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(EDITORIAL from Korea Times on Jan. 10)

All News 07:22 January 10, 2018

Korea needs resources

The Korea Resources Corp. (KORES), a state company responsible for developing natural resources at home and abroad, is in dire straits.

In May, foreign bonds worth $500 million will mature driving KORES into a default crisis. The public corporation's capital has fallen below the face value of issued stock since 2016, as the company incurred enormous losses because of its excessive resources development projects abroad.

KORES has eaten up all of its capital of 2 trillion won ($1.87 billion) and has nearly that amount in debt. If the government sits on its hands, the company won't be able to avoid bankruptcy.

The backlash of default will be severe. It will be far more than just the insolvency of a state enterprise adversely affecting Korea's sovereign credit standing. Korean businesses, public or private, will be branded as untrustworthy partners in overseas resources and energy markets. They won't get anywhere on the international stage. The government, well aware of this situation, seems set to avoid that drastic option but is at a loss as to how.

Above all, the atmosphere within the governing party is negative. The Democratic Party of Korea took the lead in voting down a bill aimed at increasing KORES' capital to 3 trillion won at the National Assembly last month. The prevailing view within the party appears to be "let even state companies go under if they mess it all up."

It is hard to stand with the state-run resources developer regarding its fiasco caused by reckless adventures. Equally irresponsible, however, will be just to sit and watch a public corporation wind up its business because of previous mistakes.

The government should fund KORES anew and restructure it drastically. Korea can ill afford to give up overseas resources development because of a state corporation's mistakes.

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