[EDITORIALS]Relax rules, spur growthKia Motors has reached an agreement with the state of Georgia to build a $1.2 billion factory in the city of West Point that will be capable of producing 300,000 automobiles per year. After Hyundai Motor’s factory in Alabama, Kia will become the second South Korean car manufacturer with a factory in the United States.
This will provide the vehicle maker an opportunity to provide cars for the world’s largest automobile market. The state of Georgia will acquire 2,500 new jobs working directly for Kia while another 2,000 jobs will be created with suppliers for Kia, making a total of 4,500 jobs.
Considering that our country is struggling to create jobs, while there is a lack of investment by companies, the news leaves much to be desired on our side. If a factory of that size was built here, thousands of jobs would be created and the overall positive effects on related industries would be huge.
Nevertheless, to limit factory sites to only domestic areas is not possible. A company makes investment decisions after considering the real estate market, logistics, demand and labor costs. Disregarding such considerations and blocking investment abroad under the pretext of national interest would make it impossible to survive against harsh international competition.
As regards accessibility to the market, avoiding the risk of exchange rate fluctuations and savings on logistics costs, the choice made by Kia was unavoidable. If you add the high real estate prices in Korea, high salaries, the unstable relationship between management and labor and all sorts of government regulations, it makes it even more difficult to expect Kia to build a factory here. This is why not only Kia but lots of other companies have left Korea.
While there is nothing much that can be done about companies that choose to leave, the problem is that many unnecessary regulations here are still intact and make survival harder for companies that choose to stay in Korea.
The State of Georgia has agreed to provide the factory site and access roads for free, while it has promised to provide a total of $410 million worth of incentives, such as subsidies in exchange for the jobs created and tax cuts.
One has to ask whether our government is exerting a similar effort to encourage companies to stay here and to lure new investment from domestic companies. Instead of blaming the companies, getting rid of regulations in order to spur investment here is the priority.