This is the first in a series of interviews with international experts on Korea offering advice to President Moon Jae-in on how to overcome challenges and create a better future for the Korean people. ― ED.
By Kim Jae-kyoung
For new President Moon Jae-in, resolving the North Korean nuclear issue must be the top priority.
This is not just to secure peace and stability on the Korean Peninsula but also to settle social conflict and provide an impetus for the South Korean economy. It is an essential prerequisite for the country to move forward.
Against this backdrop, Sohn Sung-won, a professor at California State University, called on the new president to place top priority on building mutual trust with U.S. President Donald Trump.
"First, the new president must develop rapport with President Trump. Korea has been left out in dealing with the North Korean nuclear issue," Sohn said in an interview.
"Prime Minister Abe has already met twice with President Trump including a golf outing in Florida. President Xi has also visited Mar-a-Lago in Florida," he added.
To have a bigger say on the North Korean issue, Sohn, who served as a senior economist on the President's Council of Economic Advisers in the White House, stressed that Moon should not be ambiguous about his North Korea strategy."
"The new president must enunciate a clear strategy on how he plans to approach the North Korean issue," he said.
Moon has maintained an ambiguous stance toward North Korean nuclear issues, including the deployment of a Terminal High Altitude Area Defense battery here.
Sohn also said the president should get his administration ready to renegotiate the Korea-U.S. (KORUS) free trade agreement since the Trump administration is determined to do this.
"President Trump believes that the KORUS treaty is not working for the U.S. economy, pointing to the huge deficit against the U.S.," he said.
"Trump can cancel the treaty with notice of only a few months. This would be bad for both countries," he added.
He pointed out that under the circumstances both countries should figure out how to reduce the deficit and the best way to do that is to import more from the U.S. in such industries as food and aircraft.
"In the past the U.S. has complained that food exports to Korea from the U.S. have been interrupted unfairly," he said. "Korean airlines could also buy more Boeing aircraft instead of those from Airbus."
In order to help the Korean economy become more competitive and relevant in the 21st century, the former chief economist at Wells Fargo said that Moon should revamp three sectors — chaebol, labor and education, citing them as "the most serious issues facing the economy."
"Korea's dependence on chaebol is too high and risky. The ownerships need to be diversified and the symbiotic relationship between chaebol and politicians has to change," he said.
"Small- and medium-sized businesses must be encouraged to grow," he added. "Financial incentives should be increased to encourage more young people to join small- to medium-sized businesses."
In his view, the labor sector should also be up for overhaul. "Korean workers lose too many hours to strikes and demonstrations. Labor costs have soared while productivity gains have slowed," he said.
He advised the new leader to come up with an education system to focus on science and engineering.
"Most young men and women graduating from universities want to work for the government or big businesses," he said.
To survive in the era of the Fourth Industrial Revolution, Sohn suggested that the president seek ways to create an ecosystem led by business, not the government.
"The government can't tell businesses what to do about the Fourth Industrial Revolution and innovation. It can only create a conducive environment in which innovation can take place," he said.
"Reducing government regulations is important."
Bracing for another downturn
Sohn said that the president needs to come up with both short- and long-term plans to avoid a double dip downturn.
"The Korean economy is lethargic even though it spurted a bit during the first quarter primarily due to exports of semi-conductors and facilities investment," he said. "Later this year economic growth could soften again."
He called for the government and the central bank to employ both aggressive fiscal and monetary policies coupled with deregulation to bolster the economy which is very vulnerable to another downturn.
He pointed out that the recent rebound in economic growth has been due primarily to IT exports.
"The demand for semiconductors is notoriously cyclical and could turn down in the next couple of years. Undoubtedly, the new president will add a fiscal stimulus this year boosting economic growth temporarily, but that growth could be borrowed from the future," he said.
"I am pretty sure a fiscal stimulus package to create public employment will be introduced soon. The Bank of Korea should lend a helping hand as well."
By Kim Jae-kyoung
For new President Moon Jae-in, resolving the North Korean nuclear issue must be the top priority.
This is not just to secure peace and stability on the Korean Peninsula but also to settle social conflict and provide an impetus for the South Korean economy. It is an essential prerequisite for the country to move forward.
Against this backdrop, Sohn Sung-won, a professor at California State University, called on the new president to place top priority on building mutual trust with U.S. President Donald Trump.
"First, the new president must develop rapport with President Trump. Korea has been left out in dealing with the North Korean nuclear issue," Sohn said in an interview.
"Prime Minister Abe has already met twice with President Trump including a golf outing in Florida. President Xi has also visited Mar-a-Lago in Florida," he added.
To have a bigger say on the North Korean issue, Sohn, who served as a senior economist on the President's Council of Economic Advisers in the White House, stressed that Moon should not be ambiguous about his North Korea strategy."
"The new president must enunciate a clear strategy on how he plans to approach the North Korean issue," he said.
Moon has maintained an ambiguous stance toward North Korean nuclear issues, including the deployment of a Terminal High Altitude Area Defense battery here.
Sohn also said the president should get his administration ready to renegotiate the Korea-U.S. (KORUS) free trade agreement since the Trump administration is determined to do this.
"President Trump believes that the KORUS treaty is not working for the U.S. economy, pointing to the huge deficit against the U.S.," he said.
"Trump can cancel the treaty with notice of only a few months. This would be bad for both countries," he added.
He pointed out that under the circumstances both countries should figure out how to reduce the deficit and the best way to do that is to import more from the U.S. in such industries as food and aircraft.
"In the past the U.S. has complained that food exports to Korea from the U.S. have been interrupted unfairly," he said. "Korean airlines could also buy more Boeing aircraft instead of those from Airbus."
Chaebol reform
In order to help the Korean economy become more competitive and relevant in the 21st century, the former chief economist at Wells Fargo said that Moon should revamp three sectors — chaebol, labor and education, citing them as "the most serious issues facing the economy."
"Korea's dependence on chaebol is too high and risky. The ownerships need to be diversified and the symbiotic relationship between chaebol and politicians has to change," he said.
"Small- and medium-sized businesses must be encouraged to grow," he added. "Financial incentives should be increased to encourage more young people to join small- to medium-sized businesses."
In his view, the labor sector should also be up for overhaul. "Korean workers lose too many hours to strikes and demonstrations. Labor costs have soared while productivity gains have slowed," he said.
He advised the new leader to come up with an education system to focus on science and engineering.
"Most young men and women graduating from universities want to work for the government or big businesses," he said.
To survive in the era of the Fourth Industrial Revolution, Sohn suggested that the president seek ways to create an ecosystem led by business, not the government.
"The government can't tell businesses what to do about the Fourth Industrial Revolution and innovation. It can only create a conducive environment in which innovation can take place," he said.
"Reducing government regulations is important."
Bracing for another downturn
Sohn said that the president needs to come up with both short- and long-term plans to avoid a double dip downturn.
"The Korean economy is lethargic even though it spurted a bit during the first quarter primarily due to exports of semi-conductors and facilities investment," he said. "Later this year economic growth could soften again."
He called for the government and the central bank to employ both aggressive fiscal and monetary policies coupled with deregulation to bolster the economy which is very vulnerable to another downturn.
He pointed out that the recent rebound in economic growth has been due primarily to IT exports.
"The demand for semiconductors is notoriously cyclical and could turn down in the next couple of years. Undoubtedly, the new president will add a fiscal stimulus this year boosting economic growth temporarily, but that growth could be borrowed from the future," he said.
"I am pretty sure a fiscal stimulus package to create public employment will be introduced soon. The Bank of Korea should lend a helping hand as well."
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