The government plans to reduce the number of public institutions and subsidiaries by 109. The five major power companies will be merged into one entity, while the Korea Land and Housing Corporation (LH) will be split into two separate organizations focusing on development projects and housing welfare. This restructuring aims to consolidate functions and personnel to enhance investment capacity and reduce redundant operational costs.
On September 3, the government announced the "Public Institution Function Reform Promotion Plan" following the 11th meeting of the Public Institution Operation Committee.
According to the plan, the reduction will include 15 strategic structural reforms, 11 consolidations of similar and overlapping functions, and the integration of 83 subsidiaries and small institutions. The reform will target not only public institutions but also subsidiaries and those designated for public institution status.
◇ Consolidating Renewable Energy Investment Capacity; Coal Corporation to Liquidate After Debt Settlement
The five power companies, including South East, Central, West, South, and East Power, will be merged under the provisional name "Korea Power." This consolidation aims to improve financial structure, enhance investment capacity, and increase profitability through joint purchasing of fuel and maintenance materials, as well as coordination of overlapping tasks.
The merged entity will establish a Renewable Energy Headquarters to oversee large projects like offshore wind farms and a Just Transition Headquarters to manage the phase-out of coal power. Plans are also in place to create three to four regional renewable energy offices to promote solar and onshore wind projects.
The Korea National Oil Corporation and the Korea Gas Corporation will be combined into a single entity called "Energy Resources Corporation." This merger aims to integrate strategies for the development, storage, and supply of oil and natural gas, enhancing negotiation power with oil-producing countries and global energy firms. Some functions related to oil storage and exploration will be transferred to the new corporation, while distribution improvements will be handled by the Korea Oil Management Corporation.
The Korea Coal Corporation, which has closed all its mines, will proceed with liquidation. As of the end of last year, the corporation had debts amounting to 2.59 trillion won, incurring over 75 billion won in annual interest costs without any separate business activities. The government plans to secure funds for debt resolution through consultations with relevant ministries and will amend related laws to facilitate the liquidation.
The four port authorities in Busan, Incheon, Ulsan, and Yeosu-Gwangyang will merge into a single entity called "Korea Port Authority." This consolidation will streamline policy and planning functions, transforming existing authorities into four regional branches to carry out specialized projects. The goal is to reduce excessive competition among ports and enhance international competitiveness through joint overseas initiatives.
◇ Utilizing Development Profits for Housing Welfare; Streamlining High-Speed Rail Reservations and Safety Management
LH will be divided into two entities: a provisional "Housing and Urban Development Corporation" responsible for land development and housing construction, and a "Housing and Urban Asset Corporation" focused on housing welfare and asset management. This separation aims to improve the speed of housing supply and the stability of rental housing operations by distinguishing between development projects, which require agility and financial performance, and housing welfare, which emphasizes public service.
The structure will maintain the use of development profits for housing welfare. A portion of the profits from the development corporation will be deposited into a separate account within the Housing and Urban Fund, which will then provide funding to the asset corporation. The Ministry of Land, Infrastructure, and Transport will announce specific organizational restructuring plans through a separate "LH Reform Plan."
Korea Railroad Corporation (KORAIL) and SR will merge into KORAIL to unify the high-speed rail operation system. This integration will streamline train operation schedules, reservation systems, maintenance, and safety management, while also expanding seat availability and improving fare and mileage systems.
The decision on whether to merge Incheon International Airport Corporation and Korea Airports Corporation will be re-evaluated after implementing measures to revitalize local airports. A provisional "Airport Strategy Council" will be formed to develop specialized strategies and financial improvement plans for each local airport, with progress being monitored. Security operations of the two airport corporations will be separated and consolidated into a specialized aviation security agency.
◇ Consolidating Services from Small Business Support to Overseas Offices
Institutions performing similar and overlapping functions will also be merged. The Korea Small Business and Startups Agency and the Public Home Shopping Corporation will combine into a provisional "Small Business Marketing Promotion Corporation" to streamline support from product discovery to consulting, sales, and performance management.
The Labor-Management Development Foundation and the Korea Employment and Labor Education Institute will merge into a provisional "Labor-Management Development Education Foundation." The Daegu-Gyeongbuk Advanced Medical Industry Promotion Foundation and the Osong Advanced Medical Industry Promotion Foundation will also be consolidated to enhance the joint use of research facilities and support for commercialization.
The restructuring will reduce 83 subsidiaries and small institutions. Subsidiaries closely linked to the parent company will be absorbed, while those performing similar tasks will be integrated based on function. For example, seven subsidiaries of financial public institutions responsible for facility and customer management will be merged into provisional entities called "Policy Finance FMC" and "Policy Finance CS."
Exhibition and viewing institutions, such as museums and science centers, will be integrated at the ministry level by sector, including culture, science, marine, land, and agriculture. A cross-ministerial consultative body will be established centered around the National Museum of Korea to coordinate exhibition planning, personnel training, and the development of integrated platforms and brands.
The "K-Maroo" initiative will also expand to consolidate public institution offices scattered overseas. Major cities with five or more overseas offices will be targeted to allow businesses and expatriates to receive support from multiple agencies in one location, with information about office locations and key functions made available through the AliO platform.
Employees of merged institutions, excluding executives, will be guaranteed job security. The government will implement a compensation system to ensure that treatment does not decline before and after the merger, and will consider increasing fixed allowances and optional welfare limits based on the welfare levels of each institution and the restructuring timeline.
The government plans to develop specific institutional reform plans for each ministry and present them to the Public Institution Operation Committee. It will consult with the National Assembly on related legal amendments and communicate with local governments on matters involving regional stakeholders. Discussions will also be held with labor unions of relevant ministries and individual institutions.
* This article has been translated by AI.
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