Lee Hyo-sik is Finance Desk editor at The Korea Times. He manages finance-related stories on macroeconomics, banks, stocks, bonds, crypto etc. He is passionate about covering what's happening in Korea's financial industry and explaining it to both Korean and non-Korean readers. You can reach him at leehs@koreatimes.co.kr. Your insights and feedbacks are always appreciated.
Biz fraternity worries economy 'on slippery slope'
By Lee Hyo-sik
The economy is at risk of stepping on a “slippery slope” unless the government introduces contingency plans such as a large-scale supplementary budget, the Korea Chamber of Commerce and Industry (KCCI) said Wednesday.
The call from Korea’s largest business association, representing about 150,000 small and large businesses, comes as the Middle East Respiratory Syndrome (MERS) epidemic weighs down on a hint of recovery.
“The economy is facing a great deal of uncertainties,” said Jeon Su-bong, head of the KCCI’s research division. “First-half GDP growth will likely fall short due to a combination of the MERS outbreak, the continued global economic downturn and weak Japanese yen.”
He cited as challenges the planned U.S. rate hike, the slowing Chinese economy, the won’s strength and volatile oil prices.
The KCCI provided additional specifics for the Ministry of Strategy and Finance to consider before it announces its policy direction for the second half of the year.
Besides the extra budget call, it urged an overhaul of domestic services industries, which lag far behind those of advanced countries.
“Korea should enhance its ability to cope with economic uncertainties, boost its growth potential and hone its international competitiveness,” Jeon said. “To do so, it must carry on with structural reform without a hitch.”
“We are asking the government to lower consumption taxes, and allow companies to deduct more entertainment expenses from taxable income to encourage them to spend more money. To help boost outbound shipments, the government should extend larger financing to exporters to help them deal with foreign exchange risks,” he said.
The KCCI reiterated the need for friendlier corporate tax codes to encourage companies to increase their global competitiveness and acquire foreign entities.
“The government should allow the establishment of profit-oriented hospitals by non-medical personnel and take other steps to strengthen the competitiveness of the local medical industry,” Jeon said. “It also needs to ease rules governing clinics and hospitals when treating foreign patients.”