United Nations Public Service Awards Case Studies

Korea is in fact well known for its strength in Information Technology.
It has great information infrastructure – 73.5% of Internet usage rate (ranked at top 5th in the world), 26.4% of high speed Internet service subscription rate (ranked at 4th) and 5.5million Internet host (ranked at 3rd).
Fully equipped with advanced information technology, Korean government is getting down to e-Government project which is a measure for government innovation, public services improvement and cultivating its competitiveness.
E-government allows Korean government to provide its public services to citizens and corporates in speedy and effective manner while innovating its own administration. It also invites Korean citizens to easily access and participate in policy-making process.

Korea Asset Management Corporation (KAMCO), a state-owned company whose specialties lie in managing and disposal of government assets, has actively taken part of e-government policy by independently developing an online asset disposal system called ‘OnBid’.

This result of spontaneous innovation has spread out its role throughout whole nation’s public sector and become the integrated channel for public asset trade.
KAMCO may be a small state-owned company in Korea. However, OnBid, established by KAMCO, is a nationally accepted system with great significance, utilized by most of government entities and a great number of citizens.

We apply OnBid case in hope that it can be a great exemplar to other nations for accomplishing their own unified public asset trade system.

What is the initiative about? (the solution)
OnBid is an online asset disposal system that provides real-time bidding information for all the assets on public auction, which are from public institutions, such as KAMCO itself. And the bidders can participate the bidding without physically being at the auction court. KAMCO commenced the establishment of OnBid in November 2001. We make a thorough BPR (Business Process Reengineering) to simplify unnecessary procedures and to unify different procedures in public auction, based on the characteristics of different asset types. Then, we set the trial period in which we provided public auction services on and offline both in order to educate the bidders gradually. For those who are not familiar with Internet usage and those with poor Internet infrastructure, we introduced various customer online supports such as “Proxy Bidding System”, “Virtual Bidding Site” and “Remote Control Support”. We also set up “OnBid Center” at headquarter in Seoul and “Digital Room and OnBid Helpers” in every branch. For customers’ complaints, we opened a survey section to gather customer needs and demands. Furthermore, we provide customized information through e-mails and SMS (Short Message Service) to mobile phones. The nature of real estates business requires site visiting so we provide detailed information on the auction items as we provided links to online appraisals, photographs, electronic locators and land information of declared value by public institutions. For a safety device, escrow service was introduced for online payment, and, for transaction accountability, official authentication and personal identification were requested in verification process. By using OnBid service, public institutions, including KAMCO, could reduce significant amount of their resources and administrative costs. For bidders, online bidding allowed them to save time and energy for unnecessary procedures. More chances to learn the Internet were given to middle-aged or older bidders. Providing real time bidding information increased the accountability of public administration. OnBid also make direct channel for hearing public opinions. OnBid has transformed the public auction system from seller-oriented to buyer-oriented, for it provides transparent bidding information and user-friendly atmosphere. As OnBid attracts more public to the public auction, the bid prices had increased and the government can collect more financial resources. OnBid bears social responsibility as a public entity. “OnBid Mileage Donation System” has been launched to contribute to the unfortunates in the society. The mileage is given to bidders who are participated in bidding via OnBid and the bidders can donate it back to OnBid. The donated mileages are contributed yearly to charities. KAMCO did not limit OnBid to internal use only, but expanded its service to other public entities. We have promoted OnBid through official memos and e-mails in order to induce major public institutions to use OnBid. For the utilization of OnBid by public institutions, government imposed them to use it in auctioning their assets, by amending the National Property Act and the Public Property Act. KAMCO is now trying to share its knowledge and experience in establishing one-stop online transaction service to dispose assets in public sectors, as well as in private sectors.

