Integration of Korean National Housing Corporation and Korea Land Corporation on The Verge of Dispersion

Integration of Korean National Housing Corporation (KNHC) and Korea Land Corporation (KLO), which was scheduled next year, is on the verge of dispersion. Reports, which argue that the financial structure will be worsened if the two are integrated, continue to be produced. On top of this, the opposition Grand National Party (GNP) and the United Liberal Democrats (ULD) are opposing to the integration.

The government has promoted the integration of the two corporations as an exemplary case of the structural adjustment of the state-run corporations since 1998. Some forecast that not only the government is unable to keep the schedule but also the integration itself may be dispersed.

A high ranking official of the Ministry of Construction and Transportation said yesterday, "As long as opposition parties including the Grand National Party continue to oppose to the integration, it will be difficult to launch the integrated corporation scheduled next January. Not only that it will be delayed for at least two to three months, but also it is highly possible that the delay become a long-term due to the pending situation of the standing committee."

Legislative bill proposed by the government regarding the integration of the two corporations was submitted to the National Assembly on 15th, and is to be reviewed by the committee on the construction and transportation on 26th. According to the report submitted by the Yonghwa account corporation to the Ministry of Construction and Transportation, debt rate of the integrated corporation is anticipated to increase from 247 percent this year to 303 percent in 2005, and the amount of debt is also estimated to increase from 20 trillion won this year to 31 trillion won in 2005. Reports submitted by the Korea Development Institute and the Korea Research Institute for Human Settlement also pointed that if the two corporations are to be integrated, it may become a `huge insolvent state-run corporation`.

Ja-Ryong Koo bonhong@donga.com