Korea Firmly Committed to Privatization - Flexibility Needed to Optimize Asset Value?

Article excerpt

While some people insist otherwise without presenting facts, the tract record thus far shows that Korea remains firmly committed to its privatization plan, a senior official in charge of privatization said.

Dr. Park Jong-koo, director general of the Planning and Budget Ministry's Public Service Bureau, said there has not been any changes to the basic principles of privatization.

``When you are dealing with privatization of this scale, it naturally takes time and flexibility has to be exercised to ensure that the values of the companies to be privatized are optimized,'' he said.

The former economics professor said it is vital to keep in mind that privatization is basically the disposal of assets that belong to the public and it is essential that their values are maximized.

``It is true that the privatization of companies like Korea Heavy Industries and Construction (Hanjung) is being delayed because market conditions are not suitable but the process is underway,'' Park said.

He said with the bearishness in the stock market, the disposal of stock in a huge company like Hanjung will have adverse effects and so the timing for its privatization is being readjusted.

Pointing to Pohang Iron and Steel CO. (POSCO), Park said here is a case where the government is remaining committed to its initial plans despite the fact that the stock market is down since it could have a positive effective all around.

``The government is working on the issuance of depository receipts to release 6 percent of its shareholding and the remaining 3.84 percent being sold in the first half of this year,'' he said.

Contrary to the popular notion that the delay in privatization has had a negative effect on the stock market, Dr. Park said POSCO's privatization should have a positive impact.

``In any country, privatization involves making adjustments to find suitable conditions to dispose of government-held assets and there are in fact those who say that we are moving too quickly,'' he observed.

Dr. Park said privatization in even advanced countries like Britain has taken nearly 20 years and the process is still ongoing, showing how time-consuming the disposal of state assets is.

Commenting on previous efforts at privatization, such as those in 1993, Park said there were major obstacles which prevented them from being more successful.

``They basically failed because of the stock market was down, labor unions were striking, the infrastructure for privatization was not there and the government was not determined enough,'' he said.

Fortunately, the current privatization plan is being pursued on the heels of the financial crisis and the IMF (International Monetary Fund) program and there is a national consensus supporting privatization.

``Through the years, we have been able to convince unions and the general public of the need for privatization and the government has never been more committed to the cause,'' said the 42-year-old professor-turned-bureaucrat. …