By Jane Han
Staff Reporter
California's half-baked electricity privatization, Britain's failure to do the same with its railroads, and several other global debacles have apparently swayed many Koreans to oppose the government plan to spin off public firms.
Fanning their anxiety are eerie rumors spreading online warning of a post-privatized Korea that deprives people of electricity, water and medical care due to soaring costs.
The extreme public reaction forced the Lee administration last month to delay plans to privatize public utilities and health insurance, but economic experts say the program needs to get back on track soon.
``Many central and state governments around the world have failed to successfully privatize, but this shouldn't stop Korea from road mapping a better plan,'' said Kim Hyun-jong, a senior research fellow at the Korea Economic Research Institute.
President Lee Myung-bak was elected partly on a pledge to transform state-run companies into slim and efficient private entities.
Some 305 public agencies, including the Korea Electric Power Corp., Korea Gas Corp., Korea Water Resources Corp. and the National Health Insurance Corp., were initially targeted for the massive shake-up.
The president's major turnaround, however, now exempts these firms from spin-off. Now only 50-60 of the 305 public firms will undergo mergers or privatization.
``It's good that the government is starting in phases, but it shouldn't wait too long to get to the public utility firms,'' said Kim, calling many of these agencies bloated and inefficient.
Lee Soo-il of the Korea Development Institute agreed, saying there may be price fluctuations at first, but the shift will benefit taxpayers over the long run.
When providers are in the red for supplying utilities at excessively cheap cost, they make up for their losses with tax money, Lee said.
``Cheap utility costs cause people to waste electricity, water and gas, but in the end, people end up paying for it through taxes,'' he said. ``This is no good for individuals and the country's energy resources.''
One analyst at the Korea Economist Institute, who asked not to be named, said the long monopolized electricity industry is in ``desperate need of competition.''
Researcher Kim said precedents here demonstrate that privatization can work with the proper safeguards, citing the success of Korea Telecom and Korea Heavy Industries despite strong opposition at first.
``A wise plan goes far beyond ideology, and we can see from examples in the West that ideology-based attempts end in failure,'' Kim said, adding the government should study the wide range of trial and error overseas to customize a Korea-specific plan.