By Lee Hyo-sik
The proposal to sell a stake of Incheon International Airport to low-income earners at discounted prices is reigniting disputes over privatizing Korea’s main gateway.
The government is favorable to the idea initiated by the ruling Grand National Party (GNP). It hopes the plan will win public support for the denationalization of the airport and win approval from the National Assembly.
Opposition parties and civic groups called a political tactic by the GNP to deceive the public and garner more votes in next year’s elections. They say the issuance of the so-called “citizen shares” will not improve the finances of low-income families, stressing that the airport should remain 100-percent state owned.
On Monday, GNP Chairman Hong Joon-pyo said the party will push ahead with a plan to sell a 49-percent stake to the public about 30 percent lower than market price.
“The public and particularly low-income earners should financially benefit from the sale of the state-owned enterprise. We believe the government will respond positively to our proposal,’’ Hong said.
As part of a government-wide effort initiated in July 2008 to advance hundreds of state-run enterprises, the Lee Myung-bak administration tried to sell off its stake in the airport. Negative public sentiment prevented this from happening.
In March 2010, the GNP initiated a revised bill governing the operation and management of the airport. It called for the sale of up to 49 percent of the government’s holdings to private investors, with foreign investors barred from securing more than a combined 30 percent.
However, the revised bill has been stalling in the Land, Transport and Maritime Affairs Committee for a year and a half. GNP lawmakers attempted to pass the bill on several occasions, but opposition parties remained adamantly against it.
The government expects the latest GNP proposal to push ahead the privatization drive of Incheon airport.
The Ministry of Land, Transport and Maritime Affairs, which oversees airports, said Tuesday that it will consider selling a 15-percent stake in Incheon airport, not 49 percent, at discounted prices to the public. The ministry is currently consulting with the Ministry of Strategy and Finance about how to proceed with the sale.
Ministry officials say that the revised bill pending at the assembly should first be passed to issue the citizen shares.
“The revision should get parliamentary approval to raise funds through the stake sale in order to make the airport more competitive and efficient. The airport should learn advanced operation and management know-how from the world’s top-class airports to become a true global aviation hub,’’ a ministry official said.
The official stressed Incheon airport still has a lot of room for improvement, even though it has been named the world’s best airport in service quality for six consecutive years.
Opposition parties and civic groups stand steadfast against the privatization of Incheon airport.
“The stake sale goes against public opinion and has no merit. It will not strengthen the competitiveness of the airport as the government claims, and could compromise national security. There is no reason whatsoever to privatize a blue-chip public firm like Incheon Airport,” Democratic Party floor leader Kim Jin-pyo said Wednesday.
Kim said issuing discounted shares to low-income families will not benefit them much and that the stakes will eventually be bought up by foreign investors.
“When POSCO and other state-owned firms were privatized in the early 1990s, the public bought its shares at a discount. But this failed to improve the financial condition of most households because share prices fell below the purchase price due to excessive numbers of shares circulating in the market,’’ the floor leader said.
He said by the time the share prices went up, the majority of shares in POSCO and other privatized public companies were owned by foreign investors, stressing that it won’t be much different for Incheon airport.
Ko Kye-hyun, secretary general of the Citizens’ Coalition for Economic Justice, also said the government should not privatize Incheon airport. He added it is one of the world’s top airports, operating efficiently and generating huge profits.
“GNP chairman Hong’s proposal to sell the 49-percent stake to the public is a mere political show. Low-income earners do not have money to buy the shares to begin with. As foretold, most of the 49-percent stake will end up in the hands of foreign and institutional investors,’’ Ko said.
He also said if the airport is privatized, it will become more expensive for the public to use as its monopolistic position will result in higher fees and other costs.
The Citizens’ Coalition for Economic Justice also issued a statement Friday, calling for the government to immediately stop its move to sell.
“There are no reasonable grounds for the privatization plan,” the coalition stated. “It’s a scam to win more votes ahead of the general and presidential elections next year. The government and GNP should not rush to privatize Incheon airport without a consensus.”