[INSIGHT]Selling our patrimony abroad

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[INSIGHT]Selling our patrimony abroad

I believe that borders exist in economies, and if not, we have to build them. So at this time of economic crisis, I have been displeased with the president's insistence that we sell even more valuable companies to foreign firms. I guess I am irredeemable, since I am against globalization, and I don't know the difficulty of our economy.

Daily newspapers in Korea put on Page 1 of their May 1 editions news about the failure to sell Hynix and the sale of Daewoo Motor. It appears that newspapers were relieved at the news that Daewoo Motor had been sold and deplored the Hynix story. Does that sound hypersensitive? I was irritated by that slant on the news. The government and Hynix's creditors, who have been convulsed by the news, should be even more irritated at the insistence that the company be sold.

I don't have the ability to check on the truth of allegations that Hynix actually could survive on its own if the creditors do not take their revenge by pulling the plug on loans. But I do know that only the market knows whether or not the price of 128 megabit memory chips will stay above $ 4, which is indispensable for the revival of Hynix. Neither the government nor the creditors knows that secret. I think that we should not impose a death sentence on Hynix because of an uncertain future, even though the converse is true: We cannot continue to pour money into Hynix using the uncertain future as collateral. Far from seeing unity among the government and creditors, they show disunion before the enemy as they try to peddle their problem company to a foreign firm. Creditors threatened the Hynix board, saying that they would withdraw loans and refuse new ones unless the memorandum of understanding signed between the creditors and Micron were approved. At whom was that threat aimed? It means that the creditors will pick up their marbles and go home if Hynix does not submit to them. Micron must have believed that the creditors too freely showed their hand.

I was curious about the courage shown by Hynix's board when they voted against the MOU at the risk of retaliation by creditors and the government's fury. Eight of the 10 board members studied in foreign countries and had worked for companies in the United States. The other two graduated from prestigious universities in Korea and had worked as senior officials in the government or at banks. In short, they are not milksops who are afraid of a drain of national wealth or ignorant of globalization trends. Even an American board member recommended by the creditors took the initiative in arguing to kill the MOU. If the reason for that opposition is the dirt-cheap sale price of the memory chip operation, and if the excessive debts should be carried by the remaining parts of the company which will have little with which to make money, and if we will end up with nothing for the sale, the remaining parts of the company cannot survive either. It is obvious that we should not sell the third-largest semiconductor company in the world so carelessly. There is something behind the government's and creditors' cynical words that the revival of Hynix is the market's business. I want an answer to the question of who was originally in charge of Hynix, which was the result of a reckless "big deal" merger imposed by the government. They should not treat Hynix with a cold smile, and it is not late for them to change their minds. But the government insists that selling Hynix to a foreigner is best, and begs for renegotiation with Micron, hinting that it might let Hynix go into receivership, allow the creditors to exercise their right to swap bonds for stock and gain control of the firm or change the board members.

The government and creditors should be satisfied with selling Daewoo Motor, even now that the Daewoo Group has been restructured. But I am confused about the evaluation that we were lucky to sell it, even though the terms of sale were unsatisfying. General Motors paid $1.2 billion of the $1.7 billion price for the company with stock, and those shares cannot be sold for 10 years. Daewoo gets only $400 million. In return for GM's assumption of $500 million of Daewoo Motor's $12 billion debt at home and abroad, the creditors promised to lend another $2 billion as operating capital. The creditors gave GM a $2.2 billion, 10-year interest-free loan. Why would they not offer such terms to a Korean buyer?

Former GM President Charles Wilson, who became the U.S. secretary of defense in 1953, once told the House of Representatives that what was good for General Motors was good for America and vice versa. General Motors is about to land on the South Korean auto market, the second-largest in Asia and seventh-largest in the world. I worry about whether what's good for General Motors is good for Korea.


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The writer is an editorial writer of the JoongAng Ilbo.

by Joseph W. Chung

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