Who proposed the solution, who implemented it and who were the stakeholders?
November, 2001 :Commenced the establishment of OnBid October 1, 2002 :Opened OnBid site December 6, 2002 :Appointed as Information Processing Installation by the Ministry of Finance and Economy January 2003 :Started operating online and off-line bidding concurrently. August 20, 2003 :Register OnBid Patent (Bidding System and the method of bidding on the bidding system) January 5, 2004 :Electronic letter of guarantees for bid deposits became available (linked to Seoul Guarantee Insurance Corporation) January, 2004 :Chosen as 2003 successful example in E-business by Ministry of Commerce, Industry and Energy August, 2004 :Issued official authentication for public institutions October, 2004 :Discontinued on-site bidding at KAMCO and started exclusive online bidding January 1, 2005 :Mandated to use OnBid by ‘National Property Act’ in case of sale of public properties July 1, 2005 :Mandated to use OnBid by ‘National Property Act’ in case of leasing public properties October 31, 2005 :Acquired e-Privacy mark by the Ministry of Information and Communication November 10, 2005 :Awarded with the Prime Minister’s Prize at the 9th annual Korea e-Business Awards, by the Ministry of Commerce, Industry and Energy December 30, 2005 :Acquired I-Safe mark by the Ministry of Information and Communication January 1, 2006 :Mandated to use OnBid by ‘Public Property Act’ in case of sale or lease of public properties January 2, 2006 :Appointed as Information Processing Installation by the Ministry of Government Administration and Home Affairs June, 2006 :Performance reached to 3 billion dollars in online bidding transactions December, 2006 :The information of idle state-owned-properties under the Ministry of Finance and Economy (19,000 parcels) became available to the public through OnBid.

Describe how and when the initiative was implemented by answering these questions
a. What were the strategies used to implement the initiative? In no more than 500 words, provide a summary of the main objectives and strategies of the initiative, how they were established and by whom.
Since 1962, KAMCO has specialized in property disposal of assets from financial institutions, public sale of seized properties and management of national properties. KAMCO used various ways to manage different kinds of assets efficiently such as leasing properties for rental incomes, developing them to increase the asset value or simply selling them to the public. Lease or sale of properties was done through public auction. KAMCO had maintained onsite public auction, which was held at KAMCO’s public auction center for 40 years. The process was as follows; we notified the public of upcoming auctions in newspapers and bulletin board of corporation at least twice per week. Bidders attend the venue on the day of tender. After calling for bids, KAMCO received written bidding prices from bidders. Then, we classified bids by items to select winning bidders, and returned bid bonds to unaccepted bidders. There were many problems and inefficiencies in this traditional bidding system. In operation, it had many deficiencies such as poor allocation of human resources, waste of costs and time from offline business transactions. Because the data were managed manually and the auction processes for different asset types were not standardized, needs for Enterprise Reengineering Process (ERP) had increased greatly. On the other hand, bidders had difficulties in many parts of the public auction process, for instance, searching information for relevant public auction. Attending the auction on the fixed day at the fixed venue made it very inconvenient for them. Plus, there were always security issues because generally the bidders had to have a large amount of cash for bid bond. As Information Technology advanced, demands for wider range of public information, better quality service and transparency in the auction process had increased equally. However, the process of public auctions was not unified due to the divergence of systems among institutions, national and local institutions, educational institutions and public enterprises, and due to the different characteristics of properties, national and local government properties, tax delinquent properties etc. The bidding system of public institutions also caused troubles and they had been faced the challenges to meet users’ expectations. The assets public institutions were disposing were various such as real estate, personal estate, vehicles, stocks and bonds, but the majority was real estate. E-commerce market, with IT industry, has grown faster than ever since 2000. Nevertheless, real estate market has not been benefited much from the new revolution. It had slow application of information technology, and only reached the level of simple information services through Internet. The reason why online business for real estates was not fully developed was that the nature of real estates business requires site visiting and large amount of money is involved most of the time. Therefore, it was not easy to develop a safe device for online transactions and trusts between buyers and sellers. In recognition of all these needs and necessities, and based on its 40 years of experiences in public auction and asset managements, KAMCO had developed an innovative online public auction system, OnBid.

