Stalemated Privatization of Public Enterprises

An evaluation report has been released about the privatization of public enterprises, which said the progress is at standstill and its future is also very unclear.

Korea Securities Research Institute (KSRI) (Director Choi, Woonyeol, Professor of Seokang University) released a report titled `Public Enterprise Privatization Policy Direction through Capital Market` on August 7, and pointed out that the current privatization policy of public enterprises are at a standstill, which was not anticipated.

Such evaluation is exactly opposite to the claim of Ministry of Planning and Budget which said, ``The management efficiency of public enterprises has improved by the privatization.`` The KSRI evaluated that only a few small public enterprises, such as National Textbook Corporation, Daehan Oil Pipeline Corporation, and Korea Technology Banking Corporation, were privatized as planned.

According to the report, Korea Telecom did not make any strategic cooperation with foreign partners and the domestic sale of the company is not actively engaged so that the privatization becomes unclear.

For Korea Electric Power Corporation (KEPCO), Electric Power Industry Restructuring has been delayed by the undecided relevant regulations and its management plans for the privatization has not been outlined yet. For Korea Tobacco and Ginseng Corporation, its original privatization plan was scheduled to be done by the end of 2000, but the sale of depository receipts (DR) failed so that its privatization has been delayed. Since there was no foreign sale of Korea Gas Corporation and no privatization plan has been released, the corporation was classified in the failure category.

The KSRI analyzed that such stalemated privatization policy are due to the unclear goals of government whether it aims to enhance the efficiencies of public enterprises or to increase the financial profits for government, as well as due to the weak willingness to drive up the policy.

In addition, there are difficulties due to various interests among relevant administrative offices; for example, industry policy office is trying to use the public enterprises as its policy means, while the Ministry of Planning and Budget (MPB) and the Ministry of Finance and Economy (MFE) are responsible for privatization and government finance management and the stock market policy respectively.

Cho, Sunghoon, researcher of KSRI, said, ``Since the big core public enterprises, whose portions are large in national economy, are not clear about their privatizations, the restructuring of the public area is evaluated to be at a stalemate.``

yhchoi65@donga.com