KyivPost

Down on Daewoo

Print version
Jan. 9, 1998, 1 a.m. |
Privatization of Ukraine's state-owned giants will begin this year because the government needs the proceeds to narrow the deficit in its spendthrift budget. But the real reason it needs to happen is so that private investors, and in particular strategic foreign investors, can restore a dose of economic sanity to fiefdoms that have long lived in the never-never land of barter, bad debts and government subsidies. Ukraine's economy has already been exposed to a flood of imported consumer goods. The country won't be able to afford the Korean video recorders and Italian juices for much longer, however, unless it turns itself into a competitive exporter as well. The only way to do that is to attract Western technology and management by luring foreign firms to take over failing state concerns. That's what was supposed to happen at the AvtoZAZ carmaking plant in Zaporizhya once Daewoo took it over this year. Recent events, however, suggest that far from opening up Ukraine's economy, the South Korean corporation is seeking to turn it into a protected market. It is asking for the sort of government intervention that helped it and other Korean chaebols turn the Korean economic miracle into the mess it is today. Put simply, Daewoo wants a huge import duty slapped on used cars to assure sales of its models once they start rolling off the AvtoZAZ assembly line. The government and Parliament appear ready to comply, making imported cars at least five years old a whole lot dearer and prohibiting imports of autos more than eight years old altogether. Used cars here already cost far more than they do in the West. If Daewoo fears that the new cars it will make in Ukraine production line won't be able to compete against aging Opels, and Renaults brought in from abroad, can it really the right choice for modernizing AvtoZAZ? Lawmakers casting about for a populist issue to take on the campaign trail ahead of March elections really can't do much better than this: why should the growing ranks of Ukrainian car owners pay through the nose or be forced to buy a Daewoo? Why should a foreign conglomerate that boasts of its ability to make Ukraine competitive get the sort of protection denied to AvtoZAZ when it was struggling to survive on its own? The IMF is grudgingly keeping the Ukrainian government afloat while splashing out billions to save a South Korea crippled by arrogant state intervention in the service of chaebols like Daewoo. We know the Fund does not much concern itself with import duties. Perhaps it should, before Daewoo produces another 'miracle' for it to rescue.
The Kyiv Post is hosting comments to foster lively debate. Criticism is fine, but stick to the issues. Comments that include profanity or personal attacks will be removed from the site. If you think that a posted comment violates these standards, please flag it and alert us. We will take steps to block violators.

KyivPost

© 1995–2014 Public Media

Web links to Kyiv Post material are allowed provided that they contain a URL hyperlink to the www.kyivpost.com material and a maximum 500-character extract of the story. Otherwise, all materials contained on this site are protected by copyright law and may not be reproduced without the prior written permission of Public Media at news@kyivpost.com
All information of the Interfax-Ukraine news agency placed on this web site is designed for internal use only. Its reproduction or distribution in any form is prohibited without a written permission of Interfax-Ukraine.