Surgery time for DSMERep. Park Jie-won of the People’s Party, Rep. Chung Jin-suk of the Saenuri Party and Rep. Woo Sang-ho of the Minjoo Party of Korea were recently elected as the new floor leaders of their parties for the 20th National Assembly. And around the same time, we were informed that Daewoo Shipbuilding & Marine Engineering (DSME) would have to undergo massive restructuring.
Over the past 16 years since it was acquired by the state-run Korea Development Bank (KDB) during the foreign exchange crisis, the company was riddled with top-down appointments made by powerful people.
No one took responsibility. The politicians issued no warning, while the presidents, during their five-year terms, only went after short-term glory. No deputy prime minister for the economy was willing to get his hands dirty. No commerce minister, no Financial Services Commission head and no KDB president took responsibility.
DSME was a sweet honey pot for retired public servants and a paradise for workers protected by the Korean Confederation of Trade Unions. During the period, the government injected 6.5 trillion won ($5.6 billion), but the company, as of last year, recorded a debt-to-capital ratio of 7,300 percent. The crazy debt party took place in a country where the separation of power, government regulation and financial supervision are clearly stated.
Over the past 16 years, administrations and majority parties changed, but only one surgery was performed on the company to save it. It was during the Kim Dae-jung administration. Since then, only stopgap measures were taken, and its crisis was hidden. The state-controlled company has become a bloodsucker of tax money. Financial Services Commission Chairman Lim Jong-ryong belatedly declared that he would perform another surgery on the company, but does he have the resolve and authority to cut out the affected area? Is Deputy Prime Minister for the Economy Yoo Il-ho, a politician, ready to handle the aftermath of the expected massive layoffs? If they are, the National Assembly and the people will support them. It has long been the Korean people’s will to respect and follow a leader with a strong resolution, while withdrawing support for cowardly leaders.
President Park Geun-hye still holds the key to deciding the fate of the Korean economy. Can she complete restructuring of the five embattled industries — maritime, shipbuilding, steel, construction and petrochemicals? The key is streamlining the industries and transferring the manpower, assets and the people’s energy to the fourth industrial revolution, using some imaginative power.
President Park must think more seriously about the significance of the timing for the surgery on DSME and restructuring of the five industries. They were once lean, but now they have become obese. The next step will be burning the fat. It will be a painful self-driven revolution, but the Korean economy will become streamlined through this painful process. Park’s accomplishment of her “creative economy” policy should come from the evaluation that she has restructured the constitution of the Korean economy fundamentally, rather than from the creative economy centers in 16 cities and provinces.
Park must not receive the task of restructuring DSME and the five industries as an unfamiliar challenge she faced abruptly while her approval rating is the lowest ever after the ruling party’s crushing defeat in the April 13 general election. The time of passing the bomb to another is now over. Park is responsible for defusing the bomb called DSME.
Now that she has completed her Iran trip, President Park will have to make meeting the three new floor leaders as her top priority. The three floor leaders are three- or four-term lawmakers. They must share the responsibility for the long-accumulated crisis of DSME. Because they were just fighting each other, they failed to handle the issue at a proper time.
The three new floor leaders are the most free from the pressures of their own parties. The president is losing power, while there are no clear presidential front-runners. The parties are under interim leadership. Until the presidential race starts at the end of this year, they have eight months to put all of their effort into serving the country’s interests, not those of their parties. The president and the three floor leaders must unite to serve the country’s best interests for the DSME issue.
*The author is an editorial writer for the JoongAng Ilbo.