Moon set to help aviation, tourism, car industries
A currency trader gestures at the foreign exchange dealing room of the KEB Hana Bank headquarters in Seoul, last week. AP-Yonhap
By Kim Yoo-chul
By Kim Yoo-chul
The landslide election victory for the Democratic Party of Korea (DPK) was mostly driven by public approval of the party's partnership with the government and Cheong Wa Dae for its competent handling of the COVID-19 pandemic in addition to President Moon Jae-in's focus on low-income households and small- and medium-sized enterprises (SMEs) in stimulus aid packages.
With the DPK's solid majority that clearly strengthens the party's presence in the National Assembly, Moon is expected to push his administration's plan to regain economic momentum after the virus-hit economic crisis.
“Top priority will be placed on passing additional policies through the National Assembly aimed at minimizing the negative impact of the pandemic and facilitating a rapid economic rebound. Given popular support for these initiatives, the ruling party will face limited obstacles in fast-tracking its approval despite opposition from the fiscally more conservative United Future Party,” the Economist Intelligence Unit (EIU) said in its commentary, Sunday.
Moon already confirmed that the government will submit another supplementary budget as soon as the new Assembly convenes, after the previous one worth 11.7 trillion won was approved in March. Now, this new supplementary budget will “target businesses in the aviation, automotives, technology and tourism sectors,” that sustain a large amount of jobs and have been severely affected by the virus, the EIU said.
The aviation, automotive, technology and tourism industries as a whole underpin the South Korean economy in terms of jobs. Regional cities are both directly and indirectly reliant on the employment that related companies provide. The aviation industry, therefore, is at the forefront asking the government for massive state-organized relief packages.
Government officials said it will finalize the specifics of state-level financial aid to support the aviation, automotive, machinery and shipping industries early this week. “The government is working on it. The soon-to-be-announced aid packages will aim at sustaining jobs and strengthening social buffer programs for those affected,” a government official said.
“Over the next two years, the government will also speed up efforts to roll out reformist policies aimed at reducing economic and social inequality, creating a fairer competitive environment for SMEs and tackling corruption by officials. We expect the DPK to introduce bills on deepening labor-market liberalization and encouraging domestic innovation and sourcing in the manufacturing sector,” the official said.
“The Moon administration's policy priorities will include public sector-led economic stimulus measures designed to support the economic recovery …. The Moon administration might also pursue tax and regulatory reforms designed to address income inequality and the disproportionate economic influence of conglomerates within the South Korean economy,” said Scott A. Snyder, a senior fellow for Korea studies and director of the program on U.S.-Korea policy at the Council on Foreign Relations (CFR).
Specifically, as more Korean manufacturers clearly remain highly vulnerable to the COVID-19 pandemic, the country's top two carmakers ― Hyundai and Kia ― extended production shutdowns in their key markets where factories are suffering from a crushing supply-chain issue. The country's top airliners ― Korean Air and Asiana Airlines ― are nowhere to be seen on multiple fronts. Samsung and LG Electronics also shifted their focus on securing cash and defending their bottom lines rather than expanding markets in key products.