YONHAP NEWS

Gov't puts relocation projects for public companies on hold

   SEOUL, May 4 (Yonhap) -- The Lee Myung-bak government has put on hold the previous administration's flagship project to relocate state-run companies out of Seoul in a shift of policy priorities to government downsizing from decentralization, sources said Sunday.

   Under the Roh Moo-hyun administration, the government sought to relocate 175 public companies in Seoul and its surrounding areas to provincial towns, starting in 2010, as part of policy measures aimed at ensuring proportionate national development. More than a quarter of Korea's 50 million population lives in metropolitan Seoul.

   On the priority list were 28 public companies whose relocation plans have been confirmed and detailed by the Presidential Committee of Balanced National Development in December. Before Lee took office in February, leading public firms such as the Korea Land Corporation, Korea Expressway Corporation and Korea Electric Power Corporation, were set to move to towns designed as "innovation cities," where clusters of specialized industrial functions were to be developed with government support.

   Talk had been widespread that the government was reconsidering the relocation project overall, but the move to suspend the 28 firms' move prompted concerns that the decentralization move may be canceled.

   "We cannot exclude the possibility that the relocation project will be stuck for a long time, " an official from one of those public firms said, requesting anonymity.

   Lee, Korea's first CEO-turned president, is seeking to streamline government organizations, privatize some government services and stem wasteful budget expenditure. In a major step toward downsizing, the government announced earlier this week that it will lay off 10,000 civil servants in provincial governments this year. A privatization list of public firms is to be unveiled by the end of June.

   Senior presidential secretary for state affairs planning, Kwak Seung-jun, recently said all 596 public companies and their spin-off agencies will be the target of reform.

   The newly created Ministry of Land, Transport and Maritime Affairs and Board of Audit and Inspection said benefits from the proposed relocation of public companies were exaggerated under the previous administration, and there is a need to reassess the policy.

   The major opposition United Democratic Party has voiced opposition to Lee's shift from decentralization, but its meager status in the National Assembly has dampened its capacity to genuinely oppose the move. Lee's Grand National Party won a thin majority in April's parliamentary elections.

   hkim@yna.co.kr
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