Renew Campaign for Foreign Investment
By Lee Hyo-sik
Staff Reporter
Korea's candidate for the vice presidency of the Asia Development Bank (ADB) advised the government to renew its campaign to attract foreign direct investment.
In an interview with The Korea Times, Thursday, Inha University professor Hyun Jung-taik said, "Attracting foreign investment is crucial to generating high-quality jobs. Hyundai Motor and other large local companies are building more plants overseas and hiring foreign workers, shifting jobs overseas. To offset such job losses, foreign firms should come in, do business here and employ Korean workers."
To do so, the former president of the state-funded Korea Development Institute (KDI) suggested that Korea remove related regulations and create a better residential and educational environment for non-Koreans living here.
Last month, the government named Hyun as Korea's candidate for the ADB vice presidency. He has accumulated extensive experience and expertise in macroeconomics and international finance over his 30-year career as a bureaucrat and a scholar. He is expected to be interviewed for the post this month and the nominee will be selected in March.
"In the nation's free economic zones, political considerations come before economic principles. We think removing one or two rules would make foreigners eager to come here and invest. But they will instead go to Singapore, Shanghai and other places where more regulations have been lifted. To attract foreign investment, we should give them the freedom to do what they need to do to make money," Hyun stressed.
To better shield itself from outside shocks and enter the league of advanced economies, he suggested that Korea ease regulations on manufacturing and abolish entry barriers to various services sectors.
The government has introduced a series of measures over the past few years to turn the nation into a manufacturing hub and boost the competitiveness of services industries here. But they have largely failed to achieve the intended goals.
"It takes too much paperwork and time to build a plant here. The entry barriers to the medical, education, legal and other services industries remain intact, a major hindrance to promoting competition and efficiency. We are now losing Chinese and Vietnamese students who would otherwise come here for their education to Singapore and other advanced Asian countries," Hyun said.
He also said many foreign medical tourists choose Thailand and other nations over Korea because of heavy regulations imposed on what medical services hospitals can offer and how they operate.
Touching on Korea's economic outlook for this year, the professor dismissed a possibility of the nation falling into a "double dip" downturn.
"But the Korean economy will not post robust growth in 2010 either. Given its heavy exposure to external factors, it would be the best scenario if the nation expands at its growth potential rate of around 4 percent after discounting the base effect," Hyun said, adding the fate of Asia's fourth-largest economy will be determined by what happens outside its borders.
He then said China is Korea's largest trading partner and export destination, stressing the Chinese economy's performance will greatly affect the growth here. "If the world's fastest growing economy focuses more on boosting its domestic demand, rather than on increasing outbound shipments for growth, it would be more beneficial to Korea."
Hyun stressed the nation should place top priority on creating as many jobs as possible in 2010, adding the government should do everything it can to help companies expand investment and hire more workers.
"Last year, the government offered temporary positions in the public sector to prop up the sluggish labor market. But in 2010, the private sector should do more. The government should introduce a host of policy measures, including tax cuts for facility investment, to encourage businesses to add workers to their payrolls," he said.
Hyun then said the government must maintain policy coherence, adding when it promises to cut corporate income tax, it should honor the pledge no matter how politically unpopular it may become later.
Role of English-language Media
The Korea Times and other English-language media outlets here are the key to upgrading Korea's image overseas, he said.
Hyun added that the English daily should assume a more significant role in providing foreign investors and companies with credible, precise financial and business information on Asia's fourth-largest economy.
"We cannot stress the importance of local English-language media enough in promoting Korea overseas. They are the nation's window to the rest of the world and the key to attracting investment from outside. When I was in China, The China Daily was the primary source of information for me and other non-Chinese people. I am sure The Korea Times plays the same role for foreigners residing here," Hyun said.
He then said the English daily should make more efforts to extend its coverage on local business and financial issues for foreign businesspeople, stressing the government needs to strategically foster the English-language media industry and turn it into an effective tool for promoting Korea abroad.