Privatization of Incheon Airport, KDB Financial hangs in the air due to political resistance 


The Lee Myung-bak administration’s plans to privatize public institutions including the sale of a state-owned stake in Incheon International Airport have been put on hold due to opposition from politicians.

Plans to privatize KDB Financial Group and find a private company to run the KTX bullet train from Suseo in southeastern Seoul also face delays or suspension.

The government decided not to submit a revised bill for the sale of its stake in Incheon Airport to the regular National Assembly session next month as the bill was met with a strong political backlash ahead of the presidential election in December.

“Selling the stake in Incheon Airport will be difficult,” a government source said.

“We are not going to submit the revised bill since both ruling and opposition parties are against it.”

The Finance Ministry plans to try getting the bill sponsored by lawmakers, which won’t be easy.

Considering the law revision, the procedures for an initial public offering and the upcoming change of government, stake sale and listing of the airport could be postponed indefinitely or ditched altogether.

The government had planned to select early next year a private company to run the KTX from Suseo, but is unlikely to make an official notice within this year due to political disapproval.

As for the privatization of KDB Financial, which sought to make an IPO this year, the National Assembly is far from approving a state guarantee on the overseas bonds issued by KDB.

Without the state guarantee, KDB Financial cannot proceed with the IPO, meaning the privatization scheme and the plan to invest KDB shares worth 500 billion won ($439 million) in Nonghyup could go up in smoke.

Several lawmakers say the privatization of KDB Financial should be reviewed from square one.

There is also a high chance the state-run Korea Finance Corporation’s plan to sell a part of its stake in Korea Aerospace Industries could fall through within this year as only Hanjin Group made a bid, drawing political criticism over possible favors for the chaebol.

The government injected some 8 trillion won into the KAI.

“The public opinion has grown against the privatization of the Incheon Airport, KDB Financial and private participation in KTX operation,” a government official said.

“They can be jettisoned as some say these projects need to be reconsidered in the next administration.”

Privatizing state-owned enterprises has been a key policy of the Lee Myung-bak administration from its beginning.

The government also recently failed in its third attempt in three consecutive years to privatize banking giant Woori Financial and recoup the public funds injected to rescue banks after the financial crisis in the late 1990s.

By Kim So-hyun (sophie@heraldcorp.com)