[Reporter's Notebook] Repeated Election Pledges to Relocate Private Companies

"Candidate Lee Jaemyung's statement that HMM employees agreed to the relocation to Busan is not true. There has not even been a discussion, and most employees are opposed to the idea internally."

Lee Jaemyung, the presidential candidate of the Democratic Party of Korea, has announced a pledge to relocate HMM (formerly Hyundai Merchant Marine) to Busan together with the Ministry of Oceans and Fisheries. Since Korea Development Bank and Korea Ocean Business Corporation together hold more than 70% of HMM's shares, the plan is to use the government-owned stake as the basis for the relocation. Lee also claimed that employees had agreed to the move, but HMM clarified that there had been no external contact regarding this issue, nor had employees been consulted for their opinions, which has turned the matter into a controversy.

An HMM container ship is docked at Busan Port. Photo by Jin-Hyung Kang aymsdream@

This is not the first time the relocation of HMM to Busan has been proposed as an election pledge. In the past, not only during general and local elections, but also during the 20th presidential election, Lee included the attraction of HMM as one of his nine major pledges for Busan. However, the plan never materialized and remained merely a hope among local residents. This expectation is based on the belief that attracting the country's largest shipping company would revitalize the local economy and further strengthen Busan's image as a maritime city. It is true that HMM has made Busan Port its home port and has worked to coexist with the local community.

However, when deciding on corporate relocation, economic logic must take precedence over political considerations. The question arises as to whether the relocation is appropriate in terms of enhancing the company's competitiveness and reducing uncertainty, which is a major risk factor. Lee has made it clear that the relocation of Korea Development Bank to Busan, a pledge made by former President Yoon Sukyeol, is not possible. There were concerns that, due to its large asset size and significant role among public enterprises, Korea Development Bank's competitiveness could be weakened if relocated. The same concerns apply to HMM. Most employees and client shippers are based in the Seoul metropolitan area. Due to the nature of the shipping industry, companies operate where shippers are concentrated and manage logistics at ports across the country and around the world. This is especially true for global shipping companies like HMM.

In addition, HMM is a private company. Although Korea Development Bank and others currently hold a large share, its nature is fundamentally different from that of public enterprises whose main purpose is to provide public services. HMM is not designated as a public institution or public enterprise by the government. The company has simply come to its current state because public funds (such as perpetual bonds) were converted into shares during the shipping industry's downturn and management crisis in the Hyundai Merchant Marine era. During that time, Korea Development Bank also attempted to sell its stake. If HMM had found a new owner last year, this controversy would not have arisen.

There are many companies in Korea that have passed through the hands of Korea Development Bank. However, these companies have not all been regarded as public enterprises. While this could be seen as a political move to win votes in the Busan region, the proposed relocation of HMM to Busan could set a precedent, so greater caution is needed when making such pledges.