Korea to overhaul monitoring of state enterprises

The Ministry of Strategy and Finance said Monday that it would overhaul its management and evaluation systems of state-run enterprises and institutions to boost their transparency and efficiency.

It said that the government would strengthen its monitoring of state-owned enterprises to see whether they are efficiently managing their debt and human resources.

This is part of efforts to wind down the debt that has adversely contributed to an overall increase in national obligations.

Also, the government seeks to weed out the practice of so-called “parachute appointments” in which top executives are selected to their posts mainly because of their close connections with high-ranking government officials, including the president.

The Finance Ministry said it would make sure that the country’s state enterprises and institutions would push efforts to “reform anytime” for improved management, rather than carrying out a “one-off” reform.

It also seeks to overhaul their recruitment system allowing them to hire people based on their professionalism, not mainly on their educationed background. This pertains to recruiting chief executives of state-run enterprises, who will be given independence but more management responsibility under the renewed system.

The government wants its state-owned companies to lead with private corporations in achieving an employment rate of 70 percent.

The Finance Ministry said that it seeks to push state-run enterprises to create some 700,000 jobs over the next four years.

CEOs of state-owned companies would be evaluated whether they have not only contributed to boosting company growth but also creating jobs and improving public services. These would be important criteria for their reappointments.

Last but not least, state companies would need to expand their public information database so that people can easily understand and make use of it for both personal and entrepreneurial purposes.

There are almost 300 state-run companies, institutions and quasi-sovereign enterprises as of the first half of 2013.

They created about 254,000 jobs last year, accounting for 40 percent of employment in the public sector.

Some 30 state-owned enterprises posted combined sales of 181 trillion won ($157 billion) last year, 28 percent more than the 2012 sales of Samsung Electronics, the country’s biggest private company.

By Park Hyong-ki (hkp@heraldcorp.com)