstream end of the dike to permit drainage of the reclaimed area at low tides. Irrigation Facilities 43. (a) Pumping Stations. Each of the 16 irrigation units forming the project area would be served by its own pumping station. The total installed capacity of the pumping stations would be about 15,000 HP. Facilities to supply power to the pumps would include 95 km of 22 kV distribution lines, and four substations containing 12,500 KVA of transformer capacity. (b) Main and Secondary Canals. The 16 irrigation units would each be served by a system of main and secondary canals. Altogether there would be 165 km of main canals and 150 km of secondary canals. Tidal Reclamation 44. The estuary dam and sea dike would eliminate tidal inundation of a large area of uncultivated tidal flats. The net area proposed for reclama- tion is 5,500 ha (including 830 ha protected by the sea dike), after allow- ing for 15 percent of the land to be taken up by ditches, drains, and roads. - 13 - Development of the tidal lands would be similar to that provided in the land consolidation areas and would involve land leveling and construction of a rectangular grid of irrigation ditches, drains, and farm roads. Temporary drains about 1.0 m deep and at spacings of about 20 m would be provided to permit the salts in the soil to be leached out by flooding and draining. It would take about a year for the soils to be desalinized sufficiently to plant the first rice crop. Assurances were obtained that before inviting bids for reclamation of tidal lands below elevation +3 m, ADC would submit to the Bank for review an economic and technical analysis of the reclamation of such lands (Section 3.04 of the draft Loan Agreement). Land Development 45. This component of the proposed project would consist of the follow- ing elements: (a) Land Consolidation. Land consolidation has already been carried out on 3,300 ha and would be provided by the project on 3,200 ha of existing paddy land where slopes are less than 2 percent. On steeper land, consolidation cannot generally be justified because earth moving costs become prohibitive. The advantages of land consolidation are that (i) it facilitates mechanical land preparation, (ii) it allows easier access to the fields and improved standards of farm management, and (iii) it allows more effi- cient control of irrigation and drainage. The improvements in crop and water management should result in higher rice yields. Also, more timely land preparation combined with effective drainage at the end of the rice growing season would facilitate the planting of a winter barley crop. (b) Conversion of Uplands to Paddy. In areas to be irrigated by the project works, 3,000 ha of cultivated uplands and 250 ha of forest would be converted to paddy cultivation. The areas to be deyeloped have slopes up to 10 percent and they would be converted into a series of horizontal benches with widths ranging from 5 to 10 m depending on the slopes. (c) Upland Irrigation. An area of 1,050 ha of upland, of which 700 ha are presently cultivated and 350 ha are forest, would be developed for irrigation of upland crops. In these areas the soils are too shallow to be benched for paddy cultivation. Development would include some land clearing and grading. The area consists of small plots close to the main and secondary canals, and water conveyance and distribution would be left to the farmers. (d) Tertiary Canals and Drains. On 4,400 ha of existing paddy land where slopes are too steep for land consolidation, the existing tertiary canals and drains would be improved on - 14 - 1,900 ha and new systems would be constructed on 2,500 ha. The main and secondary drainage systems would also be repaired and realigned in a block of 850 ha within the area served by existing tertiaries. Construction and improvement of quater- nary canals would be carried out by the farmers. In Korea, it is common practice for farmers to join together to construct on-farm distribution systems. Provision of Consultants and Feasibility Study for Future Development 46. The Agricultural Development Corporation (ADC), the project implementing agency, would employ consultants to assist in project implemen- tation and in carrying out feasibility studies for future development of the Yong San Gang Basin. The estimated consultant input is 120 man-months for project implementation and 80 man-months for the feasibility studies. The consultants would be supplementing ADC's own senior technical staff due to the considerable work load in connection with the on-going and planned projects. It is estimated that the cost of the consultants services would average $6,600 per man-month. Project Cost and Financing 47. The total project cost is estimated at $167 million, with a foreign exchange component of $87 million (52 percent). Physical contingencies of 20 percent have been applied to the base cost estimates for the estuary dam to reflect uncertainties inherent in underwater work under tidal conditions. Similarly, a physical contingency of 20 percent has been applied to tidal reclamation where field conditions cannot be adequately assessed before the estuary dam is closed. Physical contingencies of 15 percent have been applied to civil works, materials and equipment for all other features of the project. About 33 percent of total project costs consist of provisions to cover expected price increases over the eight-year project implementation period. The proposed Bank loan of $95 million would finance the foreign exchange cost plus $8 million of interest and other charges on the loan. Local expenditures, representing the estimated balance of project costs, would be met through annual Government budgetary allocations to ADC. Detailed cost estimates are given in Annex III. Procurement 48. Contracts for civil works construction and the supply of equip- ment and materials, except for some contracts estimated to cost $3.4 million as explained below, would be awarded on the basis of international competi- tive bidding in accordance with Bank Group Guidelines. The total value of all civil works contracts (exclusive of price contingencies) would be about $74 million. The estuary dam, sluice, navigation lock and sea dike would be awarded as a single contract with an approximate value of $22 million. Other civil works would be packaged by areas to form about ten contracts with an average value of about $5 million. Major equipment contracts would be for the manufacture and installation of sluice gates ($12 million) and pumping - 15 - station equipment ($5 million). Contracts for cement ($2.4 million) and reinforcing steel ($2.2 million) would be divided into contracts of about $0.5 million in order to keep the supply of materials in line with require- ments. ADC's policy is to supply contractors with the cement and steel to be incorporated in the works. These materials would be procured on behalf of ADC by the Office of Supply, Republic of Korea (OSROK). A preference limited to 15 percent of the c.i.f. price of imported goods or the customs duty, whichever is lower, would be extended to local manufacturers in the evaluation of bids. Contracts for the construction of the access road together with the left embankment of the estuary dam ($2.5 million), and for the buildings and other site facilities ($0.8 million) would be awarded after local competitive bidding. Miscellaneous equipment ($100,000) would be purchased through normal government procurement procedures. Disbursements 49. Disbursements would be made at the rate of 100 percent against the foreign exchange cost of directly imported equipment and materials, or at the rate of 100 percent of ex-factory cost for equipment and materials manufactured locally. For consultant's services, disbursements would equal 100 percent of total expenditures. Disbursements for civil works carried out by contractors would be at 50 percent of total expenditures, to be disbursed against certified monthly contractor's progress payments. The disbursement schedule is given in Annex III. Organization and Management 50. The Agricultural Development Corporation (ADC), a semi-autonomous agency operating under the Ministry of Agriculture and Fisheries (MAF), would be responsible for project implementation. Responsibility for designs, procurement and construction supervision would rest with ADC's Yong San Gang Project Office, which is presently engaged in implementation of the first- stage project and was primarily responsible for the Stage II feasibility study. Most of the staff now engaged on Stage I will be employed on Stage II, and additional staff will be assigned to the project as necessary. 