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May 23, 2008
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They include Incheon International Airport Corporation, Korea Power Engineering Corporation, Korea Real Estate Investment Trust, Korea Development Bank, Industrial Bank of Korea and Woori Finance Holdings Company. Subsidiaries of the three publicly owned financial institutions will be also privatized, according to an unnamed senior official at the Ministry of Strategy and Finance who spoke exclusively with the JoongAng Ilbo. Sixteen firms that received bailouts, including Hyundai Engineering and Construction Company and Hynix Semiconductor Incorporated, will be sold this year. An unidentified Blue House official said the move to privatize will happen quickly. “Some will be privatized soon while others will be privatized later after laws are amended at the National Assembly,” he said. Amendments will be submitted to the National Assembly in June. The Blue House official said proceeds from the privatization of 50 companies will be worth 63 trillion won ($60.3 billion). That money will be used to create jobs and promote the economy in provincial regions, the official said. With privatization of the 50 public firms, the payroll at public companies will be reduced by 70,000, according to the ministry official. In addition to the companies that will be privatized, the ministry official said another 50 public companies will be merged and then restructured. The merger of Korea National Housing Corporation and Korea Land Corporation, which was suspended during the previous administration, will be executed. Kibo Technology Fund and Korea Credit Guarantee Fund will also be merged. The plans containing both the privatization and merger changes are expected to be announced in early June by the ministry. Ten energy companies, including Korea Electric Power Corporation and its subsidiaries, Korea National Oil Corporation and Korea Gas Corporation, will remain public until new energy policies are made, the ministry official said. Infrastructure related firms, including Korea Expressway Corporation and Busan Port Authority, are not subject to privatization for the time being. Instead, they will bring in managers from the private sector. The Korea Water Resources Corporation and National Health Insurance Corporation will also be exempt. In the course of privatization and mergers, care will be taken not to create monopolies or raise utility prices, “And there needs to be buyers,” said the ministry official. “We wanted to announce the plans this month, but it was delayed because of resistance by some politicians and labor unions at public companies.” Korea National Oil, which will remain public, will grow with government funds. A proposal to combine Korea National Oil and Korea Gas was scrapped. Fifty firms will be merged before restructuring. According to the Ministry of Strategy and Finance, the operations of Korea National Housing and Korea Land largely overlap. “Public companies with overlapping operations undermine the efficiency of the entire public sector,” the ministry official said. Some profitable operations of the Korea Tourism Organization and the Korea Coal Corporation, such as golf clubs and casinos, will be sold to the private sector. Korea Railroad Corporation will remain public, while its passenger and freight businesses will be separated. Operations at 30 public firms, including Kyongbuk Tourism Development, will be transferred to regional governments or parent companies. By Lee Sang-ryeul JoongAng Ilbo/ Limb Jae-un Staff Reporter [jbiz91@joongang.co.kr] |
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