Largest State Bank to Go Private
The Korea Development Bank will be sold in parts over five to seven years, as the nations largest state-run bank will undergo privatization except in its public policy finance sector.
The presidential transition committee said Monday that the bank will spin off its investment banking sector and operations with Daewoo Securities.
The proceeds of the banks sale are expected to reach up to 60 trillion or 70 trillion won. Twenty trillion won of the money will go to setting up the Korea Investment Fund to support small and medium-size firms.
Committee member Gwak Seung-jun said after a briefing by the Finance and Economy Ministry, Starting with enactment and amendment of related provisions such as the Korea Development Bank Law, we will begin work on privatizing the bank as early as March.
He said steps to ease regulations on the separation of finance and industry will also be taken at the same time, so that industrial capital can flow into the privatization process.
The committee will also pursue stability in the real estate market by limiting loans instead of slashing taxes, such as the comprehensive real estate tax.
Kang Man-soo, chief of the economic affairs subcommittee under the committee, said, On real estate issues, we should focus on managing liquidity rather than imposing taxes. Nonetheless, we will keep the comprehensive real estate tax system for about a year and decide on changes after seeing how it works out.
The committee also decided to abolish the infrastructure linkage system after hearing a briefing by the Construction and Transportation Ministry. The system was formed as part of real estate reforms announced in August 2005, and imposes quasi taxes on buildings with a gross floor area of more than 200 square meters. This has drawn criticism as the main culprit behind rising apartment prices.
To reduce the number of unsold new apartments in areas outside of Seoul, the committee will crack down on speculation and overheated speculative zones by the end of this month. Regulations on reselling purchasing rights for new apartments and housing loans will also be abolished. The target regions are six speculation zones in Cheonan and Asan in South Chungcheong Province and four in Ulsan. The three overheated speculation zones are Haeundae-gu and Nam-gu in Busan and Ulju County in Ulsan.
On inter-Korean projects, the committee will pursue major economic cooperation agreed between the two Koreas depending on progress in North Koreas denuclearization.
The projects include repair and improvement of North Korean railroads and roads, building a second industrial park in the North Korean border city of Gaesong and forming a free trade zone in the neighboring port city of Haeju.
Other major projects agreed in last years inter-Korean summit could be put on hold, such as social overhead capital for North Korea, creation of a special zone for peace and cooperation in the Yellow Sea, and construction of a shipbuilding complex. The committee said feasibility of the projects will be reviewed before proceeding.
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