By Lee Hyo-sik
Staff Reporter
Korea plans to seek a free trade agreement (FTA) with China, Japan and other major trading partners, including Australia, Canada and New Zealand next year.
A feasibility study on establishing a regional economic bloc in East Asia will also be undertaken in a bid to enhance Korea's growth potential and boost its global image.
The government has been promoting this idea for years to overcome its relatively small domestic market and boost exports to its two neighboring economic giants.
But China and Japan were largely indifferent to it over touchy political and historical issues, as well as hegemony in Asia.
But they have recently become more positive over integration, with the expansion of the EU and the establishment of regional economic blocs across the globe changing the landscape of trade.
Leaders of the three countries met in Beijing in October and agreed to speed up negotiations for an FTA. Joint research by industries, governments and academia will be conducted in pursuit of these.
Strategy-Finance Minister Yoon Jeung-hyun made public the 2010 plan in a report to President Lee Myung-bak, Wednesday.
The ministry will map out a comprehensive aid package, ranging from infrastructure construction and investment, to manpower, education and the transfer of developmental know-how.
Yoon also said his ministry would make an all-out effort to ensure Korea successfully hosts the G-20 summit in November 2010 and enlarge its bridging role between advanced and developing worlds.
"We will look to raise our voice on the global stage by our shares in the International Monetary Fund (IMF) and other international financial institutions," Yoon said.
"Also, the government will pursue the expansion of the Chiang Mai Initiative (CMI) introduced in 2000 to bolster economic cooperation in the Asian region, as well as increase the nation's official development aid (ODA) to developing countries."
Meanwhile, the government will mandate individuals and businesses with bank accounts abroad to report them to the financial authorities.
Electricity, gas and other utility costs here will be automatically adjusted in line with changing crude oil and other imported energy prices.
Energy consumption has been increasing at an explosive pace over the years partly because electricity and other utility costs have been kept artificially low, despite surging international crude oil and other raw material prices.
The government will allow people to deduct 20 percent of the amount of their donations from taxable income next year, up from 15 percent this year.
The government plans to foster the local bond market following Korea's recent inclusion into the World Government Bond Index (WGBI).
It will also ask the Korea Asset Management Corp. (KAMCO) to manage state-own land, buildings and other tangible assets across the country.
To encourage "low-carbon and green-growth," the government will invest 2.2 trillion won in various research and development (R&D) activities to advance renewable energy and other energy saving technologies in 2010, up 19 percent from this year.
The government will place top priority on creating as many jobs as possible next year, as the labor market here continues to remain in a slump, despite improving other macroeconomic conditions.
"The government will maintain an expansionary policy next year by frontloading the fiscal spending to the first half of the year. The government will continue to offer jobs in the public sector until the end of the first half of next year, while strengthening the competitiveness ofthe service industry and creating a more business-friendly environment to help boost corporate investment," it said.
The government will also establish a 3.5 trillion won fund to help small firms in the high-tech and green business sectors.
The government also hinted extending the temporary easing of capital gains taxes on multiple home owners beyond 2010 in accordance with market conditions. Currently, people holding more than two houses are subject to a capital gains tax rate of 45 percent, while single-and double-unit holders pay between 6 to 35 percent tax in line with the homeownership period.
But when the easing of capital gains taxes is lifted, those owing two houses will be subject to a 50 percent rate. People with more than two units will have to pay 60 percent of capital gains as taxes.