It's hard to believe that some 15 years ago South Korea teetered
on the brink of bankruptcy.
Seoul's commercial district today is alive and busy, but in
1997, its businesses were vastly indebted, its banks were over-leveraged and
its financial system was on the verge of collapse.
The Asian Financial Crisis had hit and South Korea was determined
to find a way out, fast. And it was successful.
- Firstly, it obtained a massive $58bn (£37bn) loan from the International Monetary Fund (IMF), and then it swallowed the tough conditions attached.
"The Koreans took on conditions that they didn't
like, So much so that they called it the 'IMF Crisis', as
if it was caused by the IMF.
"But within three years, they turned it around - quicker
than any other country - and then they paid [the loan] back."
Sacrifices
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- Managers and workers agreed to accept salary cuts and layoffs. The consensus among the people is a key ingredient
Two things about the way South Korea faced the Asian Financial
Crisis were remarkable.
- One was the speed with which the country rebuilt its economy.
- The second was the fact that South Koreans so willingly helped them do it.
The story of a South Korean !!!!
- Seoul resident Choi Gwang-ja lives in a high-rise apartment with a view of the city's glitzy southern district. Here, apartments go for $1m a piece and are a symbol of South Korea's success.
- As Choi Gwang-ja watches her nine-month-old grand-daughter play with a toy keyboard, she explains it is a tradition for families in Korea to receive gold rings on the birth of their children.
- But Choi Gwang-ja doesn't have the ring she was given for her own daughter's birth; because, like many other South Korean women, she sold her gold jewellery to help dig the national economy out of the financial crisis.
- "To think of all the gold and the memories that we had to give away," she says. "It's really heartbreaking. And it makes me fill with tears even now, because each piece of jewellery had a story - it was my wedding ring, my husband's wedding ring, it was the ring given to me when my daughter was born," she says.
- "But at the time, it was the only thing we could do. People were saying that the whole country was going bankrupt."
Urged on by the main TV networks, millions of households
reportedly turned up to gold-collection centres across the city.
'Burden-sharing'
- Other campaigns urged people to buy local products(swadeshi) and donate spare foreign currency to the government.
- These campaigns ran alongside draconian restructuring programmes.
- And in a country where trade unions are seen as militant - there were job cuts. So how did the government do it?
At the Finance Ministry offices, the memories of that time are
stark.
Many South Koreans sold their prized assets to help save the economy from bankruptcy
Psychological boost
- Koreans didn't have much to fall back on during the financial crisis, and so "they knew what it meant".
In fact, the jewellery-collection campaign in Korea was more of
a psychological than financial boost to the nation.