51. Agricultural services in the project area are well organized and would adequately support the farmers in realizing the benefits of improved irrigation and land development. The Office of Rural Development (ORD) is the agency in MiAF responsible for research and extension. ORD's extension work is carried oult through provincial, county and district offices. Each of the four county ORDs serving the project area has sufficient extension workers and specialists-in crops, livestock, soils, plant protection and farm management, for the presently cultivated land. To serve 5,500 ha of tidal land to be reclaimed, ORD would establish new branch offices and employ additional staff (Section 3.02 of the draft Guarantee Agreement). 52. Responsibility for operation and maintenance (O&M) of existing irrigation projects in Korea rests with the Farm Land Improvement Associa- tions (FLIA). Three FLIAs, presently operating 5,200 ha in the project - 16 - area, would be expanded to cover the additional areas to be developed by the project. The FLIAs would operate and maintain the irrigation systems, schedule water deliveries, allocate and collect project charges, and enter into cooperative arrangements with other agencies, such as the National Agri- cultural Cooperative Federation (NACF) and ORD, for various kinds of assist- ance to the farmers. The estuary dam, sluice, navigation lock and pumping stations would be operated and maintained by ADC, but the costs would be borne by the FLIAs. The cost of O&M in January 1977 prices for the project is estimated at Won 35,000/ha ($72/ha). An assurance was obtained that ADC would prepare by December 1980, and submit to the Bank for review and comment, a detailed plan for the operation and maintenance of the project, including proposals for turning over the irrigation service area works to the FLIAs (Section 3.08 of the draft Loan Agreement). 53. Almost all supplies of inputs and credit originating from Govern- ment sources are supplied through the cooperative system, which also handles marketing of a number of crops. Some 90 percent of farmers in the project area are members of cooperatives serving one or more villages. These village cooperatives are successively grouped into county cooperative federations, and ultimately the NACF. NACF anticipates no difficulties in providing the farmers participating in the proposed project with the additional quantities of seed and fertilizer needed. At full development, about 26,000 farmers would require an estimated Won 3,200 million ($6.6 million) production credit annually. An additional $3.7 million of longer term credit would be required for farm machinery purchases. Because of the necessity for production credit to finance the larger volume of farm inputs under the project, assurances were obtained during negotiations that the Government would make the necessary arrangements to finance the farmers' requirements of farm equipment, inputs and hired labor. (Section 3.03 of the draft Guarantee Agreement). Cost Recovery 54. Korea has a well established system of charges applying to govern- ment planned land development projects. These charges are split into re- current or O&M costs, and capital repayments. While farmers must pay full annual O&M costs, the capital repayment terms vary according to the type of land development. For irrigation works farmers repay 30 percent of capital costs over 35 years,including 5 years of grace, at 3.5 percent interest per year. For tidal reclamation, farmers buy the developed land by repaying 100 percent of capital costs over not more than 13 years,including 3 years of grace, at 7 percent interest per year. In addition, farmers also pay produc- tion taxes of 6 percent of the gross value of all foodgrain production above 1.4 ton/farm, and 6 percent of the gross value of upland crop production above Won 85,000/ha (Section 3.05 of the draft Guarantee Agreement and Section 3.09(b) of the draft Loan Agreement). Incremental project charges, discounted at 10 percent and assuming no inflation over the project's life, would be sufficient to recover 41 percent of total costs. At annual infla- tion rates of 5 percent and 10 percent, the corresponding cost recovery indices are 34 percent and 30 percent. - 17 - 55. The reclaimed tidal land would be sold in plots of 1.0 ha and 2.0 ha to persons with farming experience. A majority of the purchasers would be farmers, mostly from other parts of Korea, whose land has been purchased for public works projects or for industrial development. Before disposal of reclaimed tidal lands, ADC would submit to the Bank for review a disposal plan including (a) eligibility criteria for selection of purchasers and (b) terms and conditions for sale of the lands (Section 3.09 of the draft Loan Agreement). Environmental Effects 56. The project would have no adverse effects on the environment. The impact of the project on fisheries in the estuary of the Yong San Gang and on sedimentation in Mok Po harbor have been studied by ADC and its consultants. A survey by ADC showed that about 800 households in the vicinity of the project engage in fishing to supplement farm income, but nearly all of the fishing is in shallow coastal waters. Therefore, construction of the estuary dam will have no significant effect on fisheries. As regards effects on Mok Po harbor, a study by an expert in sedimentation concluded that the estuary dam would not increase, and might in fact reduce, the annual dredging requirement in the harbor. On the benefit side, the project would improve water quality in the lower reaches of the Yong San Gang through elimination of sea water intrusion. This would create a large source of irrigation water for use in the proposed project area and potential developments to the south and west of the project area. Project Benefits and Risks 57. The project would support the Government's policies to increase foodgrain production through irrigation and land development, and consequently rural incomes. Implementation of the project would lead to changes in land use, reclamation of uncultivated land, and more intensive cropping and higher yields on presently cultivated land. The cultivable area would increase from 14,600 ha to 20,700 ha through reclamation of 600 ha of forest and 5,500 ha of tidal land. It would increase rice production to 87,600 tons compared to 32,000 tons at present and barley production to 43,600 tons from 14,100 tons. At full agricultural development, the project would result in rice import savings of Won 10,600 million ($22 million) annually at the projected world market price c.i.f. Incheon/Busan. After deducting the incremental cost of imported fertilizers, chemicals, fuel and other. farm inputs, annual net foreign exchange savings would amouint to about Won 7,300 million ($15 million). 58. The project would provide, through the estuary dam and reservoir, a road link between Mok Po and the eastern river side and, if the reservoir salinity level falls sufficiently, a possible source of industrial and municipal water for Mok Po City. - 18 - 59. The proposed project would directly benefit some 29,000 farm families or approximately 174,000 people. It has been estimated that about 45 percent of the farm families in the project area with a farm of 0.6 ha or less have per capita income below the poverty level of around $175. At full agricultural development the project would increase this group's income on average by 40 percent. Income on a 0.3 ha rainfed farm benefiting from the project would increase from $610 to $850 while on a 2.0 ha partially irrigated farm the increase in income would be from $2,960 to $4,300. The project would enable farmers in the area to roughly maintain the relative position Qf their incomes with regard to the national average per capita income. Without the project the income gap would widen. 60. The project's overall economic rate of return would be 13 percent, using a fifty-year evaluation period, full project benefits being attained by 1989. The project's economic rate of return showed little sensitivity to variations in the cost estimate or assumptions made concerning the timing of agricultural benefits. It was moderately sensitive to a reduction in the level of benefits, but in none of the cases tested did the rate of return for the entire project fall below 10 percent. 61. Project risks are no greater than can normally be expected with qperations of this type. PART V - LEGAL INSTRUMENTS AND AUTHORITY 62. The draft Loan Agreement between the Bank and the Agricultural Development Corporation, the draft Guarantee Agreement between the Republic of Korea and the Bank, the report of the Committee provided for in Article III, Section 4 (iii) of the Articles of Agreement of the Bank and the text of a draft resolution approving the proposed loan are being distributed to the Executive Directors separately. The Loan and Guarantee Agreements follow the pattern of Bank agreements for loans of this kind. Special con- ditions of the project are listed in Section III of Annex IV of this report. 