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Domestic Airports Slated for Sale

Posted August. 27, 2008 09:34,   


Up to three of the country’s 14 airports will be sold to the private sector, excluding Incheon International Airport.

The Resolution & Finance Corp., the Korea Labor Education Institute and Korail Adcomm will be shut down and the workload of the Korea Deposit Insurance Corp. and the Korea Asset Management Corp. will shrink.

The government announced yesterday the second-phase reform of 40 state-run corporations.

One to three airports belonging to the Korea Airports Corp. will be sold to the private sector. In the first phase announced Aug. 11, the government said it will gradually seek privatization including the sale of 49 percent of the Incheon International Airport Corp. to the private sector.

The government, however, will set a minimum level of regulations despite selling management control. It will maintain the functions of airports, own the main assets such as runways or terminals, control airport safety such as air traffic, and cap terminal fees.

Vice Strategy and Finance Minister Bae Kook-hwan told a briefing that all airports either in the black or red can be sold. Those buying airports in the red will get the right to develop the surroundings.

Despite the offer, privatizing airports with deficits will be impossible because few will want to buy them. In response, a government official said, “We are not worried because of the high demand for airlines with the emergence of low-cost carriers.”

Only five airports – Gimpo (57.4 billion won), Gimhae (44.4 billion won), Jeju (28.1 billion won), Daegu (800 million won) and Gwangju (300 billion won) – posted net profits last year. Over the same period, the airport in Yangyang lost 10.5 billion won and that in Yeosu lost 5.7 billion won.

○ Overlapping organizations to be integrated

Twenty-nine promotion agencies and foundations with overlapping functions in R&D, information and communications, and environment will be cut to 13.

Among them, 10 slated for integration will cause problems because of their planned relocation to other innovative cities.

For example, the Korea Software Promotion Agency and the Korea Institute for Electronic Commerce will be integrated into the Korean IT Industry Promotion Agency and moved to North Chungcheong and South Gyeongsang provinces. The National Information Society Agency and the Korea Agency for Digital Opportunity and Promotion, which will be merged into the Korea Agency for Information Society and Culture, will be relocated to Daegu and Jeju Island.

Bae said, “We are searching for ways to swap organizations through the Presidential Committee for Balanced National Development to avoid damage to provincial governments.” If a state-run corporation set to move to South Gyeongsang Province due to integration has to move to South Jeolla Province, South Jeolla will offer a company that it was set to receive. Setting up branches or additional compensation will also be considered if a relocation plan is canceled in a region.

The government will also revamp the Korea Deposit Insurance Corp. to reduce its asset management function and have it focus on protecting depositors. The functions of the Korea Asset Management Corp. and the Korea Accreditation Board will go away from buying and dealing with bad credit and accreditation.

○ Additional plan slated for early September

An additional list of 20 organizations set for privatization or integration is slated under the third phase of privatizing state-run companies. The plan will decide if the Korea Credit Guarantee Fund and the Korea Technology Credit Guarantee Fund will be integrated, a move which was supposed to come in the second phase. Ways will also be sought to enhance management efficiency in the Korea Electric Power Corp. and advance the Korea National Railroad Corp., the Korea Expressway Corp., Incheon Port Authority, and the Korea Housing Guarantee Corp.

Bae said, “Many remaining corporations will be privatized,” indicating the majority of organizations inviting controversy will be privatized in the third phase.

The government will release additional measures to increase management efficiency in 319 organizations, including those mentioned in the first to third phases. The measures will focus on downsizing staff and budget.

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