[EDITORIALS]Time to Invest in the FutureWarning bells are sounding all around us about the Korean economy. Exports are tumbling. Sales and profits at Korea's leading large companies, like Samsung Electronics Co. and Pohang Iron & Steel Co., are deteriorating. Pessimistic views are as common as dark clouds in this rainy summer.
Amid such a depressing situation, the JoongAng Ilbo has recently featured a series of articles on how to develop industries for the 21st century. There were two messages in those articles: One is that the Korean economy's growth power has been exhausted. The other is that Korea should find and nurture new industries on which the nation will live as it enters the digital age. It is the weakening competitiveness of Korea, not outside factors such as the business slowdown in the United states and Japan, that are causing our problems, and we should take immediate steps to solve those problems.
Concern about lagging competitiveness is not new, but the problem is now upon us. The number of Korean products ranked in the top five in global market share dropped to 482 in 1999 from 555 in 1994. Our competitiveness in our ten major business is also weakening. Korea has the top position in the global memory chip market, but holds only a 1.2 percent share in the market for non-memory chips. The latter market is where the semiconductor money is. Korea also leads in global shipbuilding, but our shipbuilders focus on low-technology ships such as oil tankers. We pointed out that Korean companies are excellent in manufacturing low-priced goods quickly but are less competitive in developing basic technologies, in designing essential parts and in marketing, which are needed to add value.
Such weaknesses are more apparent as earnings deteriorate in the current global slowdown. Samsung Electronics' 12-month operating profits plunged 43 percent in the second quarter of this year and the Pohang Iron & Steel's first-half profit tumbled 73 percent.
We see ten major industries for the 21th century: five are our existing major businesses － semiconductors, automobiles, shipbuilding, textiles and precision parts － and five are new industries － information technology, digital consumer electronics, electronic commerce, electronic content and biotechnology. We believe that a move into these industries can be accomplished by increasing the value-added of the current top-five industries and pouring the increased profits into the new industries.
These ideas have struck a chord with the public and have been praised by economists and analysts. Now we should think about how to put them into practice. We must allocate our limited resources efficiently.
Of course we are concerned about the drop in investment by local companies. Capital spending by local firms has declined for the last seven consecutive months. There will probably be no improvement in the second half after the sharp deterioration of earnings in the first half of the year.
If such a slump in new investment is prolonged, there is little reason for hope. Though the economy is currently not in good condition, we should remember the lesson, "Invest in the recession." The aim of the painful restructuring of the Korean economy is an improvement in competitiveness and the development of the new major industries on which Korea will focus. Now is the time to find new growth power through investing and strengthening competitiveness. The government and the political sector must share in that task.
More in Editorials
Stop attacks on Yoon
What did the government do?
Fearing the jab