`Restructuring` fails to solve true problem

Economists say that the nation's foreign exchange crisis was triggered by excessive debt and manufacturing facilities. Now, three years after the outbreak of the crisis, these problems have not been solved.

Kim Jong-In, former chief economic aide for the president, said at a recent breakfast meeting that nearly nothing has changed, although the government has poured 110 trillion won of public funds for restructuring over the past three years.

"If restructuring is carried out in such an approach, there wouldn't be any improvement even if an additional 50 trillion won is provided," he said.

He pointed out that if a ship with a loading capacity of 100 kilograms is loaded with 150 kg of cargo, it has to reduce the cargo volume.

"It is not restructuring if even hopeless companies are kept in the market through financial aid," he said. "Workout program has been utilized just like rescue financing."

Following the outbreak of the foreign exchange crisis, the government, which has begun surgical operation of the economy, has found massive tumor and just stitched up it, and the tumor is causing trouble again, according to him.

"The current economic crisis is not because of a newly found tumor but due to accumulated structural problems," he said.

Kim contended that a grand surgery is necessary to overcome the crisis, noting that it is important for policy makers to have a leadership based on confidence among people. He said that it is vital to bring about people's consensus about restructuring policy through proper explanation about the reality of the Korean economy, not hiding it with healthy-looking macroeconomic indicators.

sarafina@donga.com