President Kim¡¯s speech

President Kim Dae-jung yesterday hosted a cabinet meeting, reaffirming again the need for reforms to continue. He especially stressed his intention to see through controversial medical and financial sector reforms, that are currently causing turmoil in the nation. He explained in detail the fruit of government reform plans, as if to counter the critique that the government is in an inertia, incapable of doing anything about the recent series of social protest over government reform plans. He in particular countered the argument of the government-led finance system in disguise.

-The Results of Reform: The government has tackled reforms in various sectors with a firm commitment and strong principle. It has integrated the national agriculture and meat-related cooperatives into one National Agricultural Cooperatives Federation, a matter that had dragged on for over a year. Though there was a heated debate about in what area the government should invest its tax surplus, the government handled it successfully. On recent cases of social groups invading a newspaper company and the takeover by the union at Hotel Lotte, the government did things by the book. Bad financial banks are now clean, through restructuring and funding by the government. The issue of a mark-to-market evaluation of trust investment companies, that threatened to cause another round of financial crisis is now solved, with the nation having smoothly gone through July 1, the day on which many had forecast that a financial crisis would erupt.

-Future Tasks of Reform: What remain to be tackled is the financial and medical reforms. The medical reforms have been on the government agenda for many years to reduce drug overuse and medical cost for the public. It is known that Koreans take in the most amount of anti-biotics in the world. This is devastating to the public health. On the financial reform, internationally leading banks are merging and integrating among themselves these days. It is the trend of the times, where globalization and opening of the financial sectors are the norm of the day. If employees in the

financial sector adamantly stick to the ways of the past, they will not able to adapt to the new environment, thereby losing their jobs. Furthermore, it will lead to the breakdown of the national economy. The times call for the financial institutions to lead the restructuring and the change that is need for our economy to recover. The world is highly evaluating our efforts taken in the past few years, but if we do not proceed with the reforms, they will turn their back on us, in the event of which it would mean another major financial crisis for us.

-Government-led financial system (or Financial Governance): The government-led finance system is a practice of the past. Without possessing one share in a bank, the government appointed top executives and influenced preferential lending, causing incidents such as the bankruptcy of Hanbo and Kia business groups. ¡®The government of the people¡¯ has consistently pursued the policy to eliminate financial governance, and I firmly declare that during the past years of my administration there have been neither cases of preferential lending having gone to a certain business nor any collusive links between politicians and business. But to rule out constructive audit is a negligence of duty. The IMF president and renowned Nobel laureates have all opined the need for a government intervention in times of transition.

-Cracking down on illegal activities: What would become of a nation if self-interested groups took to violence in pursuit of their interests. We must not allow such incidents. It is a very encouraging development that the two sides are negotiations, talking to each other to resolve the differences. It is the right way and the necessary procedure in a democratic nation that the concerned parties take to dialogue before taking up arms.

Choi Young-Mook ymook@donga.com