Restructuring is the answer

Companies that filed for bankruptcy or court receivership through the court reached the record number of 1,533 this year, 200 more casualties than after the 1997 financial crisis. The year-end toll will be even bigger since the figure was registration until November.

Liquidation cases with a death sentence to the company involved totaled 659 and court receivership 874. Those under court receivership could hardly improve given the worsening business conditions.

The chain insolvencies and bankruptcies would spread next year. As the government missed the time needed to restructure the overcapacity industries, various reform bills are still held hostage at the legislature. The economy has lost steam beyond repair. The growth pace that slipped below 3 percent last year may not even reach 2 percent next year.

The economy is in such a pitiful state due to the lagging competitiveness of our companies and the government’s slow and impotent role in economic policymaking.

The government has been holding cabinet meetings to strengthen industrial competitiveness since June, but that was after the shipping and shipbuilding sector was ruined. Yoo Il-ho, deputy prime minister for the economy, held another meeting this week, but came up with nothing new beyond the ongoing work on the 1shipping, shipbuilding, steel and petrochemical sectors.

There is nothing to be done with already-weak companies. But the contagion should be stopped. When companies go bust one after another, joblessness would surge and related industries would crumble to wreak havoc on the entire economy.

The external front is jittery with a faster-than-expected pace in interest rate increases in the United States and U.S.-China trade frictions.

Lawmakers must expedite the passing of reform bills and the government must remove all the unnecessary red tape to stimulate corporate investment. Restructuring, although painful, is the only way to save the economy.

JoongAng Ilbo, Dec. 27, Page 34