Seoul needs hard heads

At this stage, the region and the world can only wait with hope and patience for the economic reforms prescribed by the International Monetary Fund (IMF) to produce concrete results in South Korea.

But we can certainly draw a measure of comfort from the fact that Seoul was, finally, willing to bite the bullet and accept the tough terms and conditions of a massive US$57 billion IMF loan package to help it out of its financial and economic crisis.

Maybe it is too early to congratulate South Korea, a country that has been described as a combatant in an economic war, while that war is still going on. Maybe it is also too early to rule out the possibility of another disappointment that will dash hopes for stability in the region. Thailand, which also has signed an agreement with the IMF, suffered a major disappointment on Wednesday when its currency dropped to a historic low.

The IMF has warned Seoul that the situation requires hard- headed calculation and wisdom rather than reckless demands if the country is to stabilize its enervated industry and economy. Financial Secretary Donald Tsang also has performed some hard- headed calculations. He has decided that Hong Kong should not contribute to this rescue package since South Korea has the full backing of the industrialized countries.

But Hong Kong will try to help in other ways which will not involve public funds. It will, for example, host a meeting of experts on 18 December at which mechanisms will be drawn up to address financial problems in the region.

Other matters to be discussed are likely to include Mr. Tsang's call for the creation of a bond market in the region as a source of relatively cheap funds.

Mr. Tsang is aware that Hong Kong's financial system is equally vulnerable to contagious shocks. But he also recognizes the need to be prudent with public funds.

-- The Hong Kong Standard