Hands off restructuring

Politicians have started acting like back-seat drivers, offering tips and promises on corporate restructuring. Party leaders were beside themselves to rush to the scenes of restructurings. At Daewoo Shipbuilder and Maritime Engineering’s dockyard in Geoje, South Gyeongsang Province, Kim Chong-in, head of the Minjoo Party, pledged his utmost to stabilize jobs. Saenuri Party floor-leader Chung Jin-suk vowed to make shipbuilding a sector for special attention about employment assistance. Ahn Cheol-soo, head of the People’s Party, visited the Chamber of Commerce and Industry in Busan and listened to regional businessmen’s thoughts on the restructurings of the shipping and shipbuilding industries.

Political interference in corporate reforms is always a double-edged sword. If politicians take initiatives to reach a public consensus, the painful fallout from restructuring can be minimized to produce faster results. But restructuring drives can lose direction if politicians get overly involved. Few politicians could turn a deaf ear to pleas from workers in danger of losing their jobs. They could make things worse if they try to save jobs. The cases of Hanjin Heavy Industries and Ssangyong Motors provide object lessons.

Differences between the conservative and liberal parties over the means of restructuring are also significant. The liberals have already been demanding greater pain-sharing from big shareholders of troubled companies. The Minjoo’s Kim demanded the Korea Development Bank retire its shares in companies it managed to be accountable for such poor management. But the Saenuri Party believes the approach should differ by companies. It thinks the same approach should not be applied to companies in which the KDB or government is the largest stakeholder as compared to private units of conglomerates like Samsung Heavy Industries and Hyundai Heavy Industries.

Restructuring should be left in the hands of professionals. The government should respect market principles. The government should be blamed for inviting in back-seat drivers. The government spent months wrangling over the financing of this restructuring. The liberals suspect it is buying time to dump the job in the lap of the next administration. Restructuring of the shipping and shipbuilding sectors will be the tipping point for a broad retooling of the Korean economy. It must not stop at a few companies. The task should be based on a big picture to rebuild industries for the future. The president and deputy prime minister for the economy must take command. Politicians should offer bipartisan support instead of using restructuring as a means of winning favor from future voters.

JoongAng Ilbo, May 24, Page 30