Gov`t Scraps Plan to Merge Housing, Land Corporations

The Korean government Friday scrapped plans to merge the Korea National Housing Corp. and Korea Land Corp. after five years of deliberation on the issue.

The Ministry of Construction and Transportation held a committee meeting on the merger of the KNH Corp. and KL Corp. at Gwacheon Government Complex and announced, instead of going ahead with a merger of the two state-run companies, the ministry would adjust the functions of the two organizations and streamline management.

“We decided to scrap the plan based on the judgment that it is difficult for a bill promoting the merger to be passed through the National Assembly because of its strong opposition,” said Lyu Yoon-ho, director of the land division in the ministry. “The two organizations` role is vital to implement the current government`s key projects such as housing projects, relocation of the new administrative capital, and development of a special business zone.”

However, controversy is likely to emerge because both the KNH labor union, which favors the merger, and the KL labor union, which is against the plan, expressed their disapproval of the announcement.

Meanwhile, in the wake of the Construction and Transportation ministry`s decision, the government has come under harsh criticism that it seems to slow the pace of the public sector reform because privatization of a state-run company in charge of supplying gas and electricity was also returned to square one, along with other government privatization plans

Jae-Seong Hwang jsonhng@donga.com