Learning from Korea

[sonicboom]

Learning from Korea

Part I

Saturday, January 30, 2010
Javed Masud

This article has been provoked by the observations and analysis of your distinguished columnist Shafqat Mahmood, based on his recent visit to South Korea, as published in The News of November 27, 2009. Mr Mahmood referred to the popular myth in our country that Koreans owe a debt to Pakistan in terms of duplicating its planning and development process as learnt through a visiting Korean delegation in the 1960s. He observes that his scepticism about the myth was considerably diluted when he actually met Mr Kim Jin-Hyun who had been a member of the visiting Korean delegation and had shared his feelings of fondness and nostalgia about that historical trip.

If Mr Mahmood had chosen to enquire from Kim as to what they had actually learned from Pakistan and what, if any, part of that knowledge had been translated into the Korean economic planning process and strategy, he would have faced embarrassing silence. It is, of course, a fact that a Korean delegation did visit Pakistan in the 1960s. The visit was proposed by the Harvard Advisory Group who were advisors to the Korean government at that time and had advised the Pakistan government earlier in establishing Pakistan's Planning Commission. It is, however, a complete myth that Koreans learnt much from this visit.

The system established in Korea is in fact quite different. The apex body for planning and development in South Korea is the Economic Planning Board (EPB), which is headed by a minister who is also designated as the deputy prime minister of the country. The EPB is responsible not only for planning and resource allocation but more importantly for implementation of public-sector programmes through line ministries. In order to ensure effective and timely implementation, each ministry has a representative of the EPB for purposes of coordination.

It may be interesting for readers to know the origin of the popular myth. In 1981, the Korean government posted one of its most senior diplomats, Mr Jay Hee Oh, to Islamabad as its consul general. Mr Oh was charged by his government with the mission to persuade Pakistan to establish full diplomatic relations with South Korea. At that time Koreans were miffed by the fact that while Pakistan had full diplomatic relations with North Korea, they had only consul-level relations with South Korea. Mr Oh began to work on all fronts and quickly recognising the Pakistani psyche he used his charm and diplomatic skills to massage our collective ego and to use all opportunities for political lobbying. He quickly appointed Chaudhry Zahoor Elahi, at that time a close political ally of General Ziaul Haq, as Korea's honorary counsel general in Lahore. His singular achievement was to convince Pakistan about Korea's debt to Pakistan.

In an address to the Lahore Chamber of Commerce, Mr Oh made this revelation that Koreans largely owe their success to Pakistan and referred to the visit of the Korean delegation to study our planning process. This statement was like music to all Pakistani ears; and since that time it is treated as the gospel truth. Renowned economists, foremost intellectuals, journalists and even political leaders have referred to this from time to time in public media. Incidentally, Mr Oh achieved his one-point agenda when Pakistan extended full diplomatic recognition to South Korea in 1984. As a reward, Mr Oh was appointed vice-minister of foreign affairs on his return from Pakistan.

At the time Korea started its planned economic development process in the early 1960s, they already had a national literacy rate of over 70 per cent. The important implication of this is that the learning curve for skilled workers in industrial undertakings was much shorter. As a matter of deliberate policy, Koreans opted for an industrial strategy which was totally opposite to the strategy in Pakistan. The manufacturing base targeted the export market, and not import substitution, as was the case in Pakistan. This ensured the high level of cost and quality competitiveness. In Pakistan, on the other hand, the strategy of import substitution was encouraged through establishing a multiple exchange rate under which industrial raw materials were imported at a concessional foreign exchange rate and the output was consumed locally with prices protected through high import tariff barriers. As a consequence, the output of these manufacturing activities was not internationally competitive and in many cases the capacity utilisation was below 50 per cent but sponsor continued to earn phenomenal profits because of tariff distortions.

Even at the initial stage of designing the planning strategy, the Korean leadership had a very clear vision of the future and, hence, a meaningful roadmap. Efforts were initially directed at promoting labour-intensive industry to be followed by capital-intensive industry, and later graduating to knowledge-intensive industry and services. This strategy was augmented by a well-conceived and effectively implemented public sector programme focusing on the development of heavy industry as well as both the physical and human infrastructure.

There are many stories of successful public-sector initiatives. One of the most important initiatives was the establishment of the first integrated steel mill (POSCO) as a totally green-field project. The mill with a capacity of 1 million ton (same as Pakistan Steel) was completed in July 1973 within a period of three years from the start of implementation. Soon after completion, the capacity continued to be expanded and by May 1981 it had reached 8.5 million tons.

 

[sonicboom]

Part II

The upgradation and expansion of road infrastructure was yet another milestone. The six-lane highway from Seoul to Pusan, the southern port city, was again completed in record time during that period with several industrial zones established in various parts of the country, all having access to the main highway. In the wake of the sharp increase in oil prices, Korean planners quickly realised the need for reduced dependence on imported oil and in achieving energy self-sufficiency. In the absence of resources of oil, gas, coal, and limited opportunity for hydro-power, the main emphasis was shifted to electricity generation through nuclear power. Thus, ten nuclear power stations were planned and implemented by stages with the result that currently 35 per cent of total electricity generation constitutes nuclear power.

