Korea to bolster investment, deregulation for biz-oriented growth

Minister of Trade, Industry and Energy Lee Chang-yang delivers the opening speech at the 2022 Korea Times Forum at the Korea Chamber of Commerce and Industry (KCCI) building in Seoul. Korea Times photo by Shim Hyun-chul

By Lee Kyung-min

• Published Jun 21, 2022 3:15 PM KST
• Updated Jun 22, 2022 2:59 PM KST

Foreign firms in Korea are strategic assets of nation's economy: minister

By Lee Kyung-min

Korea will remove and overhaul policies that have long frustrated the entrepreneurial spirit and undermined corporate competitiveness, in a clear, dramatic shift in the government's economic policy directives to restore and enrich the dynamism and vitality of the private-sector-driven economy, the country's top industry policymaker said, Tuesday.

“Key high-tech industries encompassing semiconductor manufacturers and beyond will be fostered with the full, flexible and business-friendly policy assistance of the Yoon Suk-yeol administration, mostly in the areas of increasing the pool of highly skilled experts and tax benefits,” Minister of Trade, Industry and Energy Lee Chang-yang said during an opening speech at the 2022 Korea Times forum at the Korea Chamber of Commerce and Industry (KCCI) building in Seoul.

The forum titled, “Policy Suggestions to Yoon Government," has been jointly planned with global consulting firm McKinsey & Company in cooperation with the industry ministry.

He stressed that uncertainties clouding corporate outlooks and the unpredictability of business conditions marred by inconsistent government policies will be drastically reduced through corporate tax cuts and the clarification of legal responsibilities and requirements regarding punitive measures on the CEOs of large firms in the event of a death or serious injury at a small partner firm.

The slew of new policy priorities, in Lee's view, will help Korea solidify its role as a key contributor to global supply chain stabilization, underpinned by joint efforts by the government and private sector to lead a much-awaited economic recovery.

Also anchoring the optimism are the significant contributions of foreign firms in Korea, highly valued members of the local economy with influences extending beyond Korea's borders.

Mutual growth

“The government will establish policies reflective of the concerns and recommendations of market players ― a critical step toward sustainable mutual growth,” Lee said. “We will not push through any particular measures that neglect or dismiss the voices of the private sector and instead will strive to find answers understood and applicable not in principle but in practice.”

The pledge will be implemented via what the ministry has termed, “One In, Two Out,” a new rule whereby creating a new regulation must be pursued with the easing or altogether removal of two or more similar regulations.

“We will remove redundancies for the streamlined and better use of administrative resources, instead of posing costly risks to corporate growth,” said the former professor of economics and public policy at Korea Advanced Institute of Science and Technology (KAIST).

Also to be eased are some rules involving the environment, labor and education, a set of complicated redundancies long criticized by the corporate sector.

“Unreasonable regulations will be lifted, and goal-oriented and result-focused research activities and investments will be rewarded under the new policy assistance. The technological prowess of the country will be more than propelled by the government's new direction,” Lee said.

The set of new visions are in line with President Yoon Suk-yeol's governing principle announced June 16: combatting low growth and restoration of the market-driven economy.

The overarching principles will not be easy to uphold, as hobbled by continued global supply disruptions, rising inflation and fears of stagflation amplified by monetary tightening in the key leading economies, Lee acknowledged.

The extremely adverse external conditions, Lee said, will weigh heavily on Korea, long stymied by falling potential growth rates over the past decade, the spike both in borrowing costs and the prices of goods and services, as well as the recent slump in the Korean currency.

“The much-dreaded combination of risk factors is feared to further strain public and private sector participants, most of whom are still reeling from years of difficulty brought on by the ongoing COVID-19 pandemic. The government recognizes the slew of developments as grave challenges, and will continue making efforts to navigate the crisis prudently,” Lee said.

He added that innovation and investment know no nationality ― a reason why foreign firms in Korea are strategic assets to the country's economy and just as important as their local peers.

“The government recognizes the value and contributions of foreign-invested entities, to whom government policy assistance will be extended without discrimination,” the minister said.