[EDITORIALS]Invest to be the bestThe Korean economy is off to a "feel-good" start. The Korea Stock Exchange opened the year strongly with the strongest opening day rally in four years. It is too early to measure how the year will turn out after just one business day, but the overall mood as we start the year certainly seems better than a year ago. President Kim Dae-jung, who had to start last year with an apology that took responsibility "for recent problems we have had," said in his new year's address this year, "It is a year of great hope and expectations."
In many new year's addresses, both in the private sector and in government, the theme of a revival has been sounded. The leading example is in Mr. Kim's address. "Let us continue with political reform so that it can provide us with the ability to compete with the world's best," he said. The chairman of the Samsung Group, Lee Kun-hee, said, "We will become the business company that looks 10 years, 100 years ahead, one that seizes opportunities." LG Group Chairman Koo Bon-moo said, "Let's make LG No. 1!" In the business community, becoming the best is being championed with new determination.
The changed mood is a desirable trend because it is based on a return of confidence in our economy. Recent forecasts for Korea's economy, both here and abroad, support the optimistic mood. But the question is not about the outlook per se, but what economic actors actually do to bring about a recovery. It is especially important for businesses to act decisively because they are the ones who need "the ability to compete with the world's best." An entrepreneurial spirit is especially important.
To make our economic goals attainable, we urge the business community to above all revive their capital investment. Without steady and balanced investment in capital equipment, construction and research and development, our leap into the ranks of the most developed countries will not be possible. Declining investment in capital equipment and R&D throughout last year threatened our economy's growth potential, and now is the time to turn it around. Businesses polled at the end of 2001 said they were planning to increase spending on R&D but intended to cut back on capital investment. A Korea Development Bank survey of 2,228 companies suggested that capital investment will fall by nearly 6 percent in total this year compared to 2001 investments.
It is true that there are still obstacles to business investment. The foremost are the uncertainties created by the terror attacks in the United States and those surrounding the elections this year. Restructuring issues, including the sale of Daewoo Motor and the reorganization of Hynix Semiconductor, also pose potential threats of economic shocks.
There are also potential negative factors in the conflicting interests of business, labor and government, including the introduction of the five-day workweek and the class action lawsuit system in securities- and accounting-related matters.
But there are also bright spots in the outlook for new investment opportunities in our economy. Interest rates remain low, the corporate income tax has been lowered and the investment tax credit has been extended. Overall, conditions look better than they did late last year when we at one time braced for a real recession in our economy. There is a lot of room for businesses to step up capital investment. Again, without investing, we should not expect to acquire the ability to compete in the world or to become the best.