No Government Intervention

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No Government Intervention

Continuing concern about whether Hyundai Electronics will be able to survive has been revived with a report that the government floated as a trial balloon: Samsung Electronics might take over the troubled company.

How strongly the government has intervened remains unclear, since the report says the positions of the Commerce, Industry and Energy Ministry and the two companies are different from each other. And it seems that Samsung and Hyundai are themselves considering their own solutions.

What the deal involves, and which direction it will take, is anybody''s guess. Hyundai Electronics may simply want to liquidate its seven percent stake held by Hyundai Merchant Marine, which Hyundai has already said it would sell; or the Hyundai Group may dispose of its total holdings of 20 percent in Hyundai Electronics.

All this could mean that strategic discussions are under way on the issues of pricing and the output of memory chips. But the government may ask Samsung to take on the management of Hyundai, since Commerce Minister Shin Kook-hwan is known to have queried Samsung Electronics about its interest in buying Hyndai Electronic shares.

In the current circumstances, we strongly urge the government to desist from intervening in corporate matters. Clearly, the present unstable condition of the nation''s economy began with the problems experienced by Hyundai Electronics. The firm, which is the world''s largest producer of Dynamic Random Access Memory chips, is in financial straits, with liabilities almost matching its annual revenues. The situation could reach a crisis point if the state-run Korea Development Bank refuses to underwrite its corporate bonds, all of which mature this year.

In view of all this, the government must not repeat its "big deal" business-swapping failure of two years ago in which the LG Group was forced to hand over its semiconductor unit to the Hyundai firm. That government-promoted deal was definitely the cause of the parlous state in which Hyundai finds itself today. Of course, the Hyundai management has only itself to blame for the mess, but the situation was further exacerbated when the government heedlessly intervened in company matters.

by Park Won-soon

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