63. I am satisfied that the proposed loan would comply with the Articles of Agreement of the Bank. PART VI - RECOMMENDATION 64. I recommend that the Executive Directors approve the proposed loan. Robert S. McNamara President Attachments, January 10, 1977 Washington,, D. C. ANNEX I PAP 1 or 4 page4 TABLE 3A KOREA, REPUBLIC Of - SOCIAL INDICATORS DATA SHEET LAND AREA (THOU KK2I - - -- -----… --------------- KOREA, REPUBLIC OF REFERENCE COUNTRIES (1970) TOTAL 98.5 MOST RECENT AGRIC. 24.1 1960 1910 ESTIMATE THAILANO TURKEY JAPAN GNP PER CAPITA (USSI 110.0 270.0 550.0 220.0 480.0 2650.0 POPULATION AND VITAL STATISTICS _______________________________ POPULATION IMID-YR, MILLION) 25.0 31.4 34.0 36.3 35.7 104.3 POPULATION DENSITY PER SQUARE KM. 250.0 319.0 3l,5.o 71.0 4S6.0 282.0 PER SQ. KM. AGRICULTURAL LAND 1217.0 1320.0 1368.0 .. 67.0 1575.0 VITAL STATISTICS CRUDE BIRTH RATE PER THOUSAND 39.7 35.0 2.7 44.3 40.6 17.5 CRUDE CEATH RATE PER THOUSAND 22.9 11.1, 8.8 13.7 14.4 7.1 INFANT MORTALITY RATE I/THOU) .. .. .. 80.0 145.0 13.1 LIFE EXPECTANCY AT BIRTH (YRSI 52.6 57.7 60.6 . 54.4 71.1 GROSS REPRODUCTION RATF 3.1 /j 2.6 2.4 3.2 2.6 /a.b 1.0 POPULATION GROWTH RATE IS) TOTAL 2.8 2.3 1.6 3.1 2.5 1.0 URBAN 5.9 2 6.14 1,.8 3.7 4.2 4.0 URBAN POPULATION It OF TOTAL) 28.0 41.2 4k7.3 13.0 31.2 84.4 AGE STRUCTURE (PERCENT) 0 TO 14 YEARS 44.0 42.1 39.9 /a 45.0 41.8 24.0 15 TO 64 YEARS 53.0 54.6 so.77i 52.0 53.9 68.9 65 YEARS AND OVER 3.0 3.3 3.4 7E 3.0 4.3 7.1 AGE DEPENDENCY RATIO 0.9 0.8 0.8/a 0.9 0.9 0.5 ECONOMIC DEPENDENCY RATIO 1.5 La 1.4 1.2 & 1.2 1.1 /c 0.6 FAMILY PLANNING ACCEPTORS (CUMULATIVE, THOUI .. .. .. 460.0 USERS (S OF MARRIED WOMEN) .. 42.0 34.0 10.0 8.2 EMPLOYMENT TOTAL LABOR FORCE (THOUSAND) 7500.0 10400.0 12100.0 16700.0 14500.0 /d 53300.0 LABOR FORCF IN AGRICULTURE (IS 66.0 so.5 /a 50.6 /a.b 79.0 67.3 19.0 UNEPLfnYEO (S OF LABOR FORCE) 9.0 5.0 7 4.1 .. 4.0 /e 1.2 INCCME DISTRIBUTION X OF PRIVATE INCOME REC D BY- HIGHEST 5S OF HOUSEHOLDS 17.0 /d 17.1 18.1 /o *- 32.8 /f 14.2 HIGHEST 20T OF HOUSEHOLDS 42.0 7d 44.5 43.4 7c *- 60.6 7j7 37.6 LOWEST 202 OF HOUSEHOLDS 7.0 7T 7.1 7-2 7c *. 2.9 77 8.8 LOWEST 40S OF HOUSEHOLDS 20.07d 17.7 18.7 75 .. 9.4 77 22.3 DISTKIBUTION OF LAND OWNERSHIP ______________________________ I OWNED BY TOP 10 OF OWNERS 27.0 28.0 .. .. 53.0 I OWNED BY SMALLEST 102 OWNERS 3.0 2.0 .. .. 0.9 HEALTH AND NUTRITION POPULATICN PER PHYSICIAN 3000.0 /Of 2210.0 /c 1990.0 /aXd 7970.0 2220.0 880.0 POPULATION PER NURSING PERSON 3220.0 1LA 1760.0 7c 1700.0 d 6650.0 1880.0 ,j 240.0 POPULATION PER FOSPITAL BED 2600.0 C 1920.0 1990.0 Zj 850.0 490.0 80.0 PER CAPITA SUPPLY OF - CALORIES (I OF REQUIREMENTS) 85.0 103.0 107.0 105.0 110.0 106.0 PROTEIN (GRAMS PER DAYI 53.0 65.0 68.0 ae 52.0 18.0 76.0 -OF WHICH ANIMAL AND PULSE 13.0/s 19.0 .. 17.0/a 22.0 /h 45.0 DEATH RATE IfTHOUI AGES 1-4 .. .. .. .. 15.0b 1.0 EDUCATION ADJUSTED ENROLLMENT RATIO PRIMARY SCHOOL 96.0 104.0 104.0 82.0 h I.0o / 101.0 SECONDARY SCHOOL 27.0 41.0 147.0 /a 16.0 h 28.0 91.0 YEARS OF SCHOOLING PROVIDED 0 (FIRST AND SECOND LEVEL) 12.0 12.0 12.0 12.0 11.0 12.0 VOCATIONAL ENROLLMENT I (T OF SECONDARY) 14.0 16.0 16.0 /a 14.0 /I 1..0 20.0 ADULT LITERACY RATE Il .. 87.0 92.0 73 79.0 S.Oiu 99.0 HOUSING PERSONS PER ROOM (AVERAGE) 2.8k 2.7 .. .. 1.9 1.0 OCCUPIED DWELLINGS WITHOLT PIPED WATER (IS 88.0 /g.h 80.0 /d .. 64.0 5.0 ACCESS TO ELECTRICITY IS OF ALL OWELLINGS) 28.0 50.0 80.0 /a ,. 41.0 RURAL DWELLINGS CONNECTED TO ELECTRICITY (I) 12.0 30.0 40.0 /a .. 18.0 CONSUMPTION RAnIO RECEIVERS (PER THOU POP) 32.0 126.0 127.0 /a 78.0 89.0 551.0 PASSENGER CARS IPER THOU POPI 0.4 2.0 2.0 5.0 4.0 84.0 ELECTRICITY (KWH/YR PER CAP) 71.0 307.0 535.0 124.0 , 247.0 3391.0 NEWSPRINT (KG/YR PER CAP) 1.8 3.4 3.3 1.0 3 0.7 18.9 …------------------------------------------------ - … - ------ -_--- - -__ _ _ _ _ ___ _ __ _ ___ ____ ______ _ __ _ _ __-- - - --- SEE NOTES ANO DEFINITIONS ON REVERSE Peg. 2 of pages Unless othereise noted, dat. for 1960 rater to easy year between 1959 and 1961, for 1970 between 1968 sod 1970, sod for Meat Recent. Estimate between 1973 an 1975. -sa Sp., has heen Selected as an objectise ceentry due to the .1iw.1arity of the present Koraneonomc tructure to that of Japan, in, the mid-fifti.e (wth the same principle resource base, i.e., efficisot, industrious, cheap labor and heany reiaceo iported roo materiale). "aereoer agricul- tore, transport, end other ..eotero of the eConoy have etilar characteristics. Korea flee has a pattern of industrial d-evip .ent which to net very different from the one Japan, pursed with great nooses. in the eltte.. 0M .O 196 /a 1950-55; A 1955-60; A4 ettlo of population under 15 and 65 and ove to total labor force; d Mage end eslary ioco,*e of urban, houeeholds, 196.; /e 1962; £4 Registered, net all practicing in the country; £4 Roseholdo; /h Water piped inside. 1970 /. As percetage of employ .sni; a Registered; ac Regietrod, not all practicing in the country; £d Water piped inside. HOST gERT_ifESTmAE I A 1972; a Ae perce-ntage of soployment; £4 1971, rural and urban; £d Registered, not eli practieing in the country; L. 1969-71 'arerge; If 10 years old and over; £4 Reti of pup.ls- tln under 15 and 65 sod evr to total labor forc.. THArL&N 1970 ALi196L-66; £4 7-13 end 1i;-l8 yeere of age respectiumly; a. Public schoels, which include technical education at the peeat-sencoudary leve... TBKEY ~1970 AExcoludes 17 eastern prnvin..eo; A 1965-67; /- Retlo of population under 15 and 65 and over to labor force age 15 ILyears old and over; /d 15 years sod over, -ctlude unemployed; Is Registered only; £4 Diepooble income.; Including assistant curses end sldwives /b 1964-66; A1 7-11 Yearse of oge; a4 Perono et year. old and ove r who tell the censust takers that they cam rend and write. 09, Auguot L, 1976 DV'DhITiONS OP SO¶_lIND1CAr)RS teed Ares (thou le2) Popuaten ow9 mureneprson - Population divided by bouer of pracotie- Tt1Total- 1ee ouwfsca aces cmprtisg land ares end inladte tr.lgse and atltgdutonuross, etraiosd' nr -'certified" Murso., arc-Mos t rece.nt estimate of arietue ea coed tenperardy or and auxiliary personnel with training ur esprinoce. peseansetly icc -rPe, pee taran, macbt 6 kitchen gardes or to Ie. fell1w. er hoe a ~..itlbeda- Population divided by, number of hospital .d:a&_ ce an djwivte general an-d upecielloed hospital GNP per caPita (LISl) - GNP pan capita eteaste- at curret sarhet prices, and rehabilitation centers; ~ludes nursing hmorn end etbinhfloento caleulated by -m convreton method as World Reek ARton (1973-75 heals) for ctstodisl and preventive care. 1960, 1970 end 1975 dat.. Par caPita suppl otaree(of renirenete) - Ceoputed free -oergy equivalet efne-ood eupioc1 vliable in country per capita per Posuletien and ctai ocatistios day; available eupplise cemprios d-setic production, isperto leoss peou1atl on (mid-yr itllion) - A. of July firet: if not -coilble, esports, and changes in etoch; pet eupplien excit ocinal feed, ceedo, -evergs of two end-year estinatee; 1960, 1970 end 1975 data. quantitiee used in fend procesin nod lessee in dietribution; r- quireumnts were estiated by FAO booed on phyiotlogical needs fur Peculation density-per noner he - Mid-yeer population per aqusce hilo- nernal activity end health consoidering crvireonmental teeleprature, oner(10 -ecae) uf rual4y weights, agehan,d son distributions of population, ond s11iuig Pepuloticdeonitv.-pe e rie heok ei.lnd-Cnue s ho e 0 for netsat.household level. agri-ucursi land onlY. Pecapita ou2ppl of p- rtin (ams per day) - Pruten -octeut uf per ospta net eupp Y of food par day; net supply of feed is defined as Vital tatiotic shove; requfeanto for all coutri.rt estblihehd by USDAn F.onuotl Crude birth rete par thousad - ennol lice bioths per thousand of mid- Research Servine provide for a nicnu allowance of 60 graon of total ye-opuplation; iso-pose r -ithsec ic evecacc ending 1. 1960 end 1970, Protei per dOy, .ud 20 gras of unial and pulsee Protei 1n, -c attc?- sod fin -year average ecdng in 1971 lop moor recent estimate. gram= hould be cace p21 bo thece tondards are lopr time thwne Crude death rate perthousand - Anoo-I dasthe per thousad of eid-yscc of 75 grau of total protein and 23 gren,a of nodal protein 00 en over pepultetic; te-yea aritheetic -verage eding Em 1960 sad 1970, end age for the senld, propo..ed by PAO in the Third World Food Surey. five-year, coerga ending in 1175 fec ont recent astimetc. Pe sla oei upyfe nimal and pules - Protei supply or food icccacaity rate (ichen) - anneal deatha ofincfanta uinder one yeor of derivedfreesnrtl anfd%puse in grat per day. age pe tbcua sod live births. ~Annual deaths par thouseud in ugc group lifeeopoiooc etbirth_(veal - Average nnber of yearn of life re-cing -hyers tocildren In this age. group; sageted as 00 indicator at birth, us ually (ice-year --erges ending En 1960, i970 and 1973 for of onic-tritton. developiui coutric., Grees -pe-r.eci_ ree- A--rge ounbec of live da.Shtece a wonos will Ed,scntlep R hsarie her .cr-I1 rerductive periud if she aprecepr-see age- 'Kt::fl wnrolle ato_-orta,'shool - Kroint of eli uge a ePecific fertility este; eosly five-yea avrages ending in 1960, .e~naeo rsyene-g popnaton;Iniluden children aged 1970 and i975 for d-ve1eping countries. 