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[EDITORIALS]Some Advice on Daewoo Talks

May 30,2001
General Motors Corp. submitted Wednesday a proposal to buy Daewoo Motor Co., and in-depth negotiations are to begin soon. Although there was no public announcement, GM is reported to be interested in acquiring just some of the firm's businesses. It is also expected to make an initial investment of approximately 1 trillion won ($773 million) in the company and is likely to ask for the cancellation of most of Daewoo's financial liabilities. Its plan is to give away in return part of the equity interest in the new company. GM was once a major shareholder of Daewoo. Many of the negotiating points and weaknesses have been revealed to the American carmaker. The talks are bound to be difficult for the Korean negotiators. Moreover, talk of the "outflow of national wealth" would further restrain negotiators on the Korean side.

We suggest that the government and the creditors engage in the negotiations with a firm determination to keep to the basics. The highest priority must be the national interest and enhancing national competitiveness in the long run. The negotiators must not accept terms that will drag our economy down just to avoid the criticism that they sold out cheap. It must not try to distort the outcome of the negotiations for nationalistic or political considerations. The treatment of Daewoo's Bupyeong plant is an especially important issue that affects the economy of Inchon, the survival of suppliers and 7,000 employees. Getting the best deal is imperative. But, out of political considerations, making one-sided concessions, which put an extra burden on the people, should not happen.

We urge the politicians and economic ministers to watch their mouths. We remember an economic minister eventually ruined the negotiations by revealing too much a year ago. GM should also recognize the importance of Korea as a gateway to East Asia and as a market in itself. There are even new arguments that it would be better to prop Daewoo up some other way. But, to rid the economy of uncertainties and to cut additional financial burden on the people, selling Daewoo to foreign interest is the inevitable choice.



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