Welcome to Korea Night
Mr. S. R. Cho
Vice Chairman, Pacific Basin Economic Council
Chairman, Korea Member Committee
Chairman, Hyosung Group
Good evening, ladies and gentlemen.
I'd like to start by congratulating PBEC on the success of its first IGM of the new millennium here in the lovely surroundings of Hawaii. I would also like to extend a warm welcome to each and every one of you and thank you for joining us here for "Korea Night."
In the previous session we were treated to a lively and far-reaching discussion of the Korean economy. And since President Kim Dae-Jung has just presented us which his great vision for the Korean economy. I'd like to briefly touch upon a few points from a businessman's perspective.
Let me begin by sharing with you some of the experiences the Korean economy has faced, and the hard-won lessons we learned, in overcoming the economic crisis the swept our country just over two years ago. The nation was on the verge of default as foreign reserves fell to almost zero. But, as many of you have already pointed out, Korea has, by almost all accounts, now recovered from its financial crisis. Indeed, the economic growth rate for the year 1999 topped 10%. And foreign reserves have now reached the 80 billion US dollars level.
In order to overcome the crisis, the government and private sectors worked together to restore national credibility and competitiveness through aggressive restructuring efforts in the financial, corporate, labor, and public sectors. Over 300 financial institutions were closed or streamlined and an official fund of 65 billion US dollars was injected into the sector, thus establishing a healthier financial system and eventually enhancing its overall credibility. Businesses increased their level of transparency of corporate management and improved their financial structure through asset sales and investments from abroad. A large-scale restructuring program was executed in the form of business swaps and reductions in the workforce. In addition, new measures were carried out to bring flexibility to the labor market and privatize the public sector.
But Korea learned a very valuable lesson from the restructuring process: Even when a great number of businesses failed, and numerous financial institutions were closed, there was no collapse of the market, as many Koreans feared there would be. Instead, the market demonstrated efficiency and an ability to recover on its own, and Koreans emerged with an even greater trust in market mechanisms.
However, there are still many tasks ahead, and problems to be solved. But it should be noted that, for the past two years, the Korean economy has carried out aggressive reforms, which surpass those carried out by any other country in the past. There were vast improvements not only in the financial structure and core competence of organization but also in the level of transparency in management, accounting, and corporate governance.
In line with this transformation, both the private and public sectors have witnessed a profound change in how they perceive foreign direct investment. In the past two years alone, Korea has attracted 24.4 billion US dollars in overseas investment. This almost matches the total foreign direct investment in Korea for its entire pre-crisis history.
Foreign investment in Korea's stock market mirrors direct investment, and now accounts for almost a quarter of the total market value. Today, when a foreign investor buys more than a 50% stake in a leading Korean company, it no longer makes headlines in Korean newspapers.
This turnaround is fundamental. Korean businesses and the public have changed their attitude about foreign investment, not to mention overall foreign businesses in Korea. Korea is integrating into the world economy, and I only see this trend accelerating.
The new insight Korea has gained doesn't just end with foreign investment, however. Our businesses have also come to realize the importance of strengthening cooperation in the private sector in the Asia-Pacific region and the growing importance of PBEC. The Asia-Pacific region is Korea's most important trading partner, and its significance only multiples. As a matter of fact, trade with Asia-Pacific countries encompasses more than 60% of Korea's overall trade. This, however, does not only pertain to Korea. The importance of the regional market is steadily growing in all nations within the Asia-Pacific region.
Many issues that once proved difficult to remedy at the level of the national government, however, can be solved relatively easily through private level cooperation. And I believe that this will help enhance the prestige of PBEC in the pacific region, as it takes the initiative in solving the entangled matters national governments find difficult to tackle. Of course, in keeping with the ever quickening industrialization of many Asia-Pacific economies, as well as global market integration, PBEC could also increase its role in implementing global standards for a new accounting system, corporate governance system and environmental preservation, and so on. We could make a collaborative effort to facilitate discussions on the restructuring of industries in the region suffering from over-capacity and non-competitiveness. We need to work on exchanging information on the market conditions in each of our member countries. PBEC could work together to form strategic alliances to build the information highway throughout the region. As e-commerce emerges, PBEC could also start developing a standard B2B (business to business) model, especially in international trading.
In closing, I would like to emphasize the importance of expanding cultural exchanges among the PBEC member countries. By increasing cultural exchange, we can broaden our understanding of each other and build a solid framework for further, lasting cooperation, no matter what the field.
It has been said that, in order to build a strong friendship, people must learn each other's cultures. Having said this, it is my great pleasure to present to you tonight what I feel is an exquisite example of the beauty of Korea's traditional culture: a performance of traditional dance and a display of traditional Korean dinner. As you will see, traditional Korean art directly expresses the graceful beauty of the natural world. The grace of the dance and rhythm of the music, the beauty of the costumes, and the flavor of the food will allow you a glimpse of the remarkable spirit that is Korea.
Thank you very much.
I hope you enjoy the dinner and the performance.