6-11 years but adjusted fer different lengtho of prinery education; Pepuliia3m as() -tori- opead enu-l Breath rates of mid- for ouriswith umiversal education, enrlollet may exced IOC% p5cc opulaion or l _i-60 sinr. 9010 tce so-5 puplils are, bel-ow r above th official school uge. Pou;lation elr2Zwo int (R - rba - CaMprted like growth rate of tebal gloted enrollment ratio - secondary school - Cos,utsd au above;en popultion;dMferrt daititona of urban areas cay arffet neapra- ondar education requires at least four years of approvd priary biltty of data amog countries, instruction; providee general, vocational or teacher training inetoc-- Urban noetlation (S of itatl) - Kotio of orben to total population; dif- tions for pupils of 12 to 17 yersr of age; correspondence course. ore f..t 'nn ... f .bnsaeas may affect comparability of date generally excluded. enog ountma lairs fsheoolag provided (fi-rst and eacond laela) - Tntel yeare of - ' " n-0 ~- chldroe, (0-14 yeare), working-age (i5-A years), sch_8ooling; at secondary level, vocatina intnttio. nay be partially A:nrt re (65 em andovrasPer-netaga of eid-yecr popuietion. or completely excluded. Ag, enpcv rti.- eti ofppltion under 15 end 65 and over to VPoostIunlene lo t S of secondas) Vo..tional institutions include haf 15 through 61. tehice1, inutra or othr prg ewhich operate independently REonenic dependency rntio - Ratio of po0ule.io.n under 15 end 65 and over ortes departbnete ef secondary institutio.. to the labor force in age group of 15-66 years. du ieeTrate 'L- Liteamte adults (able to readi and write) to Family pia-ine - acceptors (o4ua4tive. thee) - Cumulative number of percetagetor total adult population aged 15 years and veer. -accptors ef birth-cotrol devimes under auspices of national fecily planning program since inceptIo.. Fitl.yplnig-ues( or f earnied w,eeon) - Percetagee of s.rrled M One mr moan (alo e) - Average cember of par-ono per rums~ in on- V-e6 fcid-ern g 1011yas in uebrhcnrld-cupia conventiona edel ing ur ban -ara; dwellings exclude non- vie t limried mume in a- age grup. permanent strictturensd unoccupied parts. Qtouiedhelng without pipad ete.r () - Occupied ounvention.l dwelIns i uran ndrural reas wtot inside or outside piped a furoe thousad) - Ecnnomicnlly active parsons, including wtrfacilitlee as percetage e l cuiddelns anefresan nu yd but excluding houseive, students, sic.; ACcess to electricity (I of all dwellinges) - Ceeventional dwellings definitions in various countries are net conperable. with electricitty In living quarters as percet of total dwellings Labor force in encilus(%) - AgricUltural labor force (in frmairg in urbae and rural artea. frsr, inting and fishing) as,pevet,sge of total lAbor farce. brldelnscoonected to eloctricity (8) - Coeputed as above for a.M d' S of lbr force - Onemployed ene usual1y defined an pereoerua wet-e ny ah rea ban w totakea.Job, out ofa.job on .gicen day, realsined cut of a Job, and seeking enrk for a specified minimum',,ar period nottexceeding one week; may not be Comeparable between V w 5 - kl-l oye.f receivers for radio broad- trie du to diffeleut definittion of unemployed and source of date, .sata to general pbflFl thounand ef population; sorludee onli- e..,awyloyent. office ettietico, .-cPI. surveys, oncauory esee ctted receivers io couuntries and in years cdhe registrati-on radio plOpsavnt inaurance. sets one in effect; data for recet years may not be couparable oinee _t, countries abolishsd lic-anc-isg. b.Min.A1tfloi- Pee--taga of private isoc" (both in .ish -d kind) ~ jPoapgOw arajnperthotu93 -P Passenger oars copiemotor tersm eat- _asvdhcIes It, richane 201, psowest RU, end pse,sac st ci fin w ha i parsons; excludeesiuacs hearsees and emi- hooaeholds tory vehiclee. ML-r ic2teIZJWVYr P tr-g) - Annual consumption of industrial, cue- Naln~~l;o~is - Perrenteges of lad easedial, puth- merepvets electricityin, kilowatt houre per capita; set 1415--d oocm leWi eera. generelly baeed on prod.titoo date, without allowanc for loosen in grids but elUssing for imqports an wyorts of electricity. Nei= ~~~~~~~~~~~~~~~~~~~~~~~-Per capianul cosmtinnklors - ouaindivided by nmsr of practicing a.tsmt a as prodtia nitnplus net imports of niweprint. p 5 c s qua e a meIcal chedi at university level. AMUII I Page 3 of 4 Pages Actual Po1972- 1974- 197s - 1974 ~ 2.U 2I1J NATIOMPL AOM (Prelim.) 1213 ~~~~~~~~A;~erage Anual Growth Rates As Percent of COY ic Produc 23, Wl- ~~ ~ ~~~~~~~12. 7. 8.3 105.2 109.5 116.6 Gains from Terms of Trade (4) 116 - -664 -1,254 -1,422 .3,324 - - - -5.2 -9.5 -16.6 Gross DmesticIncomeiff7r rTYTi y1"TO -IT7!7 tl4,641 1T9,977 9.1 3.2 7.1 100.0 100.0 0. Import (intl. IITS) 3,435 4,367 4,634 4,573 4,996 10,450 16.2 -1.3 14.8 36.2 34.6 52.3 Exports( L.ZZ 3.961 LM L-A 6j001 1,626 9.2 4.1 14.6 Il1.i .ZLJQ 68 Resource Gap -664 -406 -1,328 -1,133 -1.003 -3,176 41.1 -14.7 - -10.4 -8.6 -15.9 Consumption Expeaditur,sa 9.017 9.598 10,780 11,434 11,028 14,839 9.3 6.1 4.5 34.2 86.5 74.3 Investment ' (intl. stocks) 2.212 3.230 4,185 4,113 4,030 5,286 37.8 -1.7 4.3 32.7 31.1 26.5 Domestic Savings]!I 1,629 2.817 2,694 3.037 5,035 8,462 28.8 12.7 18.6 21 0 23.0 42.4 National Savings;~21 1.772 2,914 2,721 2,970 5,027 8,437 23.6 9.2 18.7 21.2 22.5 42.2 AMERCHANDISE TRADE Annual Data at Current Pricen; As Percent of Total- tmports Grains 283 444 613 689 540 774 47.5 12.4 1.9 9,0 9.5 3 7 Capital Goods 762 1,157 1,849 1,909 2,105 3,241 57.0 3.2 18.3 27 0 26.2 24 9 Petroleum Fuel and Mineorals 219 313 1,055 1,387 1,249 3,436 125.0 31.5 16.3 15.4 19.1 16.4 Other (Including Raw Material fo orLa) 1,258 2,326 3,335 3,289 5,043 11,561 65.0 -1.4 23.4 48.6 45.2 ~,, Wd~alMer~)i7~~orts (c~.f) 2,522 4,240 6,852 7,274 8,9-37 iTI 02 63.0 62 1. 0. 0. 0. EXports Manufactured Goods 1,485 2.921 4,005 4,307 6.145 18,708 65.0 7.5 27.8 89.8 84.8 91 9 Other Goode 139 304 455 774 890i 1,653 82.4 70.1 13.4 10.2 15.2 8.1 Total Merch. xot fb 1,624 3,225 4.460 5,081 7,035 20,361 67.5 13.9 26.010. 100 100 Merchandise Trade Indices Average 1973 -100 Export Price Index 78.0 100.0 126.8 117.4 123.2 157.3 26.7 -7.4 5.0 Import Price Index 74.9 100.0 155.5 160.0 168.0 214.4 44. 5 2.9 5.0 Terms of Trade Index 104.1 100.0 81.5 73.4 73.4 73.3 -11.5 -10.0 0.0 Exports Volume Index 63 8 100.0 109.1 134.2 177.0 401.4 30.8 23.0 20.0 VALUE ADDED BY SECTOR Annual DaLta at 1973- Prices and Exchange Rates Averege Annual Growth Rates As Percent of Total Agriculture 3.201 3,500 3,620 3,837 3,373 4,103 6 6 4 29 29 18 Manufacturing and Mining 2,140 2,883 3,311 3,708 5,783 9,908 24 12 11 27 28 42 Other Services 4.368 4.975 5.549 5.1 6.907 9.290 13 3 11 AA 43 4 Total. 9,709 11,358 12,480 13,260 16.063 23,301 13 7 9 100 10 1 PUBLIC FINIANCE As Percent of GOP (Central Go;vernment) Current Receipts 1,701 1,530 1,862 21l99A' 2 5515' 3 870 5 i18 12 15 17 19 Curr...tnt .tues1.359 1.193 1.406 1 7044/ 06Wi~ 2'0 2 21 8 11 13 13 ~~ .9 Ings 342 337 456 ~~~~~~~~~~ 495 489 1,367 15 3 -4 4 -7 Other Public Sector - - -- - - - - Public Sector Investment 522 443 593 728 746 1,888 7 23 21 5 6 10 CUJRREN1T EXPENDITURE DETAILS 6 Actual Prelim. Est. Proj ~ DETAIL OR As % Total Current Exen. 1972 197 194 197SW 19762/ PUBLIC SECTOR US$5 Million At 1973 P and ER Education 18.6 19.3 17.8 17.5 18.0 INfVESTNMT PROGRAJd.I 1974 1975 1976 1 fTtli7-6 Other Social Services 9.1 10.4 9.6 8.8 5.0 Social Sectors 67 73 84 10.9 Agriculture 2.4 2.4 2.0 1.8 1.9 Agriculture 121 187 209 24.6 Other Economic Services 3.6 3.5 2.3 2.1 2.0 Industry and M4ining 41 82 73 9.3 Defense 33.9 35.2 41.2 43.0 47.0 Power 55 44 33 6.6 Administration 13.9 13.8 12.1 11.5 9.8 Transport and commmnicatione 138 416 172 22.2 Transfers to Local Governments 15.1 14.2 14.2 14.6 16.1 Other 171 197 175 26.4 Othe _..j3.4 .LZ 0.8 0.7 0 2 Total Expenditures 593 71[ 746 1h0.0 Tota Current Expenditures 100.0 100.0 10. 0. 00.0 SELECTED INDICATORS 1960- 1965- 1970- 1973- FINANCING3 (Calculated from 3-year averaged data) 196 1970 4j7J 1978 Average ICOR 7?T TrT TU0 -78 Public Se.ctor Savings 456 495 489 70.3 Import Elasticity 0.8 2.6 1.1 1.8 Program aid counter-part 58 38 41 6.8 ?brginal DOmestic Savings Rate 11.3 21.3 16.6 27.2 ForeCign Project Aid ~ ~ 26 2. Marginal National Savin.gs Rate 17.9 21 7-88 2.6_tlFnacna9 728 746 22o.9 IADDR FORCE AND Total Labor Force Value Added Per Worker (19 3 -i Prices & Ext. Rates) OUTPUT PER WORKERR in Millions I fTtl 17- 74 In U.S.DD11ars erent ofAeige 17-7 ~~ 19 7~~ 19 72 ~ 19 74 Growth R&te 1972 1974 1972 197A Growth Rate Agriculture 5.3 5.6 50.6 48.2 2.8 604 646 66 60 3.4 Manfacturing end Mining 1.5 2.1 14.2 17.8 18.3 1,189 1,577 130 147 15 1 Qkh.r Sectore 3.7 3.9 35.2 34.0 2.7 1 181 1,423 129 132 9 8 Total 7 T 1 1,710108. 