Cut the corporate red tapeMany agree on basically three elements that served to precipitate a recovery in South Korea’s economy faster than expectations and its global peers. Aggressive fiscal spending and a weaker currency that helped Korean products sell better overseas worked well on an economy with relatively solid fundamentals. But the bulk of the credit goes to the corporate sector. They boosted exports despite a worldwide recession and contributed to expanding the current-account surplus. In sustaining the recovery phase, their role will become even more crucial. The government usually steps out of the bullpen with relief measures in times of crisis, but it is the private-sector capital that actually helps to turn the economy around.
The industrial activity data for September released by the National Statistical Office offers the strongest indication so far that the economy is indeed back on track. Last month, consumer sales and production activity in the manufacturing sector all rose. Moreover, capital investment surged 18.8 percent on-month and 5.8 percent on-year. It is the first time in 21 months that the economy saw consumer sales, industrial output and capital investment all post growth.
The latest move by Samsung Electronics Co. further raises hope for the economy. In the 10-year plan released on its 40th corporate anniversary, Samsung Electronics said its investment next year will likely top 8.5 trillion won ($7.2 billion). The company expects revenue to reach 100 trillion won this year, with an operating profit of over 10 trillion won. It is aiming to attain revenue of $400 billion by 2020 to become one of the world’s top 10 companies.
Samsung Electronics’ aggressive leadership and corporate performance have generated a great deal of envy from overseas. The Japanese press reported that Samsung Electronics’ third-quarter operating profit of 326 billion yen more than doubles the combined 151.9 billion yen in profit earned by nine Japanese technology companies during the same period. They reported that Samsung Electronics had continued to invest heavily even as the memory chip and technology industry slipped into a slump, which sent it in a direction that was starkly different from the Japanese companies that laid low during the slowdown.
The future of our economy will be assured if we have more companies like Samsung Electronics. It won’t be easy. The company wouldn’t be where it is today if it hadn’t been creative and taken risks. To encourage corporate activity and investment, it’s time for the government to cut the red tape. Companies need more space to experiment and be creative. There is no better remedy for boosting domestic demand and employment than renewed corporate investment.