While working out at a fitness center a while ago, I suddenly felt an ache in my chest. I couldn’t breathe. The pain eased in a few minutes, but I couldn’t shake off a bad feeling. A few days later, I couldn’t climb stairs beyond the sixth floor in my office. I couldn’t take another step. I visited the hospital. It was angina. One coronary artery was fully blocked and another partially. My doctor friend spoke lightly of it.
“All bodies wear out and break down when used for long. Blood vessels narrow. Drugs are used when found at an early stage, stents later on, and surgery is necessary at later stages. The earlier it is found, the better to save the heart.” When less blood flows, the heart could stop pumping. When the heart stops, no being can live.
An economy, too, is a living organism. While staring at images of my heart with bloated arteries, I somehow was reminded of the Korean economy. It must be occupational habit.
About five years ago, alarming symptoms appeared on the exports front. Shipment prices plunged. Once the pain started, it failed to stop. Exports have been skidding nonstop for 14 months in a row, the longest-ever such streak. Private consumption, which rose by more than 5 percent a decade ago, fell to the 2 percent range. Corporate sales contracted for the first time last year. The Korean economy is suffering a silent ischemia, inadequate blood supply to the heart. All the 10 major arteries carrying blood to the economic heart - including factory operations, shipment volumes and cost, consumption and productivity - are jammed and working poorly.
External conditions are bad. The global economy remains in a slump, hobbled by a harsher-than-expected slowdown in the Chinese economy. Competition over reduced demand is fierce. But there must be a more fundamental reason behind the problems in Korean exports. Industrial restructuring was long overdue.
Industries as well as bodies wear down when overused. They require drugs or even surgical treatment at the correct time. Korean companies have not bothered to restructure ever since they were forced to do so following the 1997 Asian financial crisis. It is why illness spread and reached a stage where simpler treatment no longer can work. Of 500 companies, 111 cannot pay off the interest on their debt with their earnings. They must be put out of their misery, but nobody is willing to wield the hatchet. The job is being delayed and pushed onto another time, another administration.
That kind of lack of responsibility is what worsened the problem. The government, politicians and business sector all have been putting off reforms, not wanting to put shoulder to the plow. An influential figure in the past government opposed the restructuring plans for ailing conglomerates STX, Dongbu and Tongyang. The incumbent government is no better. Instead of cleaning up the bad blood, the government fed the economy with artificial stimuli to inflate real estate assets for an illusionary effect of growth. Choi Kyung-hwan, the former deputy prime minister for the economy, did come up with a restructuring plan for industry late last year, but without specific details or a timetable.
The Financial Services Commission, which should spearhead financial-led corporate restructuring, is equally nonchalant. It merely nags Uamco, a non-performing asset management company led by six financial institutions, to hurry up with restructuring of troubled companies. The government must have been putting on a show when it blamed the legislature for delaying restructuring by failing to pass the corporate restructuring promotion act.
The election season has kicked off. Government officials say they cannot go ahead with restructuring because of the election. The political realm is entirely engrossed in fighting over nominations. Everything they do and say is aimed to win votes. No one wants to mention restructuring. The president has been reiterating a pledge to save the economy, but never speaks of painful surgery. Four or five months will likely be wasted.
Daewoo Shipbuilding and Marine Engineering last year incurred more than 5 trillion won ($4.2 billion) in operating losses all because of delayed restructuring. But no one has been made accountable. There are many companies like the money-losing shipbuilder. Corporate and economic angina is at a critical state. Would a president, legislator or businessman sit on his hands if his arteries were blocked? If the economic heart stops, so does the nation.
JoongAng Ilbo, March 10, Page 30
The author is an editorial writer of the JoongAng Ilbo.
by Yi Jung-jae