[EDITORIALS]Japan surges, Korea stalls

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[EDITORIALS]Japan surges, Korea stalls

Nikkei Business, a leading Japanese weekly, recently reported that Japanese businesses that left Japan in search of cheap labor in China and Southeast Asia 20 years ago were coming back. They began to be confident that they could have a competitive edge even if they paid more in wages and for land at home, because productivity has increased with the development of ultra-modern technology and automation. When they started to invest at home again, jobs were created and the chances of technology leaks were reduced.
With the halt of the industrial vacuum, the Japanese economy has started to sail smoothly. It had a 5.8-percent annual growth rate in the first quarter of the year and 3.3 percent in the second quarter. The Japanese government and the Bank of Japan have officially declared that the economic recession is over and structural economic recovery has started. As consumption revives and investment increases, the economy will certainly grow more.
When we look at Korea, we feel gloomy. Many businesses are lined up to relocate overseas, and foreign investment in Korea has decreased drastically. In two years, the profitability of direct investment in manufacturing has turned sour. Investment in facilities in the second quarter has increased only 1.5 percent over the same period last year, and most of that was investment in existing facilities. Investment in new products and research and development has decreased. In other words, Korean businesses are only keeping up what they have; they are not in a position to think of developing future growth engines.
The minister of construction and transportation said, “The government will not permit construction of new factories of big businesses in the Seoul area until 2012, when the relocation of public institutions outside of Seoul is completed and construction of the new administrative city is launched.” Does that mean that he doesn’t care whether the economy goes bad for political reasons? “Business-friendly country” is nothing but a slogan here.
According to the World Bank’s “Doing Business in 2006,” Korea ranks 27th among 155 countries for its business-friendly environment. But Korea ranks 100th, behind Vietnam and Mongolia, for conditions for starting a business and the flexibility of the labor market. Seoul must learn from Japan how to create a truly business-friendly environment.
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