The Korea Times

Regulations on plant construction to be eased

By Yoon Ja-youngThe government will drastically relax regulations on plant construction near metropolitan areas as part of steps to help boost investment, the Ministry of Land, Infrastructure and Transport said Tuesday.Construction projects on railways and roads near the border with North Korea will also include preparations for unification with the North.“We will push for strong deregulation so as not to miss the golden hour for economic renovation,” said Vice Minister Yeo Hyung-ku Tuesday.First of all, it will ease rules on the construction of factories in some non-urban areas. Except for plots designated as “industrial zones” in urban areas, the government has been restricting construction of factories. For instance, bleaching or dying factories or those using chemicals are banned in those designated as specially managed zones in non-urban areas.However, there is great demand to build factories in these areas, especially around Seoul. The ministry said that instead of a ban, it will allow construction of factories unlikely to cause pollution. The measure is

Jan 27, 2015By Yoon Ja-young

Economy

Time to be frank about greater tax burden

Gov’t urged to come up with measures for fairer burden sharingBy Yoon Ja-youngThe dispute over the year-end tax settlement has pulled down the approval rating of President Park Geun-hye to an all time low of 30 percent. Salaried workers who will appear to have to pay more taxes after the year-end tax returns settlement have turned their back on her.President Park stressed during her election campaign that she would realize “welfare without a tax increase,” but experts say it is time for her to be frank and talk about welfare and tax.Professor Kang Byung-goo of Inha University points out that the country’s welfare spending will inevitably increase with the aging of society.“To sum up, Korea is in a state of ‘low burden, low welfare.’ Its overall socioeconomic condition, such as low birthrate, aging, and polarization, however, makes an increase in welfare spending inevitable. We can’t avoid the question of how to fund this,” he said.Despite the President’s promise that there would be no tax hike, the government has de facto be

Jan 25, 2015By Yoon Ja-young

Economy

Rate cut may be inevitable

By Yoon Ja-young The European Central Bank (ECB)’s announcement of a big stimulus measure is expected to add pressure on the Bank of Korea (BOK) to cut its key rate to boost the domestic economy, analysts said Thursday.Following the additional quantitative easing by the ECB, the BOK is likely to cut its key rate as early as February or March, said Im Noh-joong, an economist at I’M Investment and Securities.“As the Euro economy enters deflation, the ECB has been expected to use additional quantitative easing. Internally, Korea is continuing to see an economic slump despite the two rate cuts in August and October last year.Inflation is also quite low. When considering these, the expectation is high for a further cut of the key rate,” he said.Shin Dong-jun, an economist at Hana Daetoo Securities, said the central bank will have to cut the rate due to structural reasons such as the debt problem.“A relatively high rate enhances credit risk,” he said, pointing out that the country’s economy has gone through structural changes after the global

Jan 22, 2015By Yoon Ja-young

Economy

Gov't buckles under salaried workers' wrath

Finance Minister Choi Kyung-hwan speaks during a press conference to explain the government’s year-end tax settlement scheme in Seoul, Tuesday./ Korea Times photo by Shim Hyun-chulBy Yoon Ja-young Strategy and Finance Minister Choi Kyung-hwan said the government will consider revising tax return regulations, as salaried workers protest that many of them are likely to pay additional taxes this year.“We will look into how the tax burden of each income bracket has changed to optimize taxes,” Choi said, at a hastily-arranged media briefing Tuesday.The briefing was held amid increasing anger from workers who are expected to pay additional tax in their year-end tax settlement. As many workers used to get tax refunds after the settlement, it was referred to as the 13th month salary or bonus.Since the tax return system revision, a considerable number of workers are complaining that they will be paying additional taxes after the settlement, instead of receiving a refund.Park Min-tae, an office worker at a trading company in Seoul, for example, got around 1 million won i

Jan 20, 2015By Yoon Ja-young

Economy

Online banks stir controversy over regulation

By Yoon Ja-youngThe financial regulator is considering allowing online banks, but the plan is facing an obstacle ― the country’s regulation that bans industrial capital from owning a bank. Analysts criticize that the government regulation is making Korea fall behind in the global competition to lead in the “FinTech” sector.FinTech, or financial technology, is expected to change the landscape of the financial industry by transferring the power to IT companies. They are providing diverse financial services based on the Internet and mobile devices.China’s IT giant Alibaba, for instance, set up a financial company to provide small-sum loans to online shopping businesses. It acquired an Internet bank license from the Chinese government last year.The Internet-only banks took 3.1 percent of total assets of commercial banks in the United States as of 2014 March, and Japan is seeing the assets of such banks grow by an average 32 percent annually. As Internet-only banks can lower costs, they can attract customers with better interest rates and lower fees.Korea, an

Jan 19, 2015By Yoon Ja-young

Economy

Park receives mixed reactions on economic pitch

By Yoon Ja-young Those in the business circle welcomed President Park Geun-hye’s economic initiatives delivered in a speech Monday, but with caveats about some elements and doubts about others.“President Park dedicated over two-thirds of her New Year address in showing a determination to revitalize the economy. We will make efforts to increase corporate investment and exports,” said the Federation of Korean Industries, the big business lobby group.The Korea International Trade Association said Park was right to focus on structural problems that hamper economic recovery from reaching the general public. “The innovative education system and regulation-free business environment helped the U.S. economy recover fastest from the global financial crisis,” it said, calling for a business-friendly environment and expansion of economic territory.The Korea Employers Federation focused on labor market reform. “The labor market should be flexible and there should be fundamental measures to change its dual structure market,” it said, referring to the