1/Includes govverment, corporate and private non-corporate savings.4 eie ugt 11Includes dmsisaings, net factor incomes from abroad and tranafers rmara. ~ ugt 3/ Excludes exports not cldared through customs, such as sales of goode to A/ General Budget and Economic Development Special Account. military forces overseas. 916/76 PaS. 4 of 4 P.ge. 862JM 01 vo-,8 AB8U!62 AND (Mots In 0m221;m* 0nq V.I. a18mv at im%mlt pno.el A's. An-ea Aetwi bntlt.d PrhJated GrOth Reto 1972 IflA i2!k iflI197 ONIl.i ~ ! izzi me60 uLL 1975-1981 t SU2P04AI1! BAIA11C OF PATIWTS ~~orte (j~~~~* 975) ~2 075 3.962 5.123 51647 0,100 10,241 12.986 16.106 19.603 23.451 26.5 non-ta ~~~1ne1. 898) ~2 577 438 7,210 7.437 9.000 .I03 1 6 672 20_189 23,j48 21.5 Interest (,t) ~~~~ ~~-108 -123 -141 -158 -372 .457 -340 -622 -690 -767 19.8 Otb.0 FsetA,f 1neGf (not 67 30 -19 -70 -30 s9 60 90 89 99 170 190 222 224 160 170 I80 2...L ..J.Q5....~ -5.5 Pri,te Dir.nt mwastmt 74 137 104 42 8, 200 220 240 260 280 37.0 OffIcIA Capital or-tote - - - - mobweinont. 736 707 1.136 1.686 1.764 2,068 2,240 2.325 2.287 2,242 4.8 -A-rtia.atln 299 336 391 360 381 688 809 860 904 .i~.16.9 Net ms b,. -~ta` -Ur --nT -7w TIMT T.T! *T rrz73! U 1.383 1,203 -1.5 OIher IM.LT loso M.bus5 mta 99 4 174 85 93 ill 134 134 172 180 14.1 -A-tia.alOn 10 15 23 28 39) 63 76 93 110 132 29.5 'let Dl~~~b,foe5eOtO ~ ~ *w Y9 T! ! 5 48 38 39 62 56 -0.4 Capital Iron ontlone .e -30 -12 1.018 990 -69 I/ Igo. 1971 92 173 19 74 -159 -340 -13 -49S -100 M .PApO1 DebtrMnt &L flan-ed 1.786 2.226 2.770 3.314 4.031 ??ffi 0~t &4Cl.e nterfet on Public Debt 64 93 104 140 196 Rap,aneota on 10bli. Debt 211 230 247 276 360 P.bllc MIT. Loa- Total Pablic Debt Seolce 273 362 351 415 556 mORD 85 73 ! 6 83 63 Other Debt Servica (ont) 11 22 23365 rDA 7 26 - - Total Debt Serv)oe (ut) 26 364 374 446 610 AnB a1 68 89 2 OtherMltltoO - ..T.-rde on ftort osog, (9 Ovrent. 305 305 25 olcDetSrIe225 2.56 005 1 SoPplie-n 242 86 61 '1 TPtali Debt.ServIce 23.4 24 1 1690 1 3 1.0 rinancwa l-ntitutiono 12 80 181 o- et ,. 34 2 6 10 131. 9ends - - .9 -TDS0Di-rctlIlvt, In.. 24.2 25 6 200 127 137 Poblic L0000 n.e.i. - Ae9 es fPlioDb arrmtRAL Dayr weuelebtIttae1eson.3 2194 I.a PIonrW D 4 3 5 2 47 51 59 ~~TND8AI. tEN? Oteb,rsedOn3~~~~~~~~~~y ncut 0onrt. an % Prior Year MU& 14.3 14 0 1II 10 0 10 9 W'orld Bonk, MDA 780.3 1.9 7080 Debt OWt. & Djebno-ed 9 6 40 2 94 7 239 8 223 8 ADB 1223 0 2.01 as9 blic Debt Oo, 0 6 1 8 3 4 4.2 5 6 Soe-nete 1697.3 62.1 Ce Publiio Debt Seritn 0 3 0 7 1 9 3C0 3 5 6o-nli... 1.250 6 31.0 FInancial Iotitutione 648.5 16.1 MDA Debt Out. & Dib , 26.7 39 8 47 1 50 5 78 3 Bond. 19.0 0.3 -as Poblic Debt 00,D 1 5 1 a 1 7 1.0 1 9 Public Debts n.e.i O% Pebli.c Dbt Seric 0 1 0 1 51 01I 01 Total Poblic 941T Debt 4,030O. 6- 100.0 Other M00,T Debts 4 396 0 Short_-t.- Debt I/ 971 0 1/ SOURCE, 1810. L.an. of Mat-ity oeye- and abov, i..l.di.g coarc.1 beak horrlg 2/ 1-clode 0 580 illlion b -roed b7 the banking cyst 1/ Inaldee ehort tern ntpital Infloer of 0760 aillon 4/ SOURCE- Korea ..thoritle S.vt,aab 6, 1976 ANNEX II Page 1 of 10 pages KOREA THE STATUS OF BANK GROUP OPERATIONS IN THE REPUBLIC OF KOREA A. Statement of Bank Loans and IDA Credits (as of November 30, 1976) Loan or US$ Million Credit Amount (less cancellations) Number Year Borrower Purpose Bank IDA Undisbursed Eleven loans and credits fully disbursed 153.8 72.1 600 1969 ADC Irrigation 45.0 .3 151 1969 Republic of Korea Education 14.8 .5 669 1970 Republic of Korea Railways 40.0 .5 769 1971 Republic of Korea Highways 54.5 1.2 795 1972 ADC Irrigation 33.0 11.7 863 1972 Republic of Korea Railways 40.0 1.7 905 1973 KDFC Dev. Fin. Co. 40.0 .5 906 & 1973 Republic of Korea Education II 23.0 20.0 35.3 394 917 1973 Republic of Korea Ports 80.0 57.9 942 1973 Republic of Korea Seeds Production 7.0 5.8 953 1974 Republic of Korea Tourism 25.0 18.8 956 1974 Republic of Korea Highways II 47.0 1.4 994 1974 AFDC Agriculture 13.0 12.2 1070 1975 Republic of Korea Secondary Cities 15.0 13.2 1095 1975 KDB Dev. Fin. Co. 60.0 19.7 1096 1975 Republic of Korea Third Education 22.5 22.5 1101 1975 Republic of Korea Fifth Railway 100.0 51.6 1145 1975 KDFC Dev. Fin. Co. 55.0 23.2 1175 1975 MIB Dev. Fin. Co. 30.0 18.2 1193 1976 Republic of Korea Second Integrated 15.0 15.0 Dairy Development 1203 1976 Republic of Korea Third Highway 90.0 89.9 1216 & 1976 Republic of Korea Rural Infra- 60.0 53.6 1218-T structure 1219 1976 Republic of Korea Program Loan II 75.0 40.5 1319 1976 ADC Irrigation 29.0 29.0 1328 /a 1976 Republic of Korea Agricultural Credit 20.0 20.0 Total 1,172.8 106.9 544.2 of which has been repaid 31.7 .7 Total now outstanding 1.141.1 106.2 Amount sold 2.0 of which has been repaid 1.0 1.0 Total now held by Bank and IDA 1,140.1 106.2 (prior to exchange adjustment) Total undisbursed 531.4 12.8 544.2 /a Not yet effective. ANNEX II Page 2 of 10 pages B. Statement of IFC Investments (as of November 30, 1976) Fiscal Amount in US$ Million Year Obligor Type of Business Loan Equity Total 1968 KDFC Development Financing - 0.7 0.7 1969 Honan Silk Co. Textiles i.4 0.3 1.7 1970 Atias Paper Pulp and Paper 4.5 0.5 5.0 /a 1971 Korea Investment Finance Corp. Capital Market Development - 0.7 0.7 1974 KDFC Development Financing - 0.4 0.4 1974 Korea Investment Finance Corp. Capital Market Deveioment - 0.3 0.3 1975 Gold Star & Co., Ltd. Electronic Products 16.0 1.3 17.3 1975 Korea Securities Finance Corp. Capital Market Development 5.0 0.6 5.6 1975 Tong Yang Nylon Company, Ltd. Synthetic Fibers 6.9 2.1 9.0 1975 Hlae Un Dae Develop- ment Company, Ltd. Tourism 2.7 0.7 3.4 i976 Korea Investment Finance Corp. Capital Market Deveiopment - 0.4 0.4 i976 Chongju Paper Mlfg. Co. Paper 5.0 0.5 5.5 1976 Korea Zinc Co., Ltd. Zinc 15.0 4.0 19.0 1976 KDFC Development Financing 17.8 - 17.8 1976 Cold Star & Co., Ltd. Electronic Products 10.0 0.4 10.4 1977 Gold Star & Co., Electronic Products 0.2 0.2 Ltd. 1977 KDFC Development Financing 0.3 0.3 Total gross commitment 84.3 13.4 97.7 less cancellations, terminatibns, repayments and sales 27.5 0.9 28.4 Total commitments now held by IFC 56.8 12.5 69.3 Total undisbursed 20.1 3.0 23.1 /a Cancelled at the request of the Company. ANNEX II' Page 3 of 10 pages PROJECTS IN EXECUTION /1 Loan- o. -600 - -Pyongtaek--KumgangI-riatfon Pr6jo'et_; US$45.0 Million -L-oan-of May 23; 1969; Eff-ectiVe Df 'M 25,y 1970; Closing Date: _December-31, 1976 The Project includes irrigation for-about 31,000 ha, improVemenit of drainage and roads, consolidation of paddy fields; benching- of--upland,- and tidal -land reclamation. Construction was delayed by a reorganization of the executing agency and-a delay in hiring--consult-ants. The major project components, -(two sea.dikes, the main distribution system and pumping plants) were largely completed by the end of 1974, and the remaining work was completed in- 1976. Costs rose from US$90.0 million at appraisal to about US$130.0 million largely because of inflation and the increased costs of right-of-way, engineering, administration and land consolidation. Increases in the price of rice, however, compensate for the higher costs; and, the economic rate of return is now estimated to be about the same as the appraisal estimate of 14 percent. Credit No. 151 First Education Project; US$14.8 Million Credit of June 4, 1969; Effective Date: May 25, 1970; Closing Date- September 30, 1976 The Project comprises: (a) the expansion and equipping of 27 technical, commerc7ial'auid'agricultural schools, 5 post-secondary higher schools and 4 university teacher training departments; and (b) 26 man- 'years of technical assistance and 20 man-years of overseas fellowships to support the development of agricultural and technical.education. All civil works, equipment and furniture procurement, technical assistance and fellowships--ibcTld&dd-ii& the' Project have been completed. The total project cost is estimated to remain about 3 percent below.the appraisal estimate. Execution of the project was satisfactory. Loan No. 669 Third Railway Prolect; US$40.0 Million Loan, US$15.0 Credit No. 183 Million Credit of May 14, 1970; Effective Date: September II,''1970; Closing Date: December 31, 1977 The bulk of the Loan and Credit was earmarked for the purchase of freight 'cars, diesel locomotives, and telecommunications and track /1- These-notes- are- designed to inforu- the-ExecU'tive Directors iegarding the progress of projects in execution,-and in particular to report any problems-which are being enicountered, and the action being taken to remedy.them. They should-b.e read in this sense, and withi Lhe understanding that. th-ey. do not pursport, to present a balanced evalua-- tion of strengths and weaknesasr in project execution. AINEX II Page 4 of 10 pages maintenance equipment. Progress is generally satisfactory except for delays in the procurement of some micro-wave equipment which had to be