[EDITORIALS]Growth lies in private sectorThe comprehensive investment plan that the government pledged to aggressively promote this year has run into immediate difficulties.
The Ministry of Finance and Economy had emphasized on the plan, calling it a “Korean New Deal.” It earmarked 7 to 8 trillion won ($7 billion to $8 billion) for investment this year.
But the implementation plan submitted to the cabinet meeting Wednesday was for only 2.8 trillion won, less than half of the original plan.
The ministry explained that government agencies and local governments failed to develop new investment projects, and financial companies and public pension funds were reluctant to participate.
This means that the government didn’t even know what projects were feasible, nor how to finance them. It is tantamount to recognizing that the investment plan was not a product of a detailed plan, but a slipshod figure game from the beginning.
The question now is how to achieve this year’s goal of 5 percent economic growth.
The ministry emphasized that our economy must achieve 5 percent growth to prevent massive unemployment and that we have to set aside 1 percent of the gross domestic product for the comprehensive investment plan.
However, government estimates predict the comprehensive investment plan will only increase growth by 0.3 to 0.4 percent.
We are curious if this means the government has given up on its goal, or believes it can achieve 5 percent growth without the plan.
We don’t mean that the government should back off plans for economic recovery. Rather, we mean that it must examine the feasibility of a plan carefully when it produces one.
It is problematic that the government, after announcing a large-scale investment project, tries to evade responsibility when it implements it. If such things are repeated, confidence in the government will drop.
The shortcut to economic recovery can be realized by expanding investment in private businesses.
Public investment projects initiated or promoted by the government are less efficient than private ones and have less of an effect on boosting the economy.
However belated, the government must study ways how to increase private sector investment instead of excessively clinging to public investment projects.