[EDITORIALS]Get On With Public-Sector ReformThe government's plan to merge the Korea Land Corp. and the Korea Housing Corp. in January has effectively been scrapped, as a National Assembly committee has postponed reviewing the bill. The failure to merge the two state-run corporations is the best example of this administration's failure to reform the public sector. While opposition parties' anti-reform stance contributed to it, the failure this time resulted from the lack of preparation for restructuring on the part of the corporations and the government.
The merger of the two entities was at the center of the administration's public-sector reform announced in August 1998. While the two corporations have contributed much to developing land and supplying housing, local governments can now develop land for residential use, and private companies can build apartments. The government reasoned that extending support to the two corporations was no longer necessary.
Rather than thinking about the best way to merge, the two corporations' executives and employees have fought for the past three years over which would hold the upper hand after the merger. The Ministry of Construction and Transportation, which should have supervised them, did not work actively toward the merger, as its minister kept changing almost every month. It took up the task only when President Kim Dae-jung expressed dissatisfaction last year.
As of June, the debt-to-equity ratio was 370 percent at the Korea Land Corp. and 174 percent at the Korea Housing Corp., and both figures were rising. The Korea Development Institute has said merging the two could produce a company with 20.6 trillion won ($16 billion) of debt and an annual interest bill of 1.6 trillion won. It said that the merged company would be unable to repay the interest from operating profit. Another research report says the company could produce profit three years after the merger ?provided it undergoes strenuous restructuring efforts.
The government should not blame politicians. It should intensify restructuring the two corporations, and the National Assembly should speedily pass the needed bills, understanding that the merger is inevitable for reform of the public sector.