Monday, December 5, 2005

Rising Foreign Economic Domination (Part VII)

The outgoing President Kim Young Sam (金泳三) signed the first restructing agreement between the IMF and Korea in December 1977, he was under pressure and had no choices.

President Kim Dea Jung would be pleased to have external forces to accelerate reform perhaps due to his past during military regime and badly treated by cheabol before. He is a strong believer in unrestricted, globally open financial markets.

In late 1997 the government had to use, by Standard and Poor estimate, $125 billion (or about 30% of the country's 1999 GDP) to save the banking system. President Kim also threatened chaebol to cut off their credit unless their indebtedness is massively reduced.

With such policy implemented, foreign direct investment (FDI) poured in, ownerships of major Korean enterprises changed hands. However when Korean's major financial institutions are also in the hands of foreign owers Korea is losing control of its economic destiny. E.g. foreigners own 44% of Korean semiconductor shares and 21% of telecommunication shares (Korea Times) and the dominant stockholders in such important firms as Hyundai Motors, Hyundai Electronics, LG Chemical and Samsung Electronics.

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