b. What were the key development and implementation steps and the chronology? No more than 500 words
Since the late 1990s, Korea was paving the way for e-government in terms of procurement, patents, national tax and customs service using information technology. In 2001, the government got down to e-government project focused on 11 essential tasks including national electronic procurement system, called Government-to-Business (G2B) project and citizen-friendly public services, called Government-for-Citizen (G4C). E-government means government working system innovation and using information technology to provide high quality public services in order to enhance effectiveness and productivity. KAMCO selected public auction as most suited item to positively take a part of e-government policy. In 2001, KAMCO commenced its research for establishing an online bidding system. First, the market situation in private sector was to be examined. We gathered and analyzed data from various Internet retailers. We also visited Internet portals specialized in real estate. After considering KAMCO’s know-how and its business environment, business consultants in the field evaluated and agreed that online bidding system would be highly competitive. To begin with, full analysis of on-site public auctions had to be preceded. We made a thorough Business Process Reengineering (BPR) to simplify unnecessary procedures and to unify each different management schemes classified by properties. OnBid is a new paradigm for public auction using information technology to meet the changes in business environments. Specialized in government asset disposals, KAMCO has spontaneously innovated and played a leading role in online disposal business. While KAMCO was developing the system, the possibility to apply OnBid to all public institutions in the Republic of Korea was reviewed. Later on, under the project name 「Public Auction e-Marketplace Project」, OnBid was authorized as “Public Asset Sales Information Processing Measure” by the Ministry of Finance and Economy in 2002. Finally OnBid became a open marketplace utilized by all public institutions and citizens. The first objective of OnBid is to efficiently improve process of public auction through online service. It makes possible to increase business productivity by reducing costs and human recourses. It also provides more convenient public services to citizens. The second objective is to contribute to social development as a state owned company. We introduced a new concept that real estates can be traded via Internet and made it possible in reality.

c. What were the main obstacles encountered? How were they overcome? No more than 500 words
As the public is the user of services provided by OnBid, it is critical that normal people can use it easily and conveniently. No matter how well a system developed, if the public doesn’t use it, there is no option but to turn it off. To avoid this situation, KAMCO performed interviews and questionnaires to offline bidders. As a result of the survey, unexpectedly 70% of participants gave very positive responses to online bidding. Majority of public auction participants ages 40 to 50. This means most of them are not very familiar with Internet. A sudden change from offline to online bidding can bring public confusion and reverse effect in adaptation of a new system. In January 2003, KAMCO decided to run online and offline bidding system for in parallel in hope of smooth settlement of online bidding system and the enlargement of opportunities for bidders. Further, before starting exclusive online bidding, KAMCO introduced “Proxy Bidding System” for unskilled Internet users. In this system, bidders can register their proxy on OnBid, and the proxy can participate in bidding on behalf of the original bidders. To support unskilled Internet users and the citizens with poor infrastructure, we established “Digital Room” at the headquarter office in Seoul and in every branches throughout the nation. We also provided “OnBid Helpers” to assist the public using OnBid. KAMCO makes weekly presentation to the public to educate how to use OnBid. Public auction advisory consults bidders about the auction and auction items. Online consultation system is greatly extended. We installed “Virtual Bidding Site” which is the same as real OnBid site, and bidders can have an experience to bid just like bidding through OnBid. To help beginners, KAMCO planned “Public Sale Starters’ Section” on OnBid homepage and published online consultation press kit. It also comes with “How-To-Use-OnBid Simulation”. We further introduced “Remote Control Support” where counselors can see the computer screen of bidders and help bidders to participate in the auction in remote place, under consents of the bidders. In regard to system management, we designated the last day of each month as “Information Implementation Day” and check all information thoroughly. To strengthen stability of OnBid, monitoring and controlling system from outside was introduced for the off-duty hours and the access controlling system to important database was executed for data protection. Many institutions initially recognized the validity of online processing in property disposal, but most of them waited and observed until the other institutions successfully dispose their properties. We visited major institutions which have influential role to other governmental institutions to introduce OnBid. We had road show for the government officials presenting benefits of using OnBid, sending official memos and e-mails and finally gained more and more public institutions. OnBid has provided the public with wide range of information about the properties on public sale to compromise the nature of traditional real estate purchase. Detailed information such as photos, location map, cadastral map, online appraisals were offered. In addition, current market trend information was added in connection with real estate portal sites.

