Korea to drop 42 public entities from direct management to rationalize public sector

[Photo by MK DB]

The Korean government will change guidelines to drop 42 entities from direct state management for greater independence and liability in the public sector.

The change was decided at the public institution management committee meeting held on Thursday. Second Vice Minister Choi Sang-dae of Economy and Finance presided over the meeting.

The government will revise the classification system for public companies and quasi-government agencies to include those with up to 300 staffs, total revenue of 20 million won ($15 million) or more, and 3 billion won or more in assets. The current classification system, which has been kept the same over the last 15 years, draws the line at up to 50 staffs, total revenue of 3 billion won and 1 billion won in assets.

The government targets to amend related law and regulations by the end of this year.

Under the new system, 32 percent or 42 out of a total of 130 public companies and quasi-government agencies will go under ¡°other public category.¡± They include Busan Port Authority, Korea Teachers Pension, and Korea Creative Content Agency.

Classified in the ¡°other public category¡±, they will be evaluated for their performance by relevant ministry, instead of the Ministry of Economy and Finance. They will also be able to elect executives per relevant law and articles of association instead of going through the public institution management committee.

Greater power will come with great responsibility.

Their management will be evaluated like other government offices with doubled weight on financial performance. Greater performance will be required in staff and organizational management, with less attention to social value creation.

They will be exempted from conducting a preliminary feasibility study for projects with a total cost of less than 200 billion won or state funding of less than 100 billion won. The current requirement is set at 100 billion won in total project cost and 50 billion won in state funding.

Incentives will be provided for recruiting talented professionals. Executives charged with crimes, such as drunk driving, will be punished like other public servants, such as dismissal from service.

[¨Ï Maeil Business Newspaper & mk.co.kr, All rights reserved]