Major Overhaul for 20% of Public Institutions: 109 to Be Consolidated, Five Power Companies to Merge Into One

The public institution function reform plan announced on September 3 focuses on the merger and reorganization of 109 public institutions. Out of the total 524 public institutions (including those not yet officially designated) subject to review, the plan details strategic restructuring for 15 core institutions, such as the five major power generation companies, integration of 11 similar or overlapping organizations, and consolidation of 83 subsidiaries and small-scale institutions. The public institutions subject to merger and reorganization represent about 20% of all such organizations.

Prime Minister Han Sung-sook is speaking at a press conference on the relocation of administrative and public institutions and the reform of public institution functions, held on September 3 at the Government Complex Seoul in Jongno-gu, Seoul. Attending the conference, from the left, are Yoon Ho-jung, Minister of the Ministry of the Interior and Safety; Kim Yoon-duk, Minister of the Ministry of Land, Infrastructure, and Transport; and Heo Jang, Deputy Minister of the Ministry of Economy and Finance. September 3, 2026 Photo by Jo Yongjun

Large-Scale Mergers in Power Generation, Energy, and Ports

As previously anticipated, this reform measure includes a major plan to merge the five state-run power generation companies into a single company tentatively named Korea Power Generation. Four regional port authorities—Busan, Incheon, Ulsan, and Yeosu-Gwangyang—will be consolidated into a single entity, tentatively named Korea Port Authority, despite having similar functions but being scattered across different regions. Korea National Oil Corporation and Korea Gas Corporation will be merged, with oil stockpiling and limited oil exploration functions of the oil corporation to be transferred to the new integrated entity. Korea Coal Corporation will secure the necessary funds for debt settlement and promptly proceed with liquidation. Five subsidiaries of Korea Railroad Corporation—KORAIL Retail, KORAIL Tourism Development, KORAIL Networks, KORAIL Tech, and KORAIL Logistics—will be merged according to three areas: customer service, distribution/logistics, and maintenance. These subsidiaries have faced criticism for operational inefficiency due to their divided responsibilities in commercial facilities within train stations, train crews, ticketing, and cleaning.

For Korea Land & Housing Corporation (LH), land development and housing construction functions will be separated to form a new entity tentatively named the Housing and Urban Development Corporation, while the housing welfare and asset reserve functions will be transferred to another new entity, tentatively called the Housing and Urban Asset Corporation.

The long-discussed integration of Incheon International Airport Corporation, Korea Airports Corporation, and the Gadukdo New Airport Construction Corporation has ultimately not been realized. Instead, a plan will be drawn up to revitalize 14 local airports for balanced growth of Incheon and regional airports, and progress will be monitored to potentially revisit the integration discussion later. To support this, an organization tentatively called the Airport Strategy Council will be formed to develop and implement innovative measures for local airport development, while aviation security functions will be strengthened through adjustment and consolidation of related work.

Eleven public institutions in sectors with overlapping functions will be merged. Korea Broadcast Advertising Corporation and the Korea Foundation for Media and Content will be merged into a new tentatively named organization, the Korea Broadcasting and Media Communications Agency. The Korea Labor Foundation and the Korea Employment and Labor Education Institute will become the Labor-Management Advancement and Education Foundation, and the Daegu-Gyeongbuk Advanced Medical Innovation Foundation will be merged with the Osong Advanced Medical Innovation Foundation to form the Advanced Medical Industry Promotion Foundation.

The Korea Statistical Information Service and the Korea Statistical Promotion Agency, both under the Ministry of Data and Statistics, will also be merged. These institutions were previously highlighted by the president in December of last year as examples of government-created entities disguised as non-governmental organizations for concealment purposes.

83 Subsidiaries and Small-Scale Institutions to Be Restructured

If subsidiaries display strong functional connectivity to their parent corporation, or if work similarities among subsidiaries are high, they will be merged to improve efficiency. For example, facility management subsidiaries owned by financial public institutions—including KAMCOFMC, YEWOLFMC, SanEun Biz, KEXIM Plus, and SHINBO Operations Management—will be consolidated into a new organization, tentatively named Policy Finance FMC. Customer service subsidiaries such as KAMCO CS and HF Partners will be merged into Policy Finance CS, shifting the management system from an institution-centric to a function-oriented model. Facility management subsidiaries under the Ministry of SMEs and Startups—KIbo Mate, KOSME Partners, and HanYuwon Partners—will be unified into the SME Venture Management Company (tentative name).

Small-scale institutions that operated inefficiently due to being outside the normal scope of oversight will be grouped together to enhance cost savings and operational efficiency. The Food Life Safety Management Institute and the Food Safety Information Institute will be merged into the Food Safety Policy Development Institute, while the Construction Industry Information Institute and the Construction Technology Education Institute will be consolidated within the Korea Construction Industry Promotion Institute. The Spatial Information Industry Promotion Institute and the Spatial Information Quality Management Institute will be merged to form the Spatial Information Promotion Institute, and the National Gugak Center and the Foundation for Traditional Performing Arts Promotion will become the Gugak Culture Industry Promotion Institute.

Additionally, in the case of advancement agencies, the Korea Intelligent Information Society Agency and the Korea Data Industry Promotion Agency will be merged into the Korea Intelligent Information Society Promotion Institute, while the Korea Patent Technology Institute will be absorbed into the Korea Patent Information Institute. The Korea Broadcast Advertising Corporation, the Korea Foundation for Media and Content, and the newly launched Korea Broadcasting and Media Communications Agency (tentative name) will also merge.

Function Reform to Be Formalized Through Legal Revisions... Employment Succession Guaranteed for Merged Employees

The announced plan will proceed through ministry-level public forums followed by legislative revision. The Ministry of Economy and Finance stated, "Each ministry will promptly develop concrete reform measures for the functions of its respective institutions and pursue functional reforms of public organizations without delay, holding meetings of the Public Institution Management Committee as needed to timely submit and approve relevant reform plans from each ministry."

Given the high likelihood of backlash from labor unions and communities where public institutions are located, the government anticipates some challenges in implementation. After the functional restructuring of public institutions, the government plans to review support measures including incentives to ensure that affected employees' existing labor conditions are maintained as much as possible. Employment succession of staff at merged organizations will be guaranteed, except for executives, and, depending on the level of welfare at each institution and the reform timeline, temporary lump-sum allowances and increased limits on selective welfare benefits will be considered. A government official stated, "We will reflect management evaluation incentives for institutions subject to the function reform in future management evaluation guidelines."

This content was produced with the assistance of AI translation services.