'Delayed restructuring will drag Korea behind Japan'

By Choi Sung-jin

If Korea drags its feet with its industrial restructuring, the nation will fall behind Japan in competitiveness, suffering serious damage to major industries, a report says.

“Provided Japan successfully completes its industrial reforms, Korea’s major industries that are in fierce competition with their Japanese rivals, including shipbuilding and steel, are highly likely to suffer heavy blows amid the widening gap in their competitiveness,” said the report by the National Assembly Budget Office.

According to the report, Japan is aiming to attain a 3-percent GDP growth rate at an annual average over the next decade. In order to improve the environment for business investment, Prime Minister Shinzo Abe has pledged to repair the production base for Japan’s manufacturing culture based on its unique workmanship called “monozukuri.”

Tokyo will also lower the corporate income tax rate from the current 35.6 percent, sign more free trade agreements, implement the Trans-Pacific Partnership, and creatively handle the toughening environmental regulations and rising energy costs.

“The Japanese government is reviewing various regulations and administrative red tape from the ground up from the point-of-view of business,” Abe said Wednesday while he attended an investment seminar in Belgium as part of his European swing. “We will build Japan into the best country in which to do business,” Abe added vowing to reduce the corporate tax rate to Germany’s level by 2018.

The report said Japan is pushing strongly to bolster its industrial competitiveness through a well-thought-out and timely executed government-led restructuring of its over-invested industries.

“The Korean government, too, should carry out its restructuring more swiftly and boldly of those industries where the competitive edge has become dull, and keep enhancing corporate competitiveness and the nation’s industrial physique by nurturing a business environment where sound and steady restructuring is constantly helped along,” it said.