Privatization must go on

The government has decided to postpone the privatization of three state-owned banks, the Korea Development Bank, Woori Financial Group and the Industrial Bank of Korea.

The reason given is that as the financial crisis that started in the United States worsens economic conditions inside and outside Korea, it has become difficult to sell the banks at a good price.

It has been decided, however, that the bill to privatize the Industrial Bank of Korea will be passed within this year, and that a privatization schedule will be drawn up while observing the markets.

The delay is understandable, as it is doubtful that there will be enough bidding interest, let alone getting a reasonable price for them.

But the postponement must not be viewed as giving up or retreating from privatization. Delaying the process is not a reason for opponents of privatization to make further attempts to block the move.

The opposition party and civic organizations are opposed to the Lee Myung-bak administration’s financial reform plans, which are aimed at easing regulations in the financial industry and privatizing state-owned banks.

Opponents maintain that privatization of state-owned banks is against the global trend, as the United States and countries in Europe have recently decided to pour massive public funds into nationalizing private banks that are facing a liquidity crisis.

But their argument is inaccurate and is not a valid reason for stopping privatization. The U.S. and European governments are buying shares in private banks in order to temporarily provide capital to stabilize the financial markets. It is not to nationalize them.

Since the driving factors are different, these desperate measures taken in other countries cannot be taken as a reason to oppose privatizing state-owned banks.

Despite the financial crisis, the argument for privatizing the three banks remains the same. The privatization was decided upon because the banks are state-owned but function in exactly the same way as private banks.

There is no reason for the government to own the banks when they compete against banks in the private sector. And if these banks enjoy privileges as state-owned banks, they only hinder the development of the financial industry. The government must clarify its will to privatize these banks once again and must sell them without hesitation as soon as market conditions improve.