Companies can lead the wayThe government has started making all-out efforts to spur corporate investment, unveiling a policy on Thursday that includes almost every measure it could conceivably take to boost capital spending.
Under the policy, companies that invest in, say, new plants, equipment, technology and growth in general can receive even bigger tax cuts than before. The government also will participate by raising a 20 trillion won ($15.4 billion) loan fund for investments in new equipment.
Various regulations that companies often gripe about will be lifted, and measures aimed at corporate management will be introduced.
The government’s message is simple: It will create the type of investment environment that companies want in an effort to pull the nation out of the economic slump.
The government is focusing intensely on this area because it believes creating a climate that fosters corporate expansion will help the country not only recover, but also sustain future growth.
But the global economic slowdown is not completely over, and there are many factors in play that are keeping companies from investing. Investments in equipment, for example, have all but dried up since early last year.
When corporate investment shrinks to this degree, it is much tougher to get past an economic slowdown. Additionally, future growth potential is at risk. Capital spending not only boosts the economy in the near term, it also prepares a foundation for production in the future. A company that decides to invest in a new plant now, for instance, might not be able to use the facility for a year or two when construction is complete.
If we simply wait until the global economy recovers, we will have missed the boat.
The government has helped create the right environment for corporate investing. Now it is time for companies to step up.
Attending the Korea Regional Investment Fair last Wednesday, President Lee Myung-bak said investing “pre-emptively” is the social duty of companies, particularly conglomerates.
We believe that the second half of the year will be an important and difficult period for overcoming the economic crisis and preparing a foundation for long-term growth. Companies have a primary role in getting us out of this mess, and investing now is the right decision.
If hindrances to investment remain or there is a lack of support, companies must strongly demand that the government address the issue. The government must then incorporate that feedback into its policy.
An economic recovery, and plenty of jobs depend on it.