Time to build consensus on KTX privatization

The Lee Myung-bak administration is in discord with the ruling Grand National Party (GNP) over a plan to allow private companies to operate some KTX bullet train services from 2015. The discord showcases the absence of policy coordination between the government and the party. The public cannot but express concerns about the administration’s unilateral decision-making process.

The Lee government has repeatedly made the mistake of poor communication not only with the people but also with the governing party. This has weakened the President’s leadership and led to policy blunders. He had opportunities to improve his poor communication ability but regrettably failed to do so because he didn’t listen to the voices of diverse interest groups.

No doubt the KTX row is not an isolated case. On Dec. 27, the Ministry of Land, Transportation and Maritime Affairs disclosed the plan to break down the state-run Korail’s monopoly on the operation of high-speed trains. Before announcing this, the ministry should have held proper consultations with the GNP to iron out differences and reach an agreement. However, it did not undertake the due process, inviting opposition.

It is nonsense to push important policies such as the KTX privatization without discussion with party members. How can bureaucrats persuade opponents to accept the government’s position? The situation is getting worse as both Korail management and its trade union are strongly against private firms’ participation. Last week, the GNP’s crisis management committee made clear its objections, adding fuel to the dispute and firming up the opponents’ ground.

The poor policy-setting process might hinder the administration’s efforts to initiate a much-needed railroad reform. Korail has maintained its monopoly in the railway sector for more than a century. It is tenaciously resisting privatization to keep its vested interests. However, it should realize that reform of the rail system can no longer be delayed because it is mired in huge debts and snowballing losses. It also lacks efficiency, transparency and accountability. It has long been blamed for frequent breakdowns, operational delays, and poor services.

Let’s take a closer look at Korail’s dire financial condition. Its debt is estimated at 9.7 trillion won. It is unable to make interest payments without government grants and suffers an annual loss of 500 billion won. Conventional rail lines have plunged deeper into trouble. Only KTX is making a profit. The state should not pour more money into the bottomless pit. Korail is deemed to fail unless it undergoes a drastic reform.

Of course, there are worries about privatization. Railroads are a key public infrastructure. It is not right to measure a railway operation only in terms of profitability. But it’s urgent to boost its efficiency, provide better services and improve its financial health. So the government and the ruling party must work together with Korail to draw up a package to save the beleaguered railway system.

Unionized rail workers don’t necessarily fear the private sector’s participation. It is not intend to benefit any specific companies. And everyone knows it is hard to fully privatize Korail. The state operator will continue to control all rail networks. Private firms would only be allowed to provide some bullet train services. Introducing competition would result in higher efficiency, lower operational costs and cheaper fares.

This is not to say that the plan can solve all the problems. But private participation in KTX operations could be a starting point for change. We urge the government and ruling party to build a national consensus on this matter. They should map out wide-ranging railway reform before it’s too late.