Restructuring
Based on Function

KNHC reorganizes its set-up by biz-types, not regions, to improve its operation

Korea National Housing Corp. has undergone restructuring of its organization for the first time in 45 years, the company said recently.
The company said the move was in line with its policy to boost the effectiveness of its operation and cope better with outside environment by changing its organization to be based on business types from function and job.
Based on that policy, the company has reorganized its head office make-up to six headquarters including reform, residential welfare housing, rental housing, municipal development, and municipal redevelopment headquarters, down from seven.
Six standing directors will take charge of each headquarters from planning stages to the completion of plans. KNHC is the first government-run companies to reshape its set up by business types, not by regions, the company said.
President Park Sei-hoem said the business system is needed by the company to effectively manage its limited personnel and to play the role of a public project developer. He said the public housing units built in the latter half of the 80s should be redeveloped because they are too small. He plans to draw up a master plan for the project to refurbish these permanent rental houses. The permanent rental houses were built beginning from the end of 1980 to be rented out to poor families. KNHC owns 140,000 units across the country, while 50,000 low-cost housing units belong to local governments.
He said those rental houses in such areas in Seoul as Kangnam Ward, Kangbuk Ward, and Kangseo Ward would command high prices when redeveloped because they are expensive areas with many luxury houses.
In the meantime, KNHC issued a statement denying the redevelopment plan, but acknowledging that it is being studied as a long-term project, not sure whether the company would decide to push the plan.
In the meantime, KNHC has decided to make public the cost of apartments it built and sold in the past five years located in 88 locations across the country, which will make possible to project apartments built by private builders during the same period.
KNHC said it has been working on the plan with outside public certified accountants to figure out the real costs and they will be made public during next month.
The company estimate some 73,700 apartment units built on public land from 2002 and until last year will be the subject of the public scrutiny. The costs to be revealed are the prices of land, construction expenses, indirect expenses, designing expenses, supervision costs, additional costs and extra expenses, among others.
For those apartments whose building permits were issued before March, 2005, will have their costs bunched up in three or four broad items because it is impossible to come up with exact costs for building material and other extra expenses.
The decision by KNHC to reveal the apartment construction costs is based on the Supreme Court ruling of June 1 on the suit filed against KNHC by buyers to make public the construction costs of apartments the company built in Pung-dong, Koyang city just outside of Seoul.
The move is likely to bring a great impact on the housing market because it is detailed going item by item, unlike the government action to reveal the costs of apartments. The costs will be broken down in details so that one can figure out easily the profit for the builders and private construction companies have been shaken up by the fact that their profits will be open to the public, which may lead the apartment buyers to instigate a class action suit to deflate bubbles in the apartment prices and return excess profits to the buyers.
The number of law suits hurled against KNHC total 23 apartments in 22 locations including Songsan in Uijongbu City, Dukjong, Yangju city, and Pudong, Koyang City, all prime locations near Seoul. nw

President Park Sei-heom of Korea National Housing Corp.