The phased nuclear power programme contained an extremely important feature. In evaluating tenders from international bidders, a high weightage was given to the transfer of technology by respective bidders. This was to ensure that, with the addition of every new project, there was an enhancement in the capacity of Korean engineers, technicians and local equipment manufacturers. As a consequence, Korea has achieved the technical capacity to build nuclear power stations all by themselves. After the initial success in the Philippines and Indonesia, Korea has most recently won a landmark deal to build and operate four nuclear plants in the UAE. The Koreans clinched this $40 billion deal by beating more experienced bidders from France and the US.

Yet another important contributory factor in Korea’s phenomenal progress is the recognition of the principle of meritocracy. This is reflected not only in job selection but also in the education systems. From very early years, university admission is based on national competitive examination and admissions to universities are strictly based on positions obtained by the candidates in this examination. This, obviously, is the most effective means of ensuring equal opportunities for all.

Despite having long periods of military rule (like in Pakistan), the military establishment has shown a remarkable restraint in appropriating an undue share of national resources to themselves. There are no housing schemes, or other lavish perquisites that we are familiar with. The main reason for this is that a large part of the army consists of conscriptees and every Korean male member is required to be conscripted for three years; and given only a modest stipend during that mandatory service. By 1980, this modest monthly allowance was less than $10. There have been several media reports in Pakistan to suggest that a high level of defence expenditure in Pakistan is not a critical factor contributing to our economic travails by citing the Korean example where too defence expenditure constitutes a sizeable part of public expenditure. This comparison is highly misleading because given the conscription model of Korean armed forces, a high proportion of budgeted defence expenditure is targeted at defence production, an activity which obviously generates spin-off benefits for the rest of the economy.

The frugal style of the armed forces is equally evident in the civilian side of government. There is generally no concept of official residences, official cars, rest houses and guest houses for the civilian government functionaries. Only three government functionaries have official residences: the president, the prime minister, and the foreign minister. There is no official guest house and even the visiting heads of states are made to stay in hotels.

The above aspects clearly point to the fact that the country has shown impressive growth and development not by any quirk of fate or accident (or learning from Pakistan). There has been clarity in vision and an effective implementation strategy, which together helped the country in emerging from the ashes of the Korean War to a vibrant economic power within only half a century. This would not have been possible without the Korean work ethic which makes the ordinary Korean take pride in what he or she is doing but also to remain fully committed to his or her responsibility to themselves and to society.

There are many today in Pakistan who feel strongly that no country can move forward if society, and particularly the elite, is rife with corruption. This argument is not entirely valid if one looks at the Korean story. Over the years, there have been frequent and large-scale incidents of corruption, both in government and in the corporate sector. However, the perpetrators did not escape punishment whatever their status. The imprisonment of a former president of the country on charges of corruption amply testifies to this. Again, it is important to speculate why corrupt practices by government functionaries have not stood in the way of progress. Perhaps, the main reason is the inflexible attitude of government functionaries and implementing organisations of not allowing any compromise on quality standards or timely completion of projects even in exchange for kickbacks on project costs.

Can we then learn from Korea? The short answer is, perhaps, not. The fault lines in our governance, in our work ethics, in our individual and collective commitment, and above all, in our attitudes have continued to widen overtime and are now at a point that a miracle is required for a sustainable turnaround. But our faith-healers continue to assure us that miracles do happen.


The writer, a former CEO of PACRA, was Pakistan’s consul general/commercial counsellor in Seoul from 1982 to 1987. Email: javedmasud14@gmail.com

 

[Saleem]

The main problem, I think, has been an apathy on the part of the general population. The small group of people who did believe in a vision of a developed and advanced Pakistan could not find the necessary middle and lower level administrators, managers and business with a shared vision and integrity of character from among those whom they inherited from the colonial empire.

A second problem has been the tendency to deify local leaders - when someone is willing to die for a human being - any human being - we have a problem. One needs to follows principles and enhance institutions not individuals. A case in point is the continuous tirade against the Army. One may oppose the individual or group who are doing wrong but not ask for the destruction of the institution. Incidentally, ALL problems have been caused by insincere and dishonest appointments on the part of political leaders - form Ayub Khan to Yahya to Zia to Musharraf, all were appointed on the supposition that they were be tools who could be used to perpetuate the rule of the incumbent. Where there was a tussle and a compromise was forced, the chiefs left without major disruption - witness: Waheed Kakar, Jehangir Karamat etc. It may be noted here that Mr Musharraf himself noted that, given his file - which he saw once he became chief, he was surprised that he became chief!

For progress on needs principles more than principals !