Land, housing, infrastructure and transport-related public enterprises, including the Land and Housing Corp., Korea Railroad Corp. and K-water, were urged to launch aggressive reform plan to improve their financial health and management efficiency, the Ministry of Land, Infrastructure and Transport said Monday.
The request was made during a meeting on normalizing operations of 14 public firms under the ministry. The meeting, presided over by Minister Seo Seoung-hwan at the Sejong government complex, came a few hours after President Park Geun-hye declared 2014 as the first year for the reform of public firms in her New Year’s press conference.
According to ministry data, the debt outstanding at 14 public firms controlled by the ministry reached 222 trillion ($209 billion) won last year, worth about 60 percent of the finalized 2014 national budget of 355 trillion won.
“The initial reform plans of those enterprises, handed over to the ministry late last year, failed to meet the public’s expectations,’’ Seo said, urging these firms to develop the more detailed and tangible action plans to reduce debts drastically and to eradiate deep-rooted lax management practices.
The minister asked top management of affiliated public firms to take all types of aggressive reform measures, including sales of noncore assets, restructuring of business portfolios and freeze of hiring and executive payments.
LH and KORAIL were the main targets of the structural reforms, as they ranked the top two, respectively, in debt ratio last year. The debt ratios of LH and KORAIL soared to 464 percent and 433.9 percent, respectively, according to data compiled by the Ministry of Strategy and Finance, which is responsible for the reform drive of public firms.
“LH, in particular, has to push for the reform measures with a sense of urgency against bankruptcy,’’ Seo said. In response to his request, LH pledged a 20 percent cost cut in operations.
As follow-ups to the meeting, 14 public firms will submit the final version of their reform plan to the Ministry of Land, Infrastructure and Transportation by Jan. 15. Then, the ministry will review and turn those proposals to the Ministry of Strategy and Finance by the end of the month.
Stemming from the reform proposal, the ministry will hold a monthly meeting with 14 affiliated agencies to check on their progress.
“The ministry will propose for the government to discharge heads of public firms if they fail to make progress in debt reduction and management efficiency,’’ Seo said.
The ministry also asked 14 affiliated public firms to freeze hiring until 2017.
By Seo Jee-yeon (firstname.lastname@example.org)