As the Busan community is busy trying to attract HMM's headquarters to Busan, there are assessments that the economic effects expected from attracting HMM's headquarters, which the Busan Chamber of Commerce and Industry released, are exaggerated. The intent is to urge the transfer of HMM's headquarters, but critics say the ripple effects have been inflated, which instead undermines the report's credibility.
According to the industry on the 7th, Busan City, together with the Busan Chamber of Commerce and Industry, has formed a committee to promote the transfer of shipping corporations and holds regular meetings. The first meeting was held on the 21st of last month. The committee to promote the transfer of shipping corporations is a public-private consultative body created to transfer the headquarters of major shipping corporations, including HMM, to Busan, with Busan Mayor Park Heong-joon and Busan Chamber Chairperson Yang Jae-saeng serving as co-chairs.
The committee to promote the transfer of shipping corporations will gauge the direct and indirect economic ripple effects and discuss incentives and support measures for shipping corporations based on the report "Economic effects and attraction strategy for securing HMM's headquarters," which the Busan Chamber released in July. The gist of the report is that attracting HMM's headquarters to Busan would generate tens of trillions of won in economic effects.
The report estimates that if HMM comes to Busan, over the next five years the direct and indirect production increase effect arising in the Busan region will be 7.7 trillion won, the total newly created value added in the Busan region will be 3 trillion won, and the number of newly created jobs will reach about 16,000. Nationwide, it expects about 21,300 new jobs and 15.6 trillion won in economic ripple effects.
Experts note the report strings together only optimistic scenarios and say its basic assumptions are flawed. Based on the average operating profit over the past four years (2021–2024), the report assumes HMM will earn 5.3 trillion won in operating profit each year and reinvest 20% of operating profit in the local area.
From 2021 to 2024, after COVID-19, global ocean freight rates soared, making it an exceptionally strong period for shipping corporations. While demand for cargo volume increased, transport supply capacity did not keep up, sending ocean freight rates, including the Shanghai Containerized Freight Index (SCFI), to record highs. Shipping corporations' results are swayed by shipping market conditions, but the report excludes future uncertainties.
Investing 20% of operating profit in the local community runs counter to HMM's management strategy. HMM has said in its mid- to long-term plan that it will spend a total of 23.5 trillion won by 2030 on ships and securing new ports.
The report assumes that if HMM builds a 50-story headquarters in Busan, it would generate 1.3 trillion won in production inducement effects, 517.9 billion won in value added, and 4,570 jobs. HMM currently leases nine floors of Yeouido Park One Tower 1, so unless it goes into the real estate leasing business, it has no reason to build a 50-story headquarters.
Busan City's position is that because the transfer effects are enormous, it will provide policy support, tax benefits, and tailored incentives. It could also ease regulations and inject resources with support from local residents and the political community.
Some opinions question the report itself. The Busan Chamber says only that the report underwent professional outsourcing, but does not disclose which institution produced it or who served on the advisory panel. It is also not releasing the full report. A Busan Chamber official said, "Because the numbers were calculated by the outsourced institution, we cannot know the details."
A shipping industry official said, "Due to the nature of the business, the shipping industry does not have a large ripple effect on the region where its headquarters is located. HMM is not producing such ripple effects even in Seoul," and added, "It is questionable on what grounds HMM would build a 50-story building and reinvest 20% of its operating profit in the local area."