Program should incentivize the private sector
President Moon Jae-in's pledge to accelerate the "Korean New Deal," a 160 trillion won ($133 billion) investment to create 1.9 million jobs through 2025, should be like rain amid a drought.
The "drought" from the economic fallout from COVID-19 is worsening. On Wednesday, the country awoke to find that the unemployment rate has continued to increase for the fourth consecutive month in June. The job front is expected to deteriorate further as the International Monetary Fund (IMF) has projected the Korean economy to contract by 2.1 percent this year.
The 160 trillion won is an increase from the initial vision the liberal government put forth, which was investing 76 trillion won to provide over 550,000 jobs.
The program, which the President has said will kick start changes that will last a century, has three pillars to it. Strengthening the country's "digital" or information technology infrastructure, promoting a "green" infrastructure to prop up carbon-neutral industries and expanding the social safety net.
Some are already saying the Korean New Deal is a mixed bag of existing policies. But by giving it a five-year timeline and stressing the speed of implementation, President Moon has made it clear it will be one of the top items on his agenda for the remainder of his tenure. Yet at the same time, he has given it an urgency that could become a liability.
The COVID-19 pandemic has been affecting nations without discrimination in an unprecedented manner. Lockdowns and the disruptive changes to global supply chains caused by the virus have impacted economies everywhere. The IMF has forecast the global economy for 2020 will contract 4.9 percent.
Hopeful news of a vaccine against COVID-19 is emerging slowly, but it is not coming in the near future. In these times, expansionary fiscal measures are the new normal.
The concern is that the massive stimulus package spread over five years seems too hurried, and insufficient, even as how the money will be raised remains unclear. Some of the nation's top conglomerates already spend tens of trillions of won just on research and development.
Also, the President has said he will be presiding over monthly meetings, and a government-ruling party vehicle will be set up to oversee the program. Such strong government control may hamper the private sector's role, which is crucial.
Needless to say, the Korean New Deal requires an "innovative" level of deregulation. The administration must come up with measures to incentivize the private sector.
The Korean New Deal program recognizes the unavoidable path toward the inevitable future that the country must embark on. Among other things, the administration should address the problem of sunset industries that could be phased out and the retraining of laid-off workers.
President Moon Jae-in's pledge to accelerate the "Korean New Deal," a 160 trillion won ($133 billion) investment to create 1.9 million jobs through 2025, should be like rain amid a drought.
The "drought" from the economic fallout from COVID-19 is worsening. On Wednesday, the country awoke to find that the unemployment rate has continued to increase for the fourth consecutive month in June. The job front is expected to deteriorate further as the International Monetary Fund (IMF) has projected the Korean economy to contract by 2.1 percent this year.
The 160 trillion won is an increase from the initial vision the liberal government put forth, which was investing 76 trillion won to provide over 550,000 jobs.
The program, which the President has said will kick start changes that will last a century, has three pillars to it. Strengthening the country's "digital" or information technology infrastructure, promoting a "green" infrastructure to prop up carbon-neutral industries and expanding the social safety net.
Some are already saying the Korean New Deal is a mixed bag of existing policies. But by giving it a five-year timeline and stressing the speed of implementation, President Moon has made it clear it will be one of the top items on his agenda for the remainder of his tenure. Yet at the same time, he has given it an urgency that could become a liability.
The COVID-19 pandemic has been affecting nations without discrimination in an unprecedented manner. Lockdowns and the disruptive changes to global supply chains caused by the virus have impacted economies everywhere. The IMF has forecast the global economy for 2020 will contract 4.9 percent.
Hopeful news of a vaccine against COVID-19 is emerging slowly, but it is not coming in the near future. In these times, expansionary fiscal measures are the new normal.
The concern is that the massive stimulus package spread over five years seems too hurried, and insufficient, even as how the money will be raised remains unclear. Some of the nation's top conglomerates already spend tens of trillions of won just on research and development.
Also, the President has said he will be presiding over monthly meetings, and a government-ruling party vehicle will be set up to oversee the program. Such strong government control may hamper the private sector's role, which is crucial.
Needless to say, the Korean New Deal requires an "innovative" level of deregulation. The administration must come up with measures to incentivize the private sector.
The Korean New Deal program recognizes the unavoidable path toward the inevitable future that the country must embark on. Among other things, the administration should address the problem of sunset industries that could be phased out and the retraining of laid-off workers.
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