[Editorial] Reform-mindedness is lost in cabinet reshuffle

No person with fresh insight and new vitality is seen in the Kim Dae-Jung administration`s new economic team, which will preside over the latter part of his term of office. The cabinet reshuffle appears to lack any will or commitment to reform, as the post held by Finance and Economy Minister Lee Hun-Jae has simply been filled by another minister`s horizontal move, and economy-related bureaucrats were promoted to assume other slots.

President Kim`s apparent shift of priority from the reform drive to the pursuit of stability is profoundly disappointing. We feel it is more urgent to accomplish reforms, which are making only sluggish or marginal progress at present. We are also rather skeptical about the government economy team`s will to effect change in the public sector, which is trailing far behind the financial and business sectors in terms of reform. The new team is composed exclusively of people with bureaucratic backgrounds. The administration is now entering the second half of Kim`s tenure. It will run out of time unless it launches a full drive for reform immediately. For that reason, the cabinet

reshuffle is a significant letdown.

Minister Lee Hun-Jae`s economic team knew that there were viable solutions to the Hyundai crisis, but it delayed taking appropriate action for nearly five months due to its lack of consistency and determination to push the correct measures through. This contributed to the lasting financial instability. It should be noted here that the make-up of the new team represents not a fresh lineup, but a mere change of hands among members who have long been part of the administration`s old economy roster. What worries us is that they may not force cash-strapped Hyundai`s reform to resolve the crisis. Instead, they may seek measures to stabilize the Hyundai problem by merely preventing it from worsening.

If the Hyundai crisis grows more serious, its impact upon the Korean economy could be far more traumatic than the Daewoo case. There are calculated decisions behind Hyundai`s resistance to the government`s measures to resolve its financial problems. The economic empire is fully aware that the government can do little to threaten Hyundai`s senior officials despite its threats to deprive them of management rights and impose workouts or court receivership. The new team must bear in mind that it must resolve the Hyundai issue in the correct manner, no matter how profound the impact on our economy. Otherwise, the Korean economy will never completely turn around. The spinoff of its family firms and strong self-rescue measures are imperative, as is holding Hyundai`s management responsible for the conglomerate`s business performance.

It should be remembered that the administration`s past economic team often played with words in its attempts to meet volatile circumstances. There was also no small degree of discord among respective government ministries over their economic policies in dealing with merchant banks or bank mergers and the Hyundai crisis. The government itself therefore became the cause of waning market confidence.

It therefore behooves the new economy team to learn hard lessons from past failures. It must make every effort to recover market confidence by enhancing its policy consistency and predictability. This is the first step in a shortcut along the road to accomplishing marginal structural reforms. We also hope that policy confusion and conflict among different ministries will no longer surface under the leadership of the Finance and Economy Minister, soon to be elevated to a Deputy Prime Minister according to the new Government Organizational Law.

The structural reform of our financial sector must also be accomplished. The full control of liquidity markets, which have been weakened due to delayed reforms, must also be recovered in order to maintain a stable macro-economy.

The allotment of the Industry and Energy Minister and Agriculture Minister posts to the United Liberal Democrats, President Kim`s former coalition partner, also greatly compromise the will for reform.

Minister of Education Song Ja, also soon to be elevated to Deputy Prime Minister, should be able to display leadership to coordinate human resources development and strengthen our educational system, which has fallen into disarray in recent years.