[VIEWPOINT]Loosen up - or lose factory jobs

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[VIEWPOINT]Loosen up - or lose factory jobs

The word "exodus" conjures up the Book of Exodus in the Old Testament of the Christian Bible, but these days the word triggers an image of Korean firms moving their factory lines overseas.

The Korea Chamber of Commerce and Industry recently reported that 78 percent of firms here said that they have either moved some of their factories overseas or have plans to do so. This is truly an exodus, and it is no surprise why companies are moving to faraway places with strange-sounding names. The Korean business environment -- wages, labor flexibility, labor-management relations and business regulation -- lags behind other countries.

For the past five years, Koreans have worked hard to overcome the 1997 financial crisis; they have realized that hard work, productivity and cash flow are necessary to survive in the world today.

Management is moving toward more transparency and giving more attention to stockholder demands; corporate restructuring is moving firms back toward core businesses. In the process, 16 of the top 30 conglomerates in Korea have disappeared from the business landscape and others have had to sell off some of their profitable firms that took decades to develop.

Despite such changes, the business environment has not improved very much. Earlier administrations promised at the beginning of their terms that they would make it easier for companies to do business, but those promises went unfulfilled.

Some call for the abolition of all business regulations, saying that just lightening them is not enough. But new controls on businesses are still being introduced every day, such as the provisions for class-action lawsuits and reforms to the accounting system that have not been tested and are under debate in the United States.

The government wants to exercise more corporate control by exercising the voting rights it has through its purchases of equities for the national pension system. It is unfair, however, to implement such rights while restrictions are in place on conglomerates to limit their investment and voting rights in subsidiaries.

Although Seoul boasts that it has relaxed its corporate regulations, businessmen say that is not true in practice. Economic principles are still not a priority in this economy; political logic and government hegemony weigh heavily on the private sector. Businessmen have no one to turn to if the government is ruled by populism, pandering to popular sentiment and legal irregularities.

When Korea was still developing, the state was a unique distributor of capital, and corporations followed. Now, corporations must lead economic growth and the government's role should be limited to that of a patron that creates a good business environment.

The presidential election is drawing near. All businessmen want the new president to be committed to fostering a country with a good business environment. The flight of firms abroad will become worse if the next administration fails to meet the expectations of the business community, and foreign investors will lose even more interest in putting their money here.

Advanced nations become deindustrialized at the point when their per capita gross domestic product reaches about $20,000. Korea is expected to be deindustrialized in roughly five years, taking prices and foreign exchange rates into consideration.

But if the current poor business conditions do not improve, deindustrialization could come much earlier.

The power of the market economy is greater than that of the government. The authentic competitiveness of firms stems not from laws and systems but from competition and the market.

We should not submit ourselves to or copy from foreign systems. Sincere efforts are required to find an alternative that corresponds to the realities of Korea.

That is the right path to prevent an exodus of Korean firms that will bring speedy deindustrialization.

* The writer is president of the Korea Chamber of Commerce and Industry.

by Park Yong-sung

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