State-run conglomerates that have been given enhanced management independence are about to bear bigger burdens to meet high expectations this year as the government wants them to maintain their leadership through profit increase and new business development.
The Ministry of Strategy and Finance said Friday that it will keep its hands-off approach with Korea Gas Corp, Korea District Heating Corp, Incheon International Airport Corp. and Korea Airports Corp.
The ministry has added Busan Port Authority to the list of government non-interference on management in an effort to “boost their competitiveness against private companies and support their global expansion,” it said.
However, they will face consequences should they fail to earn high scores on their annual evaluation in respective areas by government agencies such as the Ministry of Transport and the Ministry of Knowledge Economy.
Consequences would include demanding voluntary resignation of heads of those state-run enterprises and stripping away their rights for management independence, the Finance Ministry noted.
BPA, the operator of Busan port, has been selected as the government seeks to make the southeastern port city of Busan the logistics hub of Northeast Asia, where it can handle 9.6 million twenty-foot equivalent units of cargo in 2013, up from 8.2 million TEU last year.
Another target the government has set out for BPA this year is improving its financials such as operating margin, in which the port operator needs to achieve 67 percent, up from 58 percent last year.
Reducing debt would be one of the top priorities for energy companies such as KOGAS, the liquefied natural gas buyer, and KDHC, the heat generating system operator, as increased borrowing by state enterprises has been a growing concern for the government.
Korea’s state enterprises accumulated debt worth 463.5 trillion won in 2011, up about 15 percent from 401.6 trillion won a year earlier, according to the Finance Ministry. This accounts for nearly 30 percent of Korea’s gross domestic product.
KOGAS will need to lower its debt/equity ratio to below 305 percent this year, from 419 percent last year, at the same time achieve higher returns on its equity investments in energy assets globally at about 51 percent, up from 40 percent.
KDHC has to achieve a debt ratio of 137 percent, from 181 percent, while increase its energy efficiency by 74 percent, up from 67 percent.
Key focus for state-run airport operators ― IIAC and KAC ― this year is “overseas expansion,” an industry source said.
KAC, which has maintained its management independence for two years due to “good grades,” aims to achieve overseas sales of 6 billion won in 2013, up from 4.2 billion won in 2012 through equipment exports and infrastructure projects.
IIAC, which has retained the title of the world’s best international airport, also has been given independence so that it can aggressively pursue potential airport infra projects in Myanmar and the Philippines.