d. What resources were used for the initiative and what were its key benefits? In no more than 500 words, specify what were the financial, technical and human resources’ costs associated with this initiative. Describe how resources were mobilized
OnBid, a bidding system, awarded a patent from the Korean Intellectual Property Office and its originality is admitted in terms of on-site bidding and system lease. When the first online bidding was adopted in Jan. 2003, the Internet bidding ratio was 16% or so, however, more Internet bidding ratio than on-site incurred since second quarter of 2004 as a result of sustainable public relations. When the last month of disusing on-site public auction, the Internet bidding ratio recorded to 58% and it was regarded that it is soft landed to be success. On the basis of successful online bidding system, KAMCO abrogated on-site public auction and began online bidding since October 2004. There is no need for the bidder to attend the bidding place and one-stop service is provided from submission of tender to guaranty money and its reimbursement. Due to its easy access and convenient bidding process, the participants in the bidding expand from 20s to 70s. As soon as bid is finished, bid bond from successful bidder was sent to seller’s account and to refund account for the failed bidders. Bidders can also choose the method of payment for the sake of security either electronic letter of guarantees or cash. KAMCO also executed an agreement with KEB (Korea Exchange Bank) on the payment system for safety. KAMCO is to deposit bid bond in temporary account (Escrow) until the bid is completed. OnBid approves membership application by confirming individuals’ identification with credit information service companies and by documents submission for legal entities. Electronic authentication issued by certified institution should be used for personal identification. By using OnBid system, the auction system was standardized and the business efficiency has been improved, as computerized management was possible. And, the procedure of bidding has been more transparent and fair as it is systematically not allowed for the KAMCO staff to participate the bidding. The administration cost was reduced to 60% of inputted personnel and 73% of execution time. As there was no need to on-site place, the office space at HQs and 9 regional branches can be used other efficient purpose and the bidding cost is also reduced as a result of abolition of public announcement on the newspaper. The business efficiency of public entity is increased as one-stop service provided in the property registration, bidding announcement, winning bidder selection, guaranty money receipt and its reimbursement. Also, there is a possibility for the on-site bidding to make a collusive tender between bidders, however, no more rigged bidding in the Internet bidding. And, the possible financial accident is blocked as all the money related matters are transacted in the online system. Recently, the amount of USD 1 billion bidding was successfully transacted on the OnBid and the tendency of its utilization has been increasing. And, the real estate market is influenced by increasing online transactions which enable the public to access bidding and transaction information. As a result, the existing seller’s market in the real estate has been changed to the buyer’s market. The convenient procedures result more citizens to participate in the public auction market. And, the successful bidding ratio was increased to 16.1% in the OnBid compared to on-site public auction 13.5%. Also, the contract price ratio rose to 110.5% from 109.8% and it resulted to increase the revenue of national budget.

