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[Editorial] What Will Happen to the 176 Public Corporations the Government Wants to Relocate?

[Editorial] What Will Happen to the 176 Public Corporations the Government Wants to Relocate?

Posted June. 25, 2005 06:06,   


The main business venue for the Korea Land Corporation (KLC) and Korea National Housing Corporation (KNHC) is in the Seoul Metropolitan area. The reason is that 60 to 70 percent of new city development and apartment construction takes place in this area. However, the government has announced a plan to relocate 176 public institutions yesterday which would involve moving the KLC to Jeonbuk and the KNHC to Gyeongnam. This move could result in the corporations having an abnormal structure—a far bigger Seoul branch office than provincial area corporate headquarters—in order to maintain their smooth operation.

The government has allocated the so-called Big Four public corporations: Korea Electric Power Corporation, Korea Highway Corporation, KLC and KNHC, based on the principle of balanced distribution rather than efficiency or relevance to hosting areas. While local governments fortunate enough to host the Big Four are in a festive mode, sentiments in other areas that failed to land one of the four are in a very different one. The government’s decision is certain to intensify competition among cities and counties in each metropolitan city and province to host those public corporations. This means that the government’s push for the relocation of public corporations in the name of balanced national growth is likely to escalate conflicts over regional interests.

Given that its main business is the development of overseas oil fields, the Korea National Oil Corporation is expected to be made less competitive by moving to Ulsan from the Seoul Metropolitan area where foreign companies and financial institutions are concentrated. The Korea Media Rating Board and Korean Film Council (KFC) will be sent to Busan, the host city of the Pusan International Film Festival. Most of the companies and people in the film industry that use KFC’s recording and developing equipment and movie sets are in Seoul, and will certainly have to go through great inconveniences.

The Korea Testing Laboratory (KTL) in Guro-dong, Seoul is mainly responsible for testing and qualifying the products of small-and-medium-sized companies in the Guro Industrial Complex. A relocation of the KTL to Gyeongnam will cause inconveniences to small- and medium-sized enterprises in Seoul Metropolitan area which account for as many as 73 percent of those who use it. The quality of service of public institutions cannot be improved by sending them away without consideration of their efficiency of operation and the convenience of users.

Another problem is the costs of relocation. Choo Byung-jik, Construction and Transportation minister, once said, “An additional 3.3 trillion won is needed even if we sell the entire assets, including the buildings, of the relocated public institutions.” It is also questionable whether public institutions could sell their lands and buildings at a good price when they try to sell those assets altogether at the same time. It also takes an enormous amount of money to move the facilities of public institutions.

The government should also take into account the pain and suffering of some 900,000 employees of public institutions, workers in associated industries, and their families who will have to move to an unfamiliar place. Their inconveniences and compromised living quality risk worsening the inefficiency of public institutions.

It is worrisome that the relocation is likely to have more negative effects, such as compromising the competitiveness of the nation’s economy, than positive effects, namely balanced national growth.