[EDITORIAL] Reform Is Worth More Than Money

President Kim Dae-jung has again apologized publicly for the current economic difficulties, saying in his New Year speech that he should be held responsible. The nation's economy is in a critical situation, with public unease about the economy escalating.

Needless to say, the main topic at the start of 2001 is the nation's economy. Managing the state and ensuring the people's welfare, naturally, are major tasks for the nation's leaders. However, we cannot stress enough the importance of the economy as South Korea now teeters, as it were, on the brink of life and death. We therefore hail the president's declared determination to implement reforms this year.

Time has elapsed since the president pledged to restructure the corporate and financial sectors late last year. We believe that corporate and financial restructuring has now started. Corporate restructuring began with the announcement to liquidate 50 nonviable companies. But we question the fact that a significant number of financially unstable firms remain -- these were classified by the government as viable companies and have managed to survive on government support. It's anybody's guess when the merger of Kookmin Bank and Housing & Commercial Bank will take place, but it appears to be along the lines of the proposed six-month negotiation procedure. The government plans to launch South Korea's first financial holding company in the first quarter of the year; this is to be made up of some nonviable financial institutions.

Strikes by union workers have resulted in delays in the reshuffles of some financial institutions. It is unlikely that a restructuring of the labor sectors and government offices scheduled at the end of February will go smoothly. While reforms have been at a standstill, some government officials are hastily proposing economic stimulus measures. This seems like the government is overreaching itself if any limited restructing plans, combined with a stimulus package, are being considered.

The government plans to spend 70 percent of the nation's budget in the first half of the year. During that period, the government will pour 80 percent of the 40 trillion won budget into areas designed to revive the economy, including infrastructure programs and unemployment measures. Most of newly mobilized 40 trillion won in public funds will be injected into the economy in the first half of the year, and the national pension funds will invest 3 trillion won in the stock market. State-run Korea Development Bank will underwrite high-risk corporate bonds which mature next year, which will be worth almost 20 trillion won.

Pouring in enormous amounts of money may revive the nation's economy in the second half of this year. However this will be merely because of the disbursement of these funds and not because of the thorough restructuring that South Korea really needs. The economy revived briefly two years ago when 64 trillion won was spent in public funds.

An economic boost is certainly required to some extent, but now is not the right time for the government to initiate a push with a stimulus package. In the current economic situation, the government's efforts to boost the economy can mean that the government will drag its feet on the more vital task of restructuring.

The situation may reach near-hopeless proportions if South Korea faces another economic crisis. The government should devote all its energies to making changes through reform, thereby restoring its credibility.