What gov`t can do about reforms

In order to remove cancerous parts of the national economy in the course of coping with the foreign exchange crisis that erupted in late 1997, the nation launched structural reforms in the corporate, financial, public and labor sectors. But three years after the financial crisis, there is lingering skepticism that the crucial retooling efforts will be completely carried out. Of course, the prescribed reforms are not so simple that they can be completed in just two or three years.

In early December last year, when President Kim Dae-Jung vowed that his government would wrap up the reforms by the end of this year, we were inclined to believe that his statement was a mere manifestation of the government`s strong resolve rather than a reflection of expectations that catastrophic changes were underway in the economic world. Hence, the question boils down to whether the government has so far done its best and what it plans to do to achieve its goals.

In the corporate sector, local enterprises have made meaningful progress in terms of the governance structure and decision-making process. Yet in the field of liquidating potentially nonviable enterprises, the government has not done enough. On the contrary, due to the government`s preferential assistance to core affiliates of the Hyundai Group, it has not kept to the principle of evicting nonviable firms from the marketplace. The same is true of labor sector reform. The government not only deferred the enforcement of the revised labor law by five years but also failed to attain the essential goal of ensuring liquidity in the labor market. Consequently, foreign investors still regard Korea as a poor investment destination.

In the financial sector, a master plan has been drawn up. Yet there are conflicting views with regard to the success or failure of the projected financial holding companies and the future of the proposed bank mergers.

In the area of public sector reform, which is most sluggish, restructuring is gaining steam and the policy for the privatization of state-invested firms is said to be working. However, the government must bear it in mind that government-appointed executives, most of whom are without professional qualifications, are engaged in lax management and thus raising the public`s ire.

'At this juncture, what the government must do is to humbly acknowledge the dark side of its reform drive and present a viable blueprint for future reforms. At the very least, the government should come forward with a basic framework for the systematic implementation of structural reforms, even though it will surely fail to make good on its promise to finish the four-sector reform by the end of this month. It is now incumbent upon policymakers to put newly devised systems into place from next month so as to continuously carry out its market reform tasks and bring an end to restructuring in the near future.