[Q&A] Noh Hyung-wook "LH Organizational Restructuring to be Finalized by August... Discussing Carefully"

Government to Announce LH Innovation Plan on 7th
Reducing Workforce and Transferring Some Authority
Major Organizational Restructuring Plan of High Interest Excluded

Minister of Land, Infrastructure and Transport Noh Hyung-wook is holding a joint briefing with related ministries on the "Korea Land and Housing Corporation (LH) Innovation Plan" at the Government Seoul Office in Jongno-gu, Seoul on the 7th. Photo by Kim Hyun-min kimhyun81@

[Asia Economy Reporter Moon Jiwon] The government announced the 'Korea Land and Housing Corporation (LH) Innovation Plan' on the 7th. The innovation plan includes measures to streamline the bloated LH organization by drastically reducing functions and personnel, and establishing strong internal control mechanisms.

According to the innovation plan, the public land site investigation tasks will be transferred back to the Ministry of Land, Infrastructure and Transport (MOLIT), and LH will reduce its workforce by more than 20%. The number of employees subject to employment restrictions will be raised to around 500. All employees are fundamentally prohibited from acquiring land except for actual use purposes, and those who violate this will be excluded from promotion to senior positions.

However, the core 'organizational restructuring' content was excluded from today's announcement. Although this reform plan is a painful renewal for LH, it is criticized as a 'half measure' since it is not a 'dismantling'-level restructuring as initially expected. Minister of Land, Infrastructure and Transport, Noh Hyung-wook, said, "We plan to finalize the restructuring plan by August if possible, after going through an additional opinion-gathering process as quickly as possible."

Below are the key Q&A sessions with Minister Noh Hyung-wook and others following the announcement of the innovation plan.

- The Prime Minister predicted a dismantling-level LH organizational restructuring, but it was omitted from today's measures announcement. When will the final LH restructuring plan be confirmed?

▲ To conclude, we aim to finalize the restructuring plan by August if possible, after quickly conducting an additional opinion-gathering process, and to have the necessary legislative amendments or enactments discussed in this regular National Assembly session.

- Does the additional opinion-gathering related to organizational restructuring mean further consultations between the ruling party and the government?

▲ The ruling party and government agreed on the overall contents announced today, such as management innovation, establishing control mechanisms, and slimming down the organization. However, there was an opinion that it would be better to discuss more carefully about whether to restructure the organization into a parent and subsidiary model and how to classify functions. Therefore, we plan to finalize the plan through public hearings and consultations with opposition parties.

- If the LH site investigation function is transferred to MOLIT, will the previously proposed candidate sites be newly determined? Or will the existing candidates be selected up to the 2.4 Plan volume?

▲ The planned volumes already announced have been surveyed by LH. MOLIT will be responsible for new planned volumes going forward.

- If the public land site investigation task is transferred to MOLIT, which department will handle it? Will a new organization be created within MOLIT?

▲ MOLIT has an organization called the Public Housing Promotion Team. We plan to establish a Public Land Site Investigation Division within this team to take charge of the investigation tasks. The dedicated MOLIT team is planned to have about 20 members. It will be operated more efficiently compared to the current 113 LH personnel in charge.

- A question for the Vice Minister of Strategy and Finance. There was a statement about performance bonuses today. How many years back can performance bonuses be reclaimed? What specific procedures will be followed?

▲ (Ando Geol, 2nd Vice Minister of Strategy and Finance) The timing for reclaiming performance bonuses will be decided promptly after comprehensively reviewing laws related to public institution operations and investigation results. The reclamation procedure will involve consulting evaluation teams and expert institutions based on investigation results. Ultimately, the Public Institution Management Committee will deliberate and decide on the reclamation year and scale.

Minister of Land, Infrastructure and Transport Noh Hyung-wook is holding a joint briefing with related ministries on the Korea Land and Housing Corporation (LH) innovation plan at the Government Seoul Office in Jongno-gu, Seoul, on the 7th. From the left, Ahn Do-gul, 2nd Vice Minister of Strategy and Finance, Minister Noh, and Yoon Chang-ryeol, 2nd Vice Minister of the Office for Government Policy Coordination. Photo by Kim Hyun-min kimhyun81@

(End of Q&A with ministers and vice ministers. From now on, responses from Kang Seung-ju, Director of Fiscal Management at the Ministry of Strategy and Finance; Kim Eun-sang, Director of Public Policy at MOLIT; Kim Su-sang, Director of Housing and Land; and Kim Hyung-seok, Director of Land Policy)

- Based on the management performance confirmed so far, how many investee companies meet the criteria you presented, such as recording net losses for three consecutive years and thus need to have their shares disposed of?

▲ As of the end of 2020, there are 53 investee companies. 32 are in deficit. Looking at three consecutive years, 24 institutions have deficits.

- Even if the authority for public land site investigation is transferred to MOLIT, if LH handles the follow-up procedures, wouldn't LH still have access to undisclosed development information?

▲ The land speculation issue currently under scrutiny involved leaking undisclosed information in advance to gain financial benefits. Once a site is newly designated as land and announced by MOLIT, the subsequent procedures are unlikely to involve undisclosed information.

- Is there no issue of undisclosed information when MOLIT takes charge of public land site investigation tasks?

▲ Government officials' organizations are the most public in nature, so strong internal control mechanisms exist regarding this matter. Also, the property registration and prohibition on new land acquisitions planned for LH are expected to apply to MOLIT as well.

- Will the organizational restructuring plan be finally decided among the three options currently mentioned? If negative public opinion arises during the public hearing process, is it possible that the restructuring itself might not proceed?

▲ The three options are alternatives developed after extensive expert opinions and considerations. We expect various opinions to be expressed during public hearings centered on these three alternatives.

- The announced plan maintains the existing land site functions as they are. Will there be no future transfer of these functions to some local governments or separation of land supply functions?

▲ Currently, the housing supply part is important for stabilizing housing for the general public. Therefore, this part will be maintained as is. However, some local governments are showing considerable interest in land development. The role of local governments is expected to naturally expand gradually.