[Editorial] Gov’t Should Press on Public Reform

The government announced yesterday the first phase of its plan to privatize, merge or restructure 41 state-owned firms. This plan was supposed to be announced in June, but was delayed by the candlelight protests. The number of state-owned companies on the list was drastically cut from the original 50-60 firms. The number of public firms targeted for privatization is 27, but this is deceptive since it includes 14 firms such as Daewoo Shipbuilding & Marine Engineering rescued by public funds and those for which privatization plans are already in place such as the Korea Development Bank and Industrial Bank of Korea. Therefore, a mere five firms were added to the list. The intensity and scope of the reform fall far short of expectations.

This, however, is better than nothing given fears that the Lee administration’s public reform plan would come to naught. The government deserves credit for its consistent decision to sell and merge Korea Land Corp. and Korea National Housing Corp. in the face of public resistance. Despite being unsatisfactory, the measure is likely to contribute to streamlining state firms and turning around the sagging economy if continued reform brings momentum.

Public sector reform is indeed an exhausting battle since not just the state-owned firms and their unions, but also political circles and bureaucrats have a stake. The reform should be pursued with a strong will that cannot be swayed at the time of struggle and hardship. Seemingly getting cold feet by the candlelight vigils, the Lee administration has sent so many mixed signals about this privatization plan. Though the presidential office was expected to initiative the reform, it quietly left the work to an agency.

The people feel indignant whenever they hear about loose and careless management in the public sector. Forty-five state-owned firms were newly established between 2002 and last year, adding an additional 71,000 (38 percent) staff to the public payrolls. With a whopping increase of 98 trillion won in the government’s fiscal budget, citizens will endure the huge tax burden. If the government fails to overhaul mismanagement in the public sector, which accounts for 33 percent of GDP, Korea will never enter the ranks of advanced nations.

Yim Yeong-jae, a senior researcher at the Korea Development Institute, said, “The more the reform is delayed, the less likely it will be successful. With a strong determination, the government should commit itself to making the plan a success and meeting public expectations.”