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| President Yoon Suk-yeol speaks as Deputy Prime Minister and Minister of Economy and Finance Choo Kyung-ho, on Yoon's right, listens with other ministers during a weekly Cabinet meeting at the presidential office in Yongsan District in central Seoul, Tuesday. The topics covered at the meeting included reform measures for state-owned firms. Yonhap |
By Yi Whan-woo
Korea Electric Power Corp. (Kepco), Korea Railroad Corp. (Korail), Korea Land and Housing Corp. (LH) and other laxly managed state-owned firms are facing possible drastic restructuring, as President Yoon Suk-yeol and Deputy Prime Minister and Minister of Economy and Finance Choo Kyung-ho have vowed to reform their operations.
During a weekly Cabinet meeting, Tuesday, Yoon suggested selling off the offices of the state-run firms as a part of efforts to cut the expenses of the public corporations.
The meeting also discussed ways to prevent the possible misuse of corporate credit cards and unethical behavior of employees.
"Reform is a task that cannot be delayed any further," Yoon said, adding that evaluations thus will be "conducted strictly, and areas of lax management will be drastically improved."
Choo also stressed that "the party is over" for poorly managed state-owned companies.
In particular, he said Kepco should come up with "intensive, self-made efforts" to improve its business performance if it wants to convince the public on its plan to hike utility bills.
The aforementioned three companies are among 18 public institutions that received low assessments according to the Yoon administration's management performance rating system announced on Tuesday.
While some have regarded the reform of state-run companies as necessary for years, the Yoon administration is emphasizing the need to do so now amid rising inflation, which puts the burden on households, but which has also been cited as a reason the state-run firms to increase their fees.
In the case of Kepco, Choo said that its proposal to raise electricity rates was "not enough," and that it should make "sufficient self-rescue efforts," as part of a broader strategy seeking to overhaul its management.
The reform measures vary depending on the targeted public companies' financial soundness and corporate culture, among other factors.
The measures include tougher management assessments, performance-based promotions over seniority-based promotions, selling off assets and voluntary returns of bonuses by executives.
Kepco, the country's sole electric power supplier, has been at the center of the dispute over whether to hike electricity fees, after posting an operating loss of 5.8 trillion won ($4.45 billion) in 2021 ― the highest among Korea's state-run companies in the cited year.
In its annual performance rating, the Ministry of Economy and Finance accordingly suggested that Kepco executives, who they say negligently managed the state-owned firm as well as its nine subsidiaries, should return their bonuses from last year.
The finance ministry called for the same measure to be taken for 11 other public companies that also saw net losses in 2021. The 11 public firms are: Korail, Kangwon Land, Grand Korea Leisure, Korea Coal Corp., Incheon International Airport Corp., Incheon Port Authority, SR Corp., Korea Airports Corp., Korea Racing Authority, Korea Broadcast Advertising Corp. and Korea National Oil Corp.
Tasked with the development of land and housing as well as their maintenance, LH was noted for posting the highest operating profit among state-run enterprises at 5.64 trillion won.
Nevertheless, it received the second-lowest grade out of five and was issued with a warning, following a 2021 scandal in which employees used confidential information to make speculative land purchases in residential development zones.
Such ethical lapses prompted the government to raise the level of the importance of ethical management on performance evaluations, the other criteria being: job creation, safety management and contributions for balanced regional development.
