What is privatization?
   Privatizing public enterprises can have many different meanings, but it generally means the sale of stocks in public companies to private enterprises to be managed by them. In the past, facilities that lagged behind could be significantly improved thanks to national ownership as public firms. People started to support privatization of these public enterprises, however, due to many problems, such as high-handed personnel administration, inefficiency, and other problems of monopoly. This situation was not only the case for the Korean government, but was the same in the United Kingdom in the late 1970s, and also in France in the 1980s.
   The Korean government tried to place public companies under private management from the 1950s. There were five attempts to privatize public enterprises up to the Kim Dae-jung government. None of them were completed fully, however, and there was a ten-year vacuum until President Lee Myung-bak brought up the issue again. “Privatization is not easy to implement. It is more difficult than reorganization of government. This is probably the reason why there has been a ten year vacuum,” said M. Jae Moon (Prof., Dept. of Public Admin.). From the beginning of 2008, Lee Myung-bak’s government has tried to promote its privatization plan. The Lee government is announcing the plans step-by-step. Before the plans take place, however, the government needs to have a clear concept, and people need to be provided with thorough information to decide whether this approach is beneficial for Korea and its people.

Positive effects of privatization
   Loose management and inefficiency are the most serious problems for public enterprises. There are also many exceptional and lax rules for public companies in investment, production, marketing, and organization that give them preferential treatment. Moreover, the organization of public enterprises has become unnecessarily complex. The organizations are very bureaucratic and have no flexibility. This brings about corruption in public firms. “Boards of directors in public enterprises usually get appointed by orders from the government. This has negative effects on the public enterprises’ competitiveness, for these appointed people may not have the right abilities to run the enterprises,” said Yang Hyuck-seung (Prof., Dept. of Business Admin.). When privatization takes place, it is likely to solve the above mentioned problems of public firms since strict hierarchical relationships will disappear.
This is an age of ever-increasing competition, and competitiveness is especially important when Korean firms compete internationally. If the government’s privatization plan is enacted, then competition will be introduced and this will help public enterprises improve their efficiency. One of the successful examples of privatization is the company KT (Korea Telecom). In 2002, KT was privatized, and last year the enterprise made profits of 11.9 trillion won. KT provides super-high speed Internet services, wireless services, and was the first to make commercial use of WIBRO services. 

Risks of privatization
   It seems that by public enterprises being privatized, many existing problems of public corporations will disappear. Even though some of the problems will vanish, however, it could create other problems that will significantly affect the Korean economy.
   Since the main goal of private enterprises is to make profits, service prices will be raised. “For public utilities, such as water and electricity, they cannot depend on the free market mechanism. The prices will be raised, and these will become a burden for citizens,” argues Prof. Yang. Also, according to one of the members of the Citizens' Coalition for Economic Justice, “Public utilities are difficult to entrust full power to as private enterprises. Since the main goal for private enterprises is pursuit of profits, those enterprises will put in a rigged bid and manipulate prices. For example, the Thatcher government (in the UK) tried to privatize nationalized utilities; however, the prices of those services skyrocketed.”
   Public enterprises are conventionally called the job given by God in Korea. This is because those who work in public enterprises hardly have a chance of getting fired. However, when these public firms come under private management, there will be a major organizational reorganization. Due to this, employees will feel employment insecurity. This is detrimental to our society’s economic growth, because when people do not feel safe in their jobs, it leads to decreased consumption and thus production.
  When the government sells off the public enterprises’ stocks, the supply of shares in the stock market will suddenly increase. When the supply increases, the price goes down, and this could cause stagnation. For example, in 1988, when privatization of what is now the Pohang Iron and Steel Company (POSCO) and the Korea Electric Power Corporation (KEPCO) took place, stagnation happened, and the positive effect of privatization were reduced.
These major problems are most likely to happen when the public enterprises are converted into private businesses. There are some suitable countermeasures to overcome these problems, however.

To overcome the risks
   The problem of price increases could be solved when the efficiency in management of enterprises increases and they make more profits. When enterprises make more profits then there is no need to raise the charges. If price increases occur, though, the government should restrict the rate of service price hikes. The government should institute regulations for the privatized enterprises to provide a minimum standard in services and charges. This should be done by the government creating a comprehensive regulatory framework for private businesses that have taken over public corporations.
   If the new private owners have to reduce their employees, there should not be a sudden decrease. Guaranteeing employment for a certain period after privatization and settling employees’ wages to an agreeable annual rate may help, people to feel more secure; the Korean economy would have more chance not to be disturbed since workers are both producers and potential consumers.
   To broaden ownership of these firms, the government should sell the public enterprises by the Kookminjoo method. Then, the concentration of ownership by large corporations will decrease. The Kookminjoo method is supposed to disperse the stocks indiscriminately to all social classes, and have citizens as stockholders when privatization takes place. When the sell-off of POSCO shares took place, this Kookminjoo method was introduced. Another way to overcome the danger of concentrated ownership is to form a consortium of various enterprises. Moreover, to avoid stock stagnation, the government should try to provide a variety of solutions to minimize the burden for stock markets. For example, floatation of convertible stocks and changing those to unconvertible stocks as time goes by will help reduce the risks for stock markets. It is necessary to broaden the supply and demand for stocks and minimize the shock that the stock market might receive.

Where is privatization heading?
   Privatization plans represent a major change for many different parts of our society. They could bring positive effects, but they could also be harmful. “To have a successful political measure, there are three prerequisites. First, there needs to be a certain amount of support from the citizens of the nation. Second, the surrounding relations for interests on the policy need to be settled. Last, the timing and other factors have to be in order for the government to promote the policy,” said Moon. According to him, for the privatization plan, only one of these prerequisites is currently fulfilled: the first. As we can see in several areas, the irregularities of public enterprises have always been a serious problem in our society. It is not yet certain if it is the right time to privatize the public enterprises for only those reasons, while it could be a risky policy. Privatization could bring about successful results; however, it could also lead to a disaster for our society. Before privatizing public enterprises, there needs to be a thorough analysis and consultation of public opinion.