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Economic ministers vow to revamp public firms

Economic policymakers pledged to turn up the heat on state-controlled agencies for their irregularities in their unveiling of a three-year vision for market innovation on Wednesday.

The three-year vision features “weeding out some state-run firms’ negligent management and irregular business practices,” Deputy Prime Minister and Finance Minister Hyun Oh-seok said during the economy-related ministers’ meeting.

“Policymakers will build up the economy with solid fundamentals by normalizing misconduct in society,” he said.

Hyun vowed that the public sector will take the initiative in overhauling the conventional practices, adding that policymakers will induce an innovative mode to the private sector.

To implement the detailed agenda, the economic ministers agreed to set up a task force on the innovation for a variety of sectors, which will be composed of government officials and private economists.

The ministers, however, have yet to fine-tune the detailed policies for the public agency revamping.

Last month, Finance Minister Hyun issued a warning against some public firms, demanding full-fledged restructuring to reduce their debt obligations incurred from aggressive overseas expansion for energy resources and excessive domestic infrastructure spending.

He said that chief executives of state-run companies that do not make progress in debt reduction in their mid-term evaluation will be held responsible and removed from their posts.

“The government will freeze the wages of executives of state-run firms should they fail to meet its standards,” he said.

The combined debt held by state-controlled companies is snowballing as some were found to have maintained conventional management practices, such as reckless borrowing, irresponsible overseas projects and excessive incentives for executives.

According to the public agencies’ management information provider Alio, nine major state-run firms saw their collective debt surge 5.2 percent or 17.8 trillion won in six months.

Their outstanding debt came to 358.5 trillion won ($325 billion) as of June 2013, up 5.2 percent from 340.7 trillion won at the end of 2012.

The nine firms were Korea Land & Housing Corp., Korea Electric Power Corp., Korea Gas Corp., Korea National Oil Corp., Korea Resources Corp., Korea Expressway Corp., Korea Railroad Corp., Korea Water Resources Corp. and Korea Coal Corp.

By Kim Yon-se (