New ways of managing KTX become controversial

The Ministry of Land, Infrastructure and Transport said yesterday it’s looking at Germany’s railway system in order to boost Korea’s bullet trains after receiving a civic reviewing council gave its report.

The council, comprised of 20 experts from various areas, conducted a monthlong study of the development of the railway system since April 26 for the ministry.

The government is considering a second state-run company to operate the new Korea Train Express (KTX) business, a high-speed railway system, in a bid to increase competition in the railway industry.

Currently, the state-run Korea Railroad (Korail) is the sole operator of the nation’s railroads, including the Korea Train Express, the high-speed system.

For a new KTX service that will start in 2015 from Suseo Station in southern, Seoul, the council suggested a new company be established with Korail taking some of its shares. The experts said the independence of the new company in accounting and management should be guaranteed.

The council suggested that competition is essential for improvement and Germany’s system seems to be best closer to Korea’s than Sweden’s or the United Kingdom’s.

If it wanted to be more like the German system, Korail could become a holding a company while maintaining its original job of transporting passengers. But for other services, such as logistics, Korail should spin off those businesses.

According to earlier media reports, the ministry reportedly considered allowing private investors to own 49 percent of shares in the new KTX operator, with 30 percent going to Korail and the balance going to the government and other state-run firms.

However, officials said yesterday that no private investment will be allowed in the new KTX operator.

Since the Lee Myung-bak administration, the ministry has been trying to allow private investors into the KTX system, saying they would enhance efficiency and competition, which would lead to a decline in ticket prices.

But some civic groups and politicians have opposed the idea claiming that the government’s intention is to privatize the nation’s railway system.

Thirteen Democratic Party lawmakers released a statement Wednesday saying the ministry’s plan contradicts President Park Geun-hye’s promises, while Korea Railway Workers’ Union claimed the government was recklessly pushing the plan by forcing Korail CEO Chung Chang-young to resign from his post.

Chung, who has opposed privatizing the railways, submitted his resignation Monday.

By Joo Kyung-don [kjoo@joongang.co.kr]