No Surprising Corporate Restructuring Measure

There will be "neither surprising restructuring plans nor artificial economy stimulus package," said President-elect Roh Moon-hyun.

According to the Ministry of Finance and Economy (MOFE) on Dec. 29, Mr. Roh received a briefing on current economic issues on Dec. 28 from the deputy prime minister and minister of Finance and Economy, Jeon Yun-churl and Roh said like that at the briefing.

The President-elect said that while maintaining "5+3 principle," he would push corporate restructuring continuously through a standing restructuring system though there would be some complements for the parts proven to have problems.

The 5+3 principle means the five points on which President Kim Dae-jung as President-elect and the heads of the nation’s conglomerates reached agreement plus the three principles that President Kim announced during his speech cerebrating the nation’s liberation form Japanese colonial rule on Aug. 15, 1999. The five points include improvement of transparency in management; repayment of debts in the form of mutual payment guarantee between affiliated subsidiaries; improvement of financial structure; selection of core businesses; and strengthening the management’s responsibility. Meanwhile the three principles are separation of industrial capital and financial capital; restraint of circular cross-unit equity investment and unfair inter-company transactions; and cutoff of abnormal inheritance.

Mr. Roh said that he would raise foreign investors’ confidence in Korea by promoting management transparency and company self-determination and managing the economy according to the market economy principles. He also added that he would improve the business environment by easing an assortment of regulations.

His comment is interpreted that he is conscious of conglomerates’ uneasiness toward his campaign pledge to "reform chaebol."

Officials at the MOFE stressed that if it pushed ahead with its new tax plan on inheritance and gift taxes, it could introduce the new plan early next year, but it will make complementary measures to minimize the impact that the new plan would have on the economy.

On the economy, the President-elect made clear that he would not use artificial measures to boost the economy that burdens it over medium- and long-terms. However, he added that if he decides such measures are needed, he would respond to the current economic movements by flexible fiscal management.

As a result, the MOFE was released from the burden of unreasonable economic management plans to achieve potential economic growth of 7 percent and create 500,000 new jobs, which were the President-elect’s campaign promises.

The MOFE and thin-tanks at home and abroad predict Korea’s reasonable growth potential just above 5 percent and judge that it will be hard to create more than 300,000 jobs per year.

Meanwhile, Mr. Roh is scheduled to talk about pending economic issues at a meeting with the heads of five major economic organizations including the Federation of Korean Industries (FKI) on Tuesday afternoon.

FKI Officials said, "The heads will convey businesses’ voices on the President-elect’s campaign pledges on economic growth, labor and management dispute, class action suits, five-day workweek and ceiling on the total amount of invested money in a company."

Kwang-Am Cheon Keuk-In Bae iam@donga.com bae2150@donga.com