By Lee Hyo-sik
The head of Korea's largest business lobby group said Thursday that Korea's business environment for manufacturers has deteriorated over the past few years, due mainly to anti-corporate policies and legislation.
Park Yong-maan, the chairman of the Korea Chamber of Commerce and Industry (KCCI), told reporters that an increasing number of domestic manufacturers are opting to build plants and hire workers abroad rather than expand their domestic operations.
''The United States and other advanced countries are enjoying a manufacturing renaissance. American businesses benefit greatly from the discovery of shale gas, while Japan Inc. is receiving a boost from fiscal and monetary expansionary policies of 'Abenomics.' European governments have introduced a series of policies to prop up their manufacturing sectors,'' said Park, who is also the chairman of Doosan Group.
''In contrast, policymakers and politicians here have rushed to introduce labor and environment-related policies and legislations, which have ended up curbing corporate activities,'' the chairman said. ''I can see that some labor and environment regulations are necessary. But many others are too excessive and are being implemented too quickly. Companies need time to adjust to new rules.''
Park has been expressing concerns over issues ranging from minimum wage to the reduction of working hours since August when he became the KCCI chief.
Business leaders are worried about the law that financially penalizes companies for mismanaging chemical substances. They are also concerned about the government policy of shortening working hours because this will significantly increase labor costs. The potential wage increase as a result of the expanding scope of base salaries has been negatively affecting business sentiment here.
The chairman argued that when the business environment deteriorates, companies tend to head overseas and build plants and hire workers there. ''Rather than expand domestic presence, more and more Korean manufacturers are turning to foreign countries to build and operate new production facilities. Policymakers and lawmakers should make more efforts to create a more business-friendly environment if they want to help revitalize the sagging domestic economy.''
Park then offered advice to Korea Inc., saying that only companies which successfully undergo restructuring and enhance their competitiveness will emerge as winners next year and beyond.
''I think things will likely pick up for the Korean economy in 2014 in line with the improving global economy. Businesses that have made necessary preparations will be able to capitalize on the perceived economic rebound. But those who haven't will continue to face hardship,'' the chairman said. ''In anticipation of better business conditions, companies should make larger investments and hire workers to strengthen their core competiveness, rather than downsize operation and dismiss workers.''
Park projected that the U.S. will begin tapering its quantitative easing (QE) in the first quarter of 2014, saying that Korea should take all possible preemptive measures to minimize its adverse effects.
''The reduction of the U.S. bond buying program will have only limited effects on Korea because the nation has recorded huge trade surplus over the past few years. Its record high foreign exchange reserves and low short-term foreign borrowing also helps Korea withstand outside shocks,'' the chairman said. ''But India, Brazil, Turkey, Thailand and other emerging economies that posted trade deficits and experienced asset bubbles due to the influx of hot money will likely suffer from the U.S. QE tapering.''
In response, Korea should make more efforts to reduce its export dependence on emerging markets by shipping more products to the healthier U.S. and other advanced countries, Park suggested. ''The country should also boost domestic demand by providing support to and removing regulations on various services industries if it wants to better cope with what happens outside,'' he said.
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| Park Yong-maan |
Park Yong-maan, the chairman of the Korea Chamber of Commerce and Industry (KCCI), told reporters that an increasing number of domestic manufacturers are opting to build plants and hire workers abroad rather than expand their domestic operations.
''The United States and other advanced countries are enjoying a manufacturing renaissance. American businesses benefit greatly from the discovery of shale gas, while Japan Inc. is receiving a boost from fiscal and monetary expansionary policies of 'Abenomics.' European governments have introduced a series of policies to prop up their manufacturing sectors,'' said Park, who is also the chairman of Doosan Group.
''In contrast, policymakers and politicians here have rushed to introduce labor and environment-related policies and legislations, which have ended up curbing corporate activities,'' the chairman said. ''I can see that some labor and environment regulations are necessary. But many others are too excessive and are being implemented too quickly. Companies need time to adjust to new rules.''
Park has been expressing concerns over issues ranging from minimum wage to the reduction of working hours since August when he became the KCCI chief.
Business leaders are worried about the law that financially penalizes companies for mismanaging chemical substances. They are also concerned about the government policy of shortening working hours because this will significantly increase labor costs. The potential wage increase as a result of the expanding scope of base salaries has been negatively affecting business sentiment here.
The chairman argued that when the business environment deteriorates, companies tend to head overseas and build plants and hire workers there. ''Rather than expand domestic presence, more and more Korean manufacturers are turning to foreign countries to build and operate new production facilities. Policymakers and lawmakers should make more efforts to create a more business-friendly environment if they want to help revitalize the sagging domestic economy.''
Park then offered advice to Korea Inc., saying that only companies which successfully undergo restructuring and enhance their competitiveness will emerge as winners next year and beyond.
''I think things will likely pick up for the Korean economy in 2014 in line with the improving global economy. Businesses that have made necessary preparations will be able to capitalize on the perceived economic rebound. But those who haven't will continue to face hardship,'' the chairman said. ''In anticipation of better business conditions, companies should make larger investments and hire workers to strengthen their core competiveness, rather than downsize operation and dismiss workers.''
Park projected that the U.S. will begin tapering its quantitative easing (QE) in the first quarter of 2014, saying that Korea should take all possible preemptive measures to minimize its adverse effects.
''The reduction of the U.S. bond buying program will have only limited effects on Korea because the nation has recorded huge trade surplus over the past few years. Its record high foreign exchange reserves and low short-term foreign borrowing also helps Korea withstand outside shocks,'' the chairman said. ''But India, Brazil, Turkey, Thailand and other emerging economies that posted trade deficits and experienced asset bubbles due to the influx of hot money will likely suffer from the U.S. QE tapering.''
In response, Korea should make more efforts to reduce its export dependence on emerging markets by shipping more products to the healthier U.S. and other advanced countries, Park suggested. ''The country should also boost domestic demand by providing support to and removing regulations on various services industries if it wants to better cope with what happens outside,'' he said.
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