retendered. The Closing Date has been extended by a year to December 31, 1977 to provide adequate time for the completion of procurement. Loan N4o. 769 First Highway Project; US$54.5 Million Loan of June 29, 1971; Effective Date: December 7,-1971; Closing Date: December 31, 1977 The construction of approximately 370 km of national highways between Jeonju and Busan was satisfactorily completed in December 1973, at a final cost of about five percent above the appraisal estimate. Feasi- bility studies and detailed engineering have been completed for 1,400 km and 900 km of national highways, respectively. A study of road maintenance and the establishment of a pilot maintenance organization formed the basis of the creation of a country-wide Highway MSaintenance Organization which is being carried out under the Second Highway Project. The Closing Date has been extended by 13 months to permit completion of procurement of highway maintenance equipment, and staff training. Loan NIo. 795 Yong San Gang Irrigation Project; US$33.0 Million Loan Credit No. 283 and US$15.0 Million Credit of February 2, 1972; Effective Date: September 15, 1972; Closing Date: September 30, 1977 The Project aims at transforming an area with the highest drought frequency in Korea into one with reliable irrigation and crop diversifica- tion. Also, there will be increased production of high value crops such as fruits and winter vegetables. The construction of the four dams has been completed, but the award of the contracts for the construction of canals and land consolidation was delayed, and completion of all projects works will take about 18 months. The delay was caused mainly by increased costs due largely to price escalation and design modification. The cost increases will be partially compensated for by benefits attributable to the enlargement of the area to be irrigated by about 1,400 ha and by the increase in the price of rice and barley; and the Agricultural Development Corporation (ADC) plans to reduce costs by constructing canals, roads and drainage systems for contour furrow irrigation on all lands exceeding 2 percent slope only. Also the Bank has begun monitoring construction costs on the civil works contracts on a monthly basis. Loan No. 863 Fourth Railway Project; US$40.0 Million Loan of November 22, 1972; Effective Date: February 26, 1973; Closing Date: December 31, 1976 The main elements of the Project are: electrification of lines in the Seoul suburban area; purchase of electric railcars and locomotives; the completion of electrification of 350 km of line running from Seoul to the northeastern part of Korea; track and bridge renewal; provision of yard facilities; acquisition of passenger and freight cars; and improvement of facilities for the maintenance and repair of motive power and rolling stock. No major problems have been encountered; most of the loan proceeds have been committed, and nearly 95 percent already disbursed. ANNEX II Page 5 of 10 pages Loan No. 905 Fourth KDFC Project; US$40.0 Million Loan of June 13, 1973; Effective Date: September 10, 1973; Closing Date: December 31, 1977 The Project is progressing satisfactorily. Loan No. 906 Second Education Project; US$23.0 Million Loan and Credit No. 394 US$20.0 million Credit of June 13, 1973; Effective Date: September 10, 1973; Closing Date: December 31, 1977 The Project provides equipment for and extensions to 85 educa- tional institutions at secondary, post secondary and university levels. It also includes preinvestment studies on health and management education. After three and a half years of implementation, project execution is now about 12 months behind schedule. The Government is taking steps to overcome the source of delay. All equipment lists have been approved; tenders have been made for US$35 million, contracts have been awarded for US$22 million. Total project cost remains at $75.8 million, about 8 percent above the appraisal estimates. Disbursements are expected to reach US$20 million by the end of FY77. Covenant requirements under the Development Credit Agree- ment are being met. The project is now expected to be completed by mid-1978, which requires an extension of the Closing Date. Loan No. 917 Ports Project; US$80.0 Million Loan of June 27, 1973; Effective Date: September 18, 1973; Closing Date: June 30, 1979 The Project includes the provision of container and bulk cargo facilities and equipment at Busan and coal piers and handling equipment at Busan and Mukho. The Project is progressing satisfactorily. Preparation of contract documents for all nine civil works contracts has been completed and five have been awarded. Four of the five equipment contracts have also been awiarded. Three of the civil works contracts are on schedule while two are slightly behind schedule; all are expected to be completed on time. The Government signed a Loan Agreement, on Miarch 8, 1976, with the Saudi Fund for Development, which will provide US$35 million equivalent for this Project. The Government established on March 13, 1976 the Korea Port Authority, and key management appointments have already been made. Dis- bursement is at present around 24 percent of the total loan. Loan No. 942 Seeds Project; US$7.0 Million Loan of November 16, 1973; Effective Date: April 24, 1974; Closing Date: December 31, 1978 The Project consists of: (a) the installation of five field crop seed processing and storage facilities; (b) farm machinery for seed pro- duction; (c) procurement of seasonal seed inventories through the operation of a revolving fund; (d) seed testing laboratories and equipment; (e) crop research (financed in part by USAID); (f) feasibility studies for irr4ga- tion and area development; and (g) technical assistance. The necessary ANNEX II Page 6 of 10 pages legislative and administrative action for revising the Seed Law and estab- lishing an "Office for Seed Production and Distribution" has been taken. Projec.t implementation is proceeding satisfactorily. Preliminary esti- mates suggest that Project costs would be considerably higher than envis- aged at appraisal. Disbursement has been somewhat slower than expected at appraisal but is expected to improve soon. Loan No. 953 Kyonglu Tourism Project; US$25.0 Million Loan of January 4, 1974; Effective Date: May 6, 1974; Closing Date: December 31, 1978 The Project forms part of the first phase of the planned develop- ment of the Bomun Lake resort near Kyongju. It provides for a multi-purpose dam; an irrigation system for about 1,200 ha; improvement and expansion of the water supply and sewerage and solid waste disposal systems for the city of Kyongju and the resort area; installation of electrical supply and tele- communication facilities for the resort area; the construction and/or realign- ment of about 57 km of roads, infrastructure including storm water drainage, environmental sanitation, community facilities, and a golf course; a school for training hotel personnel; and a feasibility study for the development of tourism on Cheju Island. Final design for almost all Project components is complete and several contracts have been awarded. Considerable efforts are being made by the newly established Kyongju Tourism Agency to promote hotel investors interest in the resort area. About 30 percent of the loan has been disbursed and disbursements are expected to accelerate in the months ahead. Loan No. 956 Second Highway Project; US$47.0 Million Loan of January 25, 1974; Effective Date: April 4, 1974; Closing Date: December 31, 1977 The Project, which forms part of the Government's 1972-76 road construction and paving program, consists of the construction (chiefly on new alignments) of about 130 km and paving (largely on existing align- ments) of approximately 634 km of national highways were completed on schedule and the highways opened to traffic in October 1975. Feasibility studies for future projects of about 1,000 km of road were started in August 1975 and will be followed by detailed engineering, which is expected to be completed early in 1977. Delay occurred in setting up a new nation- wide highway maintenance organization but the organization has now been established in accordance with decrees published in June 1975. Most of the maintenance offices have been constructed and staffed and procurement of the necessary equipment is in progress. Disbursement is around 95 percent of the Loan. ANNEX II Page 7 of 10 pages Loan No. 994 Integrated Agricultural Products Processing Project; US$13.0 Million Loan of June 7, 1974; Effective Date: March 19, 1975; Closing Date: June 30, 1979 The Project aims at integrating the on-farm production of commer- cial crops for export with efficient hygienic processing facilities using land that is presently idle or under-utilized. It comprises: (a) on-farm development of asparagus, oak mushrooms and mushrooms; (b) construction of and improvements to facilities