Unfortunately, such troubled monsters are not limited to Hyundai Engineering. With the global economy showing signs of slowing, export-led Korea is evermore vulnerable. To have a chance of passage, wrenching but necessary restructuring must be introduced before the electoral-campaign season begins in the second half of 2001. Politicians fighting to succeed President Kim in the 2002 elections will almost certainly block moves to throw thousands of workers out of work by shuttering hopeless companies. That's why Kim stresses that basic reforms must be completed by next spring.
Critics say the latest attempt to weed out nonviable companies was bound to be a failure.
The government let shaky banks lead the process while telling them they'd be targets of merger and consolidation if they fell short of internationally required capital-adequacy ratios. Banks know many troubled companies have little chance of recovery, but they're reluctant to declare them insolvent because it increases the level of nonperforming loans on their books and makes their own survival questionable. Instead, they keep rolling over loans or providing new credit. Little wonder, Hyundai, the largest of the pack, is considered the key test of whether Korea is ready to swallow a bitter pill. Parent Hyundai Group, the best-known chaebol , says Hyundai Engineering's liquidity problems could harm other Hyundai companies, including chipmaker Hyundai Electronics.