Jan 12, 2015By Yoon Ja-young

President doesn't get it

Economy

Inflation rate may fall below 1 pct. Lack of momentum for recovery adds to deflation concern

Stacks of 100-euro-bills piled up at the Korea Exchange Bank headquarters in downtown Seoul, Thursday. The Euro has fallen in value to around $1.18 per euro upon concern over deflation in EU. / YonhapBy Yoon Ja-young After global oil prices recently fell below $50 per barrel, some economists lowered their outlook for the country’s inflation rate to below 1 percent. Low inflation, coupled with slow growth, is adding to concerns that Korea may fall into Japanese style deflation.Samsung Securities recently lowered its inflation outlook for the year to 0.9 percent from its previous estimation of 1.4 percent, citing the falling oil prices. Credit Suisse also cut its inflation outlook to 0.9 percent from 2.9 percent. It pointed out that fuel plays a huge part in consumer prices.If their estimate turns out to be correct, the country will see inflation fall to below 1 percent for the first time since 1998.That is far below the central bank’s estimate of 2.4 percent; but it is also expected to lower its prediction soon too. The Bank of Korea Governor Lee Ju-yeol told media la

Jan 8, 2015By Yoon Ja-young

Economy

Outside directors playing 'rubber stamp'

By Yoon Ja-young The history of the chaebol shows that they can falter on the wrong decisions made by the owning family, damaging the interest of the majority shareholders.The shareholders’ meeting and outside directors are designed to work as a buffer to such “owner risks,” but it seems that they are working as a mere “rubber stamp.”Data from the Corporate Governance Service (CGS), for instance, shows that the outside directors at Hyundai Motors approved all of the 139 issues raised at board meetings during the past five years.That includes the company’s purchase of KEPCO’s land in Samseong-dong, southern Seoul. Hyundai won the bidding by offering 10.5 trillion won, or $10 billion, which is around three times the appraisal value of the land.The bold bidding by the Hyundai Motors’ chairman, however, brought criticism that the company was ignoring the interest of shareholders. Its share price has plunged since the decision amid a massive selloff by foreign investors.Korean Air, which showed in the recent “nut rage” scand

Jan 7, 2015By Yoon Ja-young

Economy

Cheil Industries correct recent gains

Analysts mixed about outlook for share pricesBy Yoon Ja-youngCheil Industries has been on a roller coaster ride for the past couple of days.The company that holds key to the governance restructuring of Samsung Group closed sharply lower Tuesday, correcting recent steep gains. It closed at 138,500 won, down 4.81 percent. It fell for two consecutive days after closing at 171,000 won Friday, the highest ever.Cheil has been at the center of attention even before its debut on the bourse on Dec. 18. The stock was 195 times oversubscribed when it took subscriptions for the IPO, with deposits totaling 30.06 trillion won.The stock continued soaring, once touching 179,500 won on Monday’s trading, which is 3.4 times its IPO price of 53,000 won, but it started sliding after hitting the ceiling.Analysts have mixed prospects.Park Joong-sun, an analyst at Kiwoom Securities, said the current market cap of Cheil is hard to rationalize.“Cheil’s competitiveness lies in its potential to outpace its peers by applying Samsung’s DNA in construction, leisure, fashion, catering and bi

Jan 6, 2015By Yoon Ja-young

Economy

Entertainers cash in on tax loopholes

Song Hye-kyo Jang Keun-suk By Yoon Ja-young Actress Song Hye-kyo made headlines in August over a tax evasion scandal. The following month, officials from the National Tax Service questioned singer and actor Jang Keun-suk for allegedly underreporting income made in China.Entertainers’ incomes have increase 24 percent during the past three years thanks to “hallyu,” but the tax agency is being criticized for leaving loopholes.According to the “Statistical Yearbook of National Tax,” the country’s entertainers earned 39.6 million won in 2013, up 24.3 percent from three years ago. Among them, singers led the way. In 2010, they earned on average 27 million won, which jumped 72.2 percent to 46.7 million won. The so-called hallyu stars pulled up the average income, as they bolstered their fan numbers around the world.“The hallyu stars’ income is much bigger than people imagine,” said the public relations manager of a girl group, who asked not to be named. “Even those who aren’t’regarded as top stars in Kore

Jan 4, 2015By Yoon Ja-young

Yoon Ja-young

Read more

Regulations on plant construction to be eased

Time to be frank about greater tax burden

Rate cut may be inevitable

Gov't buckles under salaried workers' wrath

Online banks stir controversy over regulation

Park receives mixed reactions on economic pitch

Inflation rate may fall below 1 pct. Lack of momentum for recovery adds to deflation concern

Outside directors playing 'rubber stamp'

Cheil Industries correct recent gains

Entertainers cash in on tax loopholes

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