Local Governments Compete for Core Public Companies

Local governments are waging a “silent war.” They are making every effort to meet with the Presidential Committee on Balanced National Development, relevant public companies’ labor unions and employers, and the political sector to get an upper hand in competing for hosting some 180 public companies set to move to provincial areas.

Whether they can host public companies or not will be “a report card” for local bodies and serve as a decisive factor in next year’s elections.

Local municipalities are attracting various public companies for different reasons. They are keen on hosting big public corporations with large numbers of employees and high revenues, such as Korea Electric Power Corporation, Korea Highway Corporation, Korea Land Corporation, Korea Housing Corporation, Korea Gas Corporation, and Korea Agricultural and Rural Infrastructure Corporation. Korea Electric Power Corporation (KEPC) has 20,000 employees on the payroll and pays out over 100 billion won ($90 million) annually. If a local government successfully hosts the KEPC, the head of the local government could command much credit for that.

Daegu City and North Gyeongsang Province are working together in a joint effort. The city and the province have set up a joint team to come up with strategies to attract public corporations last November and established the “Committee to Host Public Corporations in Dae-gu, North Gyeongsang Province” (the leader is Lee Jonghyun, the professor of Kyungpook National University) last month.

Meanwhile, South Jeolla Province is making an all-out effort to hold agricultural and energy-related agencies, making the most of the characteristics of the province. On February 2, Governor Park Jun-young of the province met Sung Kyung-ryung, the leader of the Presidential Committee on Balanced National Development and asked for approval of its host of IT- and BT-related agencies, as well as its agriculture-related agencies.

South Gyeongsang Province is targeting Korea Electric Power Corporation and Korea Highway Corporation, citing that the city of Busan and its province are the largest consumers of electricity in Korea, following Seoul and its metropolitan area, and noting that they have Ha-dong thermal powered generators.

Municipal governments are also trying to host government agencies. Last month, 10 civil servants of Chungju city, including the mayor of Chungju, Han Chang-Hee, and Hong Soon-oh, a representative for the committee for hosting public corporations, met the leader of Korea Land Corporation’s labor union. They put emphasis on their city’s easy access to Seoul, saying the city is an hour away by car thanks to inland highway and that it will also be connected by the East-West highway due to open soon. Hong had a meeting with Korea Highway Corporation union leader Oh Hyun-Soo to explain these points a week later.

However, other municipal governments in South Chungcheong Province, including Susan City, Boryung City, Sucheon County, Dangjin County, and Tae-an County complained that they are excluded from the list of candidates for host cities but located too far away from the administration capital Gongju and Yeongi to benefit, jumping on the bandwagon.

Once provincial governments succeed in hosting public corporations, governors and mayors have the authority to decide in which cities the corporations will be located. Considering the severe competition among municipal governments, the second round of competition will be intense.