[OUTLOOK]Economy depends on reforms

The new year of 2005 has dawned but instead of hope and anticipation, our people are overwhelmed with worries for the economy. While there are some prospects of the domestic market reviving in the second half, the media mostly talks about the weak dollar dragging down our exports and about how even certain successful businesses have announced that they are operating on a contingency management system.
Media coverage further depresses our already lagging economy, and such an atmosphere makes small to mid-size businesses, family businesses and graduates who are making their first entry to the employment world worry that the economy might get even worse.
Various voices from all parts of society clamor for economic recovery and public welfare but no one seems to have a strategy for what we should do.
The government can’t seem to provide any concrete plans other than macroeconomic policies such as the early implementation of the budget.
However, the problems of our economy are not simple ones that will go away once the business cycle is changed or if the government provides better policies. As we are all aware, unless we solve the chronic problems of our economy ― which brought upon the financial crisis in 1997 ― it will take a long time before our economy gains steam.
Reforms of the public sector and the labor-management sectors have been carried out in name only. The restructuring of the financial and business sectors have made our debt ratio the lowest in the world, but it has brought the undesirable side effect of low investment rates. In our hurry to overcome the financial crisis, we have bred problems such as the proliferation of credit delinquency and the overflow of small businesses beyond the level of capacity.
A bigger problem is that the economic actors of our society are steeped in pessimism. Since the fundamentals of our economy are quite strong, it is desirable to have confidence in it along with a sound sense of crisis.
Our semiconductor, ship building, steel and automobile industries and our big companies are at a world-class level. We also have 400 trillion won ($380 billion) waiting to be channeled into investments. Our growth potential is also very high because of an educated work force and world-class infrastructure.
Maximizing our economic potential and overcoming our structural problems is not that complicated. The solution is rather simple. All economic actors should return to the basics and be faithful to their given roles. The key to how the United States and Britain overcame their recessions and the reason South American countries such as Brazil and Argentina failed to cross the threshold to join the ranks of advanced economies all lies on whether one was faithful to the basics or not. We should not remain at the level of wondering how to revive the economy. We should be looking for ways to join the ranks of the advanced economies.
The political community’s role is most important in our return to the basics. The strife between the governing party and the opposition will only make us all lose and consume our energy. Instead of attacking one another, the political forces should all compete and cooperate in overcoming our economic hardships. That would change the atmosphere of our country and urge other economic actors to return to the basics.
The government should, above all, deeply consider what its basic role should be. It shouldn’t try, in reviving the economy with all its energy, to do things as if the government itself is leading a battle.
The more the visible hands of the government are taken away from the market, the stronger the market’s power will grow. The government’s most important basic role is to make sure the market reform is in line with global standards. Another important role is to provide a social safety net for those who have failed because of competition.
The businesses should also change from now on. Instead of relying on government support or blaming regulations, they must work to become first-rate businesses on their own. One can become a leading business if one invests boldly even when the economy is bad.
Businesses should practice transparent management not because of the fear of government supervision but for the sake of earning the trust of the market and keeping up sustainable progress. The workers and the public should be willing to share the pain of economic reform. No one but us can solve our structural problems.
All economic actors must be determined to work like athletes before a title match to build up their physical strength and improve the economy’s fundamentals.

* The writer is the president of the Korea Chamber of Commerce and Industry and the International Chamber of Commerce. Translation by the JoongAng Daily staff.

by Park Yong-sung