Korean public firms' debts near 400 trillion won

The amount of debts owed by 28 South Korean public firms neared that of national debts last year, spawning concerns that their massive debts might pose a threat to the country's fiscal soundness.

Their combined debts reached 392.9 trillion won (US$351 billion) at the end of 2012, up 8.7 percent from 361.4 trillion won a year earlier.

The figure came close to national debts reaching 445.2 trillion won.

As a result, the combined debt ratio of those public corporations soared from 174.7 percent to 190.1 percent during the period, according to the statistics.

"The public enterprises' debts resulted from the government's policy projects and regulations on charges. They are a co-product by the government, public firms and citizens," said Park Jin, chief of the Public Enterprises Research Center at the Korea Institute of Public Finance.

Park called for steps to prevent public enterprises from expanding their business scope, and asked people to embrace for a hike of charges.

The public firms include Korea Land & Housing Corporation, Korea Electricity Power Corporation and Korea Gas Corporation.

By Josephine Liu Yan Yee

AJP