to process asparagus, oak mushrooms, mushrooms and fruits; and (c) technical assistance including training of staff, services of consultants, etc. As the current investor demand for the project processing facilities is less than projected, implementation of the Project as a whole is likely to be delayed. Loan No. 1070 Secondary Cities Regional Project; US$15.0 Million Loan of January 15, 1975; Effective Date: August 18, 1975; Closing Date: March 31, 1979 The principal aims of the Project are the establishment of an organizational framework for regional investment, planning and develop- ment and the improvement of working and living conditions in the secondary cities of the less developed Gwangju region. The main elements of the Project are: (a) housing sites and services in the cities of Yeosu, Mogpo and Gwangju (370,384 sq m); (b) a fishery harbor complex with industrial processing zone (215,385 sq m) in Yeosu; (c) a city market in Suncheon City (33,160 sq m); and (d) access roads in Yeosu and Mogpo (6.61 km). It also provides technical assistance to strengthen regional planning and development, to improve the utilization of existing water supply systems in the four cities, to assist the management and operation of the fishery complex and to carry out feasibility studies of project proposals identi- fied under the UNDP-financed Phase II Regional Study. Project implementa- tion is roughly a year behind the appraisal schedule largely because of delays in establishing the Gwangju Regional Development Unit. However, progress has been improving and is considered satisfactory. Loan No. 1095 Korea Development Bank Project; US$60.0 Million Loan of March 31, 1975; Effective Date: June 17, 1975; Closing Date: June 30, 1979 The Project provided funds to KDB to make subloans to finance direct imports for subprojects principally in the manufacturing and trans- portation sectors. Almost the full amount has already been committed to finance 31 subprojects, ahead of the time estimated at appraisal. Dis- bursements now amount to about two thirds of the loan amount, also ahead of the original estimate. KDB's performance in using the loan has been highly satisfactory. ANNEX II Page 8 of 10 pages Loan No. 1096 Third Education Project; US$22.5 Million Loan of March 31, 1975; Effective Date: June 6, 1975; Closing Date: June 30, 1980 The project includes assistance for extensions and equipping of nine institutions (technical, agricultural and fisheries) under the Ministry of Education (MOE) and seven vocational training institutes under the Office of Labor Affairs (OLA). After 18 months of execution, project implementa- tion is about six months behind schedule but considerable progress has been made. Site layouts and sketch plans have been approved. Construction will begin in 1977. Progress in equipment procurement is satisfactory. Both MOE and OLA project units are functioning satisfactorily and disbursements are expected to be made on schedule. Loan No. 1101 Fifth Railway Project; US$100.0 Million Loan of April 10, 1975; Effective Date: July 15, 1975; Closing Date: December 31, 1978 The Project will help the Korean National Railroad (KNR) continue as a major carrier of freight and passengers by helping in: the upgrading, modernization and expansion of track, rolling stock, motive power, and other equipment; the improvement of the efficiency of operation; and its financial recovery. The main components of the Project are: an increase in station and line capacity and improvements in signalling; acquisition of rolling stock, diesel and electric locomotives, spare parts and repair facilities; track renewal and improvement; bridge strengthening; completion of electri- fication of 71 km of industrial lines; and other miscellaneous items. Con- tracts, financed by the Loan, have been signed for procurement of passenger and freight cars, wheel sets, rail, bridge girders and spares for coaches and track maintenance machinery, amounting to about US$57.6 million equiv- alent. Electrification of industrial lines and the Seoul Suburban system has been virtually completed. Forty-two percent of the loan proceeds have already been disbursed. In connection with this loan, the Government under- took to formulate a financial recovery plan for KNR and to discuss it with the Bank. A mission which visited Korea in October discussed this matter with the authorities concerned. Loan No. 1145 Fifth Korea Development Finance Corporation Project; US$55.0 Million Loan of July 23, 1975; Effective Date: September 5, 1975; Closing Date: June 30, 1980 The Loan will cover about half the KDFC's foreign exchange requirements through the end of 1977. It will be used to finance direct imports of machinery and equipment, and the foreign exchange component of domestically produced capital goods and of civil works. Disbursements are proceeding on schedule. ANNEX II Page 9 of 10 pages Loan No. 1175 Medium Industry Bank (MIB); US$30.0 Million Loan of November 26, 1975; Effective Date: January 28, 1976; Closing Date: March 31, 1980 The Project provides funds to MIB to make sub-loans to small and medium-sized manufacturing enterprises over the next two years. The Project is progressing satisfactorily. Disbursements are at present over 20 percent of the total loan. Loan No. 1193 Second Integrated Dairy Development Project; US$15.0 Million Loan of June 4, 1976; Effective Date: November 11, 1976; Closing Date: December 31, 1982 The project consists of: (a) the establishment of about 450 new dairy farms; (b) the continuation of the development begun as part of the First Integrated Dairy Beef Project on about 400 dairy farms; (c) the expansion of existing processing plants, the diversification of their production, the establishment of two milk collection centers and fifty small milk cooling units and the construction of a frozen milk products plant at Yeongnam; and (d) the expansion of technical services for both farm develop- ment and milk processing. Loan No. 1203 Third Highway Project; US$90.0 Million Loan of February 3, 1976; Effective Date: May 17, 1976; Closing Date: December 31, 1979 The Loan provides funds to help finance: (a) the construction, chiefly on new alignment, including paving, of about 195 km of four national highways, including supervision of the work by consultants; (b) paving and improvement chiefly on present alignments, of nine national highways totalling about 600 km, including supervision of the work by consultants; and (c) feasibility studies by consultants of about 1,200 km of national and provincial roads, to be followed by detailed engineering. Bids have been called for all construction and paving contracts, in accord- ance with the Bank's procedures of-international competitive bidding. Loan No. 1216 Rural Infrastructure Project; US$60.0 Million Loan Loan No. 1218T df which US$40.0 Million Third Window; Effective Date: June 4, 1976; Closing Date: June 30, 1979 The Project includes about 62 minor irrigation, 29 upland reclama- tion, 11,000 fuelwood, 900 roads and bridges, 4,200 water supply, and 2,700 rural electrification subprojects. Technical assistance is provided for upland reclamation and improvements to hydrologic services. Special evalua- tion studies are also included. Project implementation is on schedule, costs and disbursements are all close to appraisal estimates. The monitoring and reporting systems have also been established and are functioning well. ANNEX II Page 10 of 10 pages Loan No. 1219 Second Program Loan; US$75.0 Million Loan of March 3, 1976; Effective Date: June 9, 1976; Closing Date: May 1, 1977 The principal aim of the Loan is to help meet the foreign exchange requirements for the import into the Republic of Korea, by the private sector, of essential capital and intermediate goods. Over 50 percent of the Loan has already been disbursed. Loan No. 1319 Miho Watershed Area Development Project; US$29.0 Million Loan of July 17, 1976; Effective Date: October 21, 1976; Closing Date: December 31, 1982 The aim of the project is to increase agricultural production and farm incomes on about 12,665 ha, and to benefit directly some 10,400 farm families. The project consists of: (a) the construction of dams and canals to irrigate 8,315 ha; (b) the conversion of 2,045 ha of cultivated upland to irrigate paddy fields; (c) land consolidation on 4,600 ha of irrigated and non-irrigated land; (d) the development of 495 ha for irrigation of upland crops and 550 ha for orchards; (e) upland reclamation and bench-terracing of 1,200 ha of presently uncultivated land; (f) the improvement of about 80 km of river channels; (g) the construction of about 150 km of village access roads; (h) aerial photography, surveys and mapping; and (i) provision for technical assistance, procurement of vehicles and a feasibility study for a second-stage project of the Miho Watershed. Loan No. 1328 Second Agricultural