South Korea Unveils Major Restructuring Plan for State-Run Firms

By Kang Yoon-seung

SEOUL, Sept. 3 (Yonhap) -- The government said Thursday it will carry out a major restructuring of state-run firms, including mergers among energy suppliers, with the plan eventually reducing the number of state-run institutions by 109 while guaranteeing job security for existing workers.

The government unveiled the DIET initiative for state-run firms, aimed at responding to industrial transformation driven by artificial intelligence (AI) and demographic changes. DIET stands for dynamic game changers, integrated entities, efficient players and a transparent system.

The scheme will reduce the total number of state-run firms from 524 to 415.

"We aim to boldly overhaul around 20 percent of the existing state-run firms," Second Vice Finance Minister Huh Chang said during a briefing.

Under the plan, the country will merge and restructure five state-run power generators -- Korea South-East Power Co., Korea Midland Power Co., Korea Western Power Co., Korea Southern Power Co. and Korea East-West Power Co. -- into a single entity.

The government also plans to merge the Busan Port Authority, Incheon Port Authority, Ulsan Port Authority and Yeosu Gwangyang Port Authority into a single entity with four regional branches that will continue carrying out their existing roles.

The government will additionally consolidate the Korea National Oil Corp. and Korea Gas Corp. into a single company.

In contrast, the Korea Land & Housing Corp. will be split into two organizations, one responsible for land development and housing construction and the other for housing welfare.

"The separation is aimed at addressing inefficiencies caused by having a single organization simultaneously perform development functions, which prioritize speedy project implementation, and housing welfare functions, which emphasize the public interest," the government said.

It plans to strategically reallocate workers among state-run firms while consolidating those with similar or overlapping roles.

"We plan to guarantee workers' job security and ensure their wages and benefits do not deteriorate following the mergers," the government said. "We will also proactively prepare various support measures, including enhanced welfare programs and performance-based incentives."