Is the initiative sustainable and transferable?
OnBid tries to be a citizen-oriented system with accepting ideas from the public and listening to their complaints and proposals. We invite publicly 200 members “OnBid Monitor Membership System” by diverse criteria (ex. by region, age, sex etc.) who are interested in OnBid improvement to listen to the voice of customers. Also, we regularly carry out “Happy Call” which is to valuate how satisfactory our services are. Spreading out interactive communication, OnBid places at online community meeting place to citizens. We operate dual consultation system in OnBid Call Center; simple questions to use OnBid are asked to general counselors and more expert questions are to public sale advisor. In relation to customer complaints, we provide prompt responses, within 24 hours, through Q&A sector and suggestion corner. We also perform survey to catch customers’ needs at occasional basis. OnBid cooperates with private sector like real estate information portal and media. And it provides more useful information to the public such as current price and market trends of real estate, daily news and investment tip. To expand utilization of OnBid to public sector, KAMCO is appointed to issue a free note of online authentication. KAMCO is also providing automatic inquiry system of unjust traders. On the other hand, KAMCO decided to strengthen political activity to the government. And government encouraged public institutions to use OnBid in bidding their assets by the National Property Act and the Public Property Act. With this, OnBid is expanded to all public sectors. To support working process of public institutions, KAMCO also gives computer-added instruction to about 8,000 officials for 4 years. The transaction amount is up to 4 billion dollars via OnBid. And more and more public institutions are utilizing OnBid to sell their assets; in the early stage of 2003, the number of public institutions was 920. Now the aggregate number of them is 5,200.(465% increased). And they sold 16,000 items in 2006 comparing to 768 items in 2003 (1,957% increased). The number of notice of tender has risen of 251% from 3,990 to 14,000. Currently, Korea is facing major change in property disposal market. First, the government is positively using OnBid as a tool of innovation in public sector. The Ministry of Finance and Economy opened to the public information of 19,000 parcels of state-owned real estate through OnBid. And RTMS(Real estate Trade Management System) under government is connected with OnBid to utilize public auction information. The Supreme Court is trying to induce online auction and benchmarking to OnBid. Now we’re trying to upgrade OnBid for the future stage; electronic contract and ownership transfer after the bidding process. As a national integrated online asset disposal system, our goal is to provide a one-stop service for all community property disposing market transactions and expand this service to all citizens to further clarify all transactions, thus contributing to our nation’s economical growth and become a global example as a successful case.

What are the impact of your initiative and the lessons learned?
Several problems were encountered in accomplishing this innovative project. First of all, KAMCO had to persuade their employees who opposed to adapt all new process. In the beginning of building the system, most employees wanted to maintain their traditional way and didn’t fully understand the objective of the project. To overcome this difficulty, we open and share information of background, current situation and future plan about OnBid through online bulletin board. Business consortium was organized with relative departments and discussed major issues through weekly-based meeting. OnBid aroused all employees’ understanding through business presentation, virtual bidding participation and brand naming contest and simulation test. OnBid is the very name selected by the contest and attached to all employees. KAMCO’s CEO always puts emphasis to competitive power through innovative reform and support online bidding system to make a soft-landing and to expand to all public institutions. On the other hand, external pressure causes trouble to sustain OnBid. In case of citizens, we precede to solve their general mistrust of using online system. It is hard for them to believe how to work online auction because of invisibility. On this, KAMCO makes efficient use of official authentication system. Official authentication system is to comprehensively authorize stability of private information protection and reliability of system operation by specialists. OnBid also acquired e-PRIVACY mark and I-Safe mark, which are representative authorization from the Ministry of Information Communication. In regard to bidding results, the highest bid price and the number of bidders were open in the early stage. But now all bidders’ price including the highest bid is open to make higher confidence of processes. Also anti-hacking program is automatically executed in access with OnBid to protect unexpected hacking. In case of public institutions, we have difficulties to expand our system to public sector. The basic factor is online standardization. In order to overcome such problem, KAMCO presented standardized bid format and execution process to institutions and made progressive changes. A distinct idea how to transact real estate via Internet and spontaneous innovation trial to improve public auction make Korea’s first online system dedicated to public auctions. Now, OnBid is national integrated asset disposal system providing online selling processes to all national institutions. An innovative fruit by a small public enterprise in Korea is expecting to disseminate worldwide. We are not complacently satisfied with our many accomplishments to date. Rather, we shall further strengthen our core competencies and professionalism to ensure, fulfill our mission and create new value for the nation and society. Our achievements shall continue to shine as a model public corporation.


Institution Name:		Korea Asset Management Corporation
Institution Type:		Public Agency
Contact Person:		Seung Yeun Cho
Title:		Assistant Manager
Telephone/ Fax:		82-2-2103-6935
Institution's / Project's Website:		82-2-2103-6990
E-mail:		sycho@kamco.or.kr
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The Problem

Solution and Key Benefits

Actors and Stakeholders

(a) Strategies

(b) Implementation

(c) Overcoming Obstacles

(d) Use of Resources

Sustainability and Transferability

Lessons Learned

Contact Information