Credit Project; A US$20.0 Million Loan of September 21, 1976; Closing Date: June 30, 1981 The project provides medium and long-term loans through the National Agricultural Cooperative Federation (NACF) to about 7,900 farmers for (a) the establishment of about 2,100 ha of apple orchards; (b) the construction and equipping of improved silkworm rearing houses including improvement of existing mulberry plantings; (c) sprinkler irrigation to producing orchards of 2 ha or more; (d) the construction and equipping of greenhouses for vegetable production; and (e) the construction of on-farm fruit storage facilities. /1 Loan signed October 12, 1976, not yet effective. ANNEX III Page 1 of 4 pages LOAN AND PROJECT SUMMARY Borrower: Agricultural Development Corporation Guarantor: The Republic of Korea Amount: $95.0 million equivalent Terms: 17 years, including 3-1/2 years of grace, with interest at 8.5 percent per annum Project Description: The proposed project would benefit 20,700 ha through irrigation, reclamation of 5,500 ha of uncultivable tidal flats and land development on 11,900 ha (land consolidation has already been carried out on 3,300 ha to be irrigated by the project). Rice would be the main crop in the summer, followed by a winter crop of barley on about 70 percent of the area. The principal features of the project are: (a) construction of an estuary dam across the mouth of the Yong San Gang, consisting of 4,500 m long embankment, a 240 m wide concrete sluice and a navigation lock; (b) construction of a 4,000 m long sea dike; (c) construction of 16 pumping stations to serve a total area of 20,700 ha, including the land to be reclaimed and developed; (d) construction of about 315 km of main and secondary canals to serve an area of about 15,200 ha; (e) reclamation of about 5,500 ha of tidal land through land leveling and construction of canals, drains and farm roads; (f) land development comprising land consolidation on 3,200 ha of existing paddy, conversion of 3,250 ha of upland to irrigated paddy, development of 1,050 ha of upland for irrigation, and tertiary canals and drains on 4,400 ha of existing paddy; (g) construction in the project area of office buildings, ware- houses, access roads and a temporary pier required for the construction of the estuary dam; and (h) provision of the services of consultants to assist in pro- ject implementation and in preparation of feasibility studies for future development stages on the Yong San Gang Basin. ANNEX III Page 2 of 4 pages Estimated Cost: Foreign % Base Local Foreign Total Local Foreign Total Exchange Cost --- (Won B)------- -------(US$ M)------- (%) (%) Civil Works Access road 0.2 0.1 0.3 0.3 0.3 0.6 45 1 Estuary dam 2.2 3.4 5.6 4.6 6.9 11.5 60 12 Sluice & lock 1.1 1.6 2.7 2.2 3.3 5.5 60 5 Sea dike 0.3 0.6 0.9 0.8 1.2 2.0 60 2 Pump stations 0.6 0.5 1.1 1.3 1.0 2.3 45 2 Canals 3.7 3.0 6.7 7.5 6.2 13.7 45 14 Land development 3.2 2.6 5.8 6.6 5.4 12.0 45 12 Tidal reclamation 3.9 3.2 7.1 8.1 6.6 14.7 45 15 Buildings 0.2 0.1 0.3 0.4 0.3 0.7 45 1 Subtotal 15.4 15.1 30.5 31.8 31.2 63.0 50 64 Equipment & Materials Sluice gates 0.5 4.7 5.2 1.1 9.6 10.7 90 11 Pump stat. equip. 0.2 2.0 2.2 0.4 4.0 4.4 90 4 Furnished material 0.6 1.3 1.9 1.2 2.8 4.0 70 4 Misc. equipment - 0.2 0.2 0.1 0.3 0.4 85 1 Subtotal 1.3 8.2 9.5 2.8 16.7 19.5 86 20 Right-of-Way 1.6 - 1.6 3.3 0 3.3 0 3 Consulting Service 0.2 0.5 0.6 0.2 1.1 1.3 85 2 Engin. & Admin. 4.5 0.7 5.2 9.1 1.6 10.7 15 11 Base cost estimate 22.9 24.5 47.4 47.2 50.6 97.8 52 100 Physical contingencies 2.8 4.0 6.8 5.8 8.2 14.0 59 14 Expected price increases 13.1 13.7 26.8 27.0 28.2 55.2 52 56 Total Project Cost 38.8 42.2 81.0 80.0 87.0 167.0 52 170 ANNEX III Page 3 of 4 pages Financing Plan: The proposed Bank loan of $95.0 million would finance the full foreign exchange requirements of the project ($87 million, or 52% of the project cost) and $8 million of interest and other charges on the Bank loan. Local expenditures, representing the estimated balance of the project costs, would be met through annual government budgetary allocations to ADC. Estimated- Disbursement: Bank Fiscal Year Annual Cumulative --in $'000 equivalent-- 1977 200 200 1978 4,000 4,200 1979 10,600 14,800 1980 19,400 34,200 1981 24,800 59,000 1982 18,300 77,300 1983 10,900 88,200 1984 6,800 95,000 Procurement: Contracts for civil works construction and the supply of equipment and materials would be awarded on the basis of international competitive bidding in accordance with Bank Group Guidelines. The materials - cement and reinforcing steel - would be procured in bulk on behalf of ADC by the Office of Supply, Republic of Korea. A preference limited to 15 percent of the c.i.f. price of imported goods or the customs duty, whichever is lower, would be extended to-local manufacturers in the evaluation of bids. The estuary dam, sluice, navigation lock and sea dike would be awarded as a single contract with an approximate value of $22 million. Other civil works would be packaged together by areas to form about ten contracts with an average value of about $5 million. Major equipment con- tracts would be for the manufacture and installation of sluice gates ($12 million) and pumping station equipment ($5 million). Contracts for cement ($2.4 million) and reinforcing steel ($2.2 million) would be divided into contracts of about $0.5 million in order to keep the supply of materials in line with requirements. Contracts for the construction of the access road together with the left embankment of the estuary dam ($2.5 million), and for buildings and other site facilities ($0.8 million) would be awarded after local competitive bidding. Miscellaneous equipment ($100,000) would be purchased through normal government procurement procedures. ANNEX III Page 4 of 4 pages Consultants: ADC would employ consultants to assist in project implementation and in carrying out feasibility studies for future development of the Yong San Gang Basin. The estimated consultant input is 120 man-months for project implementation and 80 man-months for the feasibility studies. It is estimated that the cost of the consultants services would average $6,600 per man-month. Rate of Return: The project's overall economic rate of return is 13 percent. Appraisal Report: No. 1247-KO, dated January 3, 1977. ANNEX IV Page 1 of 2 pages KOREA YONG SAN GANG IRRIGATION PROJECT - STAGE II SUPPLEMENTARY PROJECT DATA SHEET Section I Timetable of Key Events -(a) Time taken to prepare the project: The project was prepared during 1973-1975 with financing under Loan 795-KO - Yong San Gang Stage I. (b) Agency which prepared the project: The Agricultural Development Corporation and consultants. (c) Date of the first Bank mission to Project preparation was consider the project: subject to continuous Bank review as part of the supervision of the implemen- tation of Stage I. (d) Departure of Appraisal Mission: November 17, 1975 (e) Negotiations completed: November 17, 1976 (f) Planned Date of Effectiveness: April 25, 1977 Section II Special Bank Implementation Action: No specific action is considered necessary. Section III Special Conditions The following special conditions are incorporated in the Loan and Guarantee Agreements: (a) Before inviting bids for reclamation of tidal lands below elevation +3 m, ADC would submit to the Bank for review an economic and technical analysis of the reclamation of such lands (para. 44); (b) ADC would employ consultants to assist in project implementa- tion and a feasibility study for future development on terms and conditions acceptable to the Bank (para. 46); ANNEX IV Page 2 of 2 pages (c) ORD would employ additional staff to provide agricultural extension service for the tidal lands reclaimed under the project (para. 51); (d) ADC would prepare by December 1980 and submit to the Bank for review a detailed plan for the operation and maintenance of the project, including proposals for turning over the irrigation service area works to the FLIAs (para. 52); (e) The Government would make the necessary arrangements to finance the farmers' requirements of farm equipment, inputs and hired labor (para. 53); (f) Project farmers would contribute to the capital and annual costs of the project facilities at the levels described in para. 54; and (g) ADC would prepare a disposal plan for reclaimed tidal lands and submit it to the Bank for review before disposal of such lands (para. 55). IBRD-12066 - %?3035'1273035MARCH 1976 KORE A YONG SAN GANG IRRIGATION PROJECT rO WANCJ STAGE 11 PROJECT MAP IRRIGATED AREAS p-O'G EXISTING LAND RECLAIMED TIDAL FLATS HAM PY | NA JU MAIN CANALS SECONDARY CANALS @ PUMPING STATIONS DAM AND SLUICE EXISTINGSROADS RAILWAYS 35 0 05 RIVERS AND RESERVOIRS COUNTYIGUN) BOUNDARIES /\ 0 1 2 3 4 KILOMETERS EOM B.nk.nd 2, .fN ~ EONG 22R02S HAF NAM GUN ct9 RY 0-~ ~~~~'<';i, / (_e 1~~~SblltodInS113S"t ^ /: x:~~~N cl ~ ~ OK°5 t1t>3 7Q5' IA A V