The government explained that its plan announced on the third to consolidate public institutional investors is not aimed at simple cost reduction but is intended to proactively prepare for the AI (Artificial Intelligence) Daejeon Ring and complex crises.
Although consolidation was not conducted with local relocation in mind, the principle of "consolidate first, relocate later" was clearly established. The intent is that after all consolidations are completed, decisions on relocation can be made based on that foundation.
A Ministry of Economy and Finance official stated on the fourth regarding the purpose of this public institutional investor consolidation: "While improving inefficiency may be one goal, it was carried out within a newly changed policy environment," adding, "It is at the level of needing convergent and proactive reforms to respond to complex crises coexisting with the AI Daejeon Ring."
On the third, the government announced functional reforms under the slogan "Public Institutional Investor Diet 2026," including △Dynamic Game Changer, △Integrated Entities, △Efficient Player, and △Transparent System. While cost reduction is also a goal of public institutional investor consolidation, the primary objective is described as "Public Institutional Investor Daejeon Ring."
The Ministry of Economy and Finance explained that for small-scale institutional investors with fewer than 40 employees, personnel costs can be reduced by eliminating redundancies such as heads of institutions, planning and coordination offices, secretaries, and drivers.
However, regarding the basis for initial costs due to consolidation and future cost savings, the official stated: "Since the policy direction does not set cost reduction as its goal, no specific figures have been calculated." They added, "Immediately after yesterday's announcement, the relevant ministry has begun a detailed investigation into specific costs and actual conditions."
Meanwhile, the government decided to reduce 109 public institutional investors through △15 strategic structural reforms, △11 consolidations of similar or overlapping functions, and △83 mergers of subsidiaries and small-scale institutional investors.
The list of targets also includes 183 institutional investors that meet the criteria for designation as public institutions but have had their designation deferred. The government will reduce the total number of managed entities from 524 to 415 by cutting 109. The employees (including regular general staff and fixed-term contract workers) of these 109 institutional investors amount to approximately 120,000 people.
More than 80% of the targeted institutional investors require legislative amendments; those where such changes are unnecessary will immediately begin consolidation. For example, five power companies—Korea Southern Power Company, Korea Central Power Company, Korea Western Power Company, Korea Southern Power Company, and Korea Eastern Power Company—do not require legal amendments and can proceed with consolidation immediately.
Regarding the relocation of public institutional investors to local areas, a Ministry of Economy and Finance official stated: "The relationship between consolidation and relocation is clearly 'consolidate first, relocate later.'" They emphasized, "Consolidation must be decided first so that the identity of the institution becomes clear before the Ministry of Land, Infrastructure and Transport can determine whether relocation is necessary based on that. Consolidation was not conducted with any intention of future relocation."
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