Review of State-run Firms
MPB Lists 13 state-run firms's performance records in 2004

The Ministry of Planning and Budget announced its performance review of 13 government-invested firms for 2004.
The Korea Electric Power Corp. (KEPCO) topped the list followed by KOTRA and the Korea Land Corp. The ministry, however, issued warnings to the Korea Highway Corp. and the Korea Mining Promotion Corp. for poor performance.
The ministry convened a meeting of the operation committee for government invested firms on June 20 chaired by Minister Byun Yang-kyun, which reviewed performance records of government-invested firms for 2004 to determine the range of performance related reimbursements for their employees including the decision not to pay performance bonuses for employees of the two firms that received warnings.
The review showed that management reform efforts have spread over all of the 13 state-run firms last year with the gap between top and poor firms narrowing from 21.8 points to 12.4 points with a huge improvement for firms rated poor last year.
By sectors, the review showed that achievement records for major targets and customer satisfaction, among others, have improved, but there were room for improvement in a number of sectors including productivity.
By firms, KEPCO, KOTRA and Korea land corporation have been able to improve their management results in a number of key areas such as reducing costs and management reform to elevate themselves as excellent firms on the list.
In the case of KEPCO, the utility firm got top places in the rankings in the areas of improved electricity bill payment and public projects, especially in customer satisfaction and clean card system introduction and others in the ethical management sectors. The giant utility firm, despite increases in the prices of oil and coal, has been able to record 8.8 percent in profit ratio through cost reduction while undergoing management reform.
KOTRA expanded its support to small and medium firms raising their export contract amount to $1.22 billion from $380 million. It also operated a joint logistics center for distribution of their goods in a bid to take care of problems for those firms. The state-run trade agency also helped in enticing foreign investment totaling $320 million over 59 cases for those small and medium firms.
Korea land corporation secured 10 million pyeong of land to help reduce the price of land for housing to be supplied to those small and medium firms, which stabilized the livelihood of the people, which in turn raised productivity and cut business expenses.
Particularly the three firms including Korea Mint Corp., Korea National Tourism Organization and the Korea Coal Corp., which were rated poor, have been able to improve their performance.
The Korea Mint Corp. has been able to push its 13th ranking to 6th by reducing its costs by innovating its procurement system and renovating its culture on labor-management relations. Korea Coal has been able to improve its performance by cutting costs, expanding the sale of coal from its inventory and lowering accident rates at its coalmines across the country improving it? ranking from 12th to 10th.
KNTO jumped from 11th to 9th by having performance bonus payments at the end of the year based on real performances of individual employees and introducing team systems in managing its affairs.
But Korea Highway Corp. has not been able to upgrade its operations. In addition KHC was unable to come up with policies to cope with changes in management environment including management of its finances and restructuring its systems. Korea Mining Promotion Corp. received a warning due to its failure to improve the return on its investment on natural resources exploration and managing its debts.
Performance bonuses for employees of well-rated firms received as high as 500 percent in performance bonuses, while those firms rated poor could only pay 200 percent performance bonuses, a difference of 300 percent.
Korea Highway Corp. and Korea Mining Promotion Corp., which were rated poor, will have to submit their recovery plans to the ministries in charge or to the Budget and Planning Ministry by the end of August and heads of those firms failed to receive year-end performance bonuses.
The Ministry of Planning and Budget plans to report its performance evaluation to President Roh and the National Assembly and hold an event in July to see that its evaluations are carried out by state-run organizations including the analysis on improvements and their direction following candid discussions. nw

Planning and Budget Minister Byun Yang-kyun.