[EDITORIALS]An unsettling economyHyun Myung-kwan, the vice chairman of the Federation of Korean Industries, said yesterday, “While the Chinese economy runs fast on an expressway, the Korean economy is entering into a dark tunnel.” His words describe the reality of the Korean economy vividly. Although there is a tendency among businessmen to exaggerate the crisis more than necessary, it is unusual that Mr. Hyun, who speaks on behalf of big business, used such expressions. His words seem to reflect the sense of uneasiness about the bad investment psychology of domestic industries.
For seven consecutive months, from June through December, the amount of investment in facilities diminished, and the 30 leading business groups in Korea spent only 16.3 percent of their planned investment for the year in the first quarter. The reason the Korean economy is failing to overcome stagnation lies in sluggish investment by our companies. Because they are reluctant to invest, jobs are not created and consumption does not revive. A more positive investment psychology is the first step to recovery.
According to a survey conducted by the Federation of Korean Industries, a quarter of those interviewed said it was time to invest based on trends in the global economy; less than a fifth said the time was not right. But nearly half said it was not the right time to invest based on domestic economic trends, and less than 8 percent disagreed. Our businessmen are not investing because of problems in the domestic economy.
The biggest factor that prevents companies from investing is uneasiness ― either economic or noneconomic. Mr. Hyun complained that industries have plans as well as money for investment, but they don’t do so because of labor problems and government regulations. The government must listen to Mr. Hyun’s appeal attentively: The government must eliminate regulations that obstruct investment, tackling them one by one, and devote all its effort to establishing principles on which stable labor-management relations can be established.
The commerce and finance ministries are considering raising the limits on investments by the largest business groups here. This is an opportunity for the government to evaluate the merits of the system that limits such investments.