[Editorial] Public Corp Privatization Going Nowhere

The government’s planned privatization of state-owned firms appears to be fading away. Privatizations of major target firms in the energy sector such as Korea Electric Power Corporation and Korea Gas Corporation were nullified and the government, once bragging about its launch of across-the-board public firm reform, has stepped back to leave the matter to related entities. In the face of deeply rooted challenges and chronic love-hate relationships among bureaucracy, public corporations’ management and labor unions, the government is apparently in low spirits to pursue the goal. As seen in the shelved merger between The Export-Import Bank of Korea and Korea Export Insurance Corporation, the streamlining of state-owned firms holding same businesses shows signs of fizzling out.

Public firms’ systematic lobbies and bureaucrats remaining idle repeat the same mistakes of the former administration, frustrating reform will. The government seemingly caved in to the Korean Confederation of Trade Unions who took advantage of candlelight rallies to spread unfounded rumors and instigate citizens. Although a Cheong Wa Dae source said yesterday, “Advancement of the public sector will proceed as planned, and we will carry it out thoroughly,” his remarks ring hollow. On the other hand, the public firms are likely toasting in celebration of the government’s reform losing steam.

During the past five years of the Roh administration, the negative and harmful influences of public firms aggravated a great deal, while they enjoyed a high time. Statistics show that the government during that period spent 48.8 trillion won making up for public firms’ insolvency. The growing public consensus is that the nation’s economy won’t make a jump start unless the excessive inefficiency of state-owned firms, wasting over 10 percent of GDP, is corrected. If the government turns a blind eye to this grave situation, it’s a shame that it made such a fuss for the past few months about fixing the irregularities of public firms and bringing restructuring measures.

The government cited rising prices for giving up privatization attempts, but this factor had already been considered. The United Kingdom successfully prevented unreasonable fare hikes by establishing an independent regulation agency when privatizing its communications sector. Germany also effectively reduced postal charges through exposing its postal services to competition when opening its postal sector.

The Lee administration once said, “If privatization goes well, the revenues from selling the shares and properties would reach 60 trillion won. We intend to invest the money in assistance for small and mid-sized enterprises, easing youth unemployment, and in education.” Now we cannot but ask these questions: How will the government resolve such national challenges? And, how long should the nation put up with the absurd burdens stemming from poorly managed state-owned firms?