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A measure to curb another "Daewoo"

Posted July. 23, 2000 23:26,   


Lee Hun-Jae, the Minister of Finance and Economy has assured on the 20th that a counter-measure to protect the nation from witnessing yet another fall of a major "chaebol", like Daewoo, would be installed. According to the minister, the government will increase the level of the bonded insurance or credit guarantee fund for the corporate bonds which have been floated by major conglomerates currently facing short-term liquidity crisis.

During a Federation of Korean Industries sponsored seminar held at the Shilla Hotel in the Island of Cheju, the minister also faced questions by reporters on the matter of corporate governance. He revealed that the government will through a comprehensive dialogue with the FKI and the business circle, adopt a two-stage reform policy which would not be forced on the corporations but would work in tandem with the corporate structure as it goes through reform.

Concerning the liquidity crunch at the Hyundai`s subsidiaries, Minister assured that while Hyundai has been affected negatively by the Daewoo fallout, there is not a direct cause and effect between the two and the rumored walk-out by those at Hyundai Construction have no real basis. He added that currently Hyundai is not facing a liquidity crisis.

As for the economic cooperation between the North and the South, he stressed that a course of mutual benefit must be sought taking into consideration various economic factors such as the production and consumption capacity of the North and the ability of the South`s economy to support and sustain the North. He added that the economic soundness must proceed the ideal of mutual economic cooperation.

For the deterioration of morale, a "moral hazard", in the business circle arising from the rumored walkouts, Minister Lee revealed that the current level of reserve rate of the financial institutions for the non-performing corporate loans, 5-20%, will be increased to 50%.