[Letters] Not so business-friendly policies
Two years ago, the Lee Myung-bak administration came into office with the appealing slogan “a business-friendly Korea.” His approval rate reached as high as 74.4 percent when he, as a presidential candidate, made a shocking proposal to eliminate government regulations. At the time, regulations were metaphorically called “utility poles” in a national industrial complex in Daebul.
As of now, the Lee administration has made some accomplishments. The lift of the equity investment cap was a great one made. It also succeeded in decreasing the number of registration regulations by about 160 from 5,247 to 5,088 as of last July. However, the Lee administration is maintaining the same position as the previous administrations on government involvement with an anti-market stance.
Contrary to the “business-friendly” slogan, the Lee administration controlled foreign exchange rates, currencies and prices in person. It was on the forefront of controlling cell phone fees and monitored prices of several items designated by the government.
The reform of the law on refurbishing the Seoul metropolitan area was also an achievement, but the move wasn’t strong enough to lift the regulations regarding the metropolitan area, which served as an obstacle to attracting investors. The government eased the restriction on reconstruction of apartments and reduced taxpayers’ burdens by cutting comprehensive income tax and transfer tax.
However, at the same time, it purchased unsold houses with its own budget and expanded to all metropolitan areas the debt-to-income ratio restriction which regulates the amount of mortgage loans an individual can qualify for.
As a result, it is no wonder that the a report released by the Federation of Korean Industries six months ago, showed that as much as 43.1 percent of survey respondents were unsatisfied with the government’s reforming of regulations, which was more than double the number satisfied. (17.7 percent)
“Pragmatism” was one of the pledges of the Lee administration and it was a very appealing one to the public. Its pledge to slim down the size of the government organization and reduce the government budget by 20 trillion won ($17.5 billion) was appealing enough to get support from the public. However, unlike the pledge to freeze the number of government officials, the total number of officials serving at the central branches of the government has risen to 608,900 in August 2009 up from 605,673 in February 2009.
The plan to privatize public firms seems overdue. Furthermore, the expansionary monetary policy devised on the pretext of tackling the global financial crisis has created a minimum of 308 trillion won debt in 2008. As the government earmarked an extra 30 trillion won for the budget, the total budget of 2010 is as much as 292.8 trillion won.
All these are not what a small government seeks, which is supposed to try to cut both taxes and the budget at the same time.
It was his pledge on the economy that gave President Lee the ticket to the Blue House. Therefore, it is natural that reviving the economy along with governing by law should be the top priority of the Lee administration. The Lee administration can get credits for its efforts to improve the labor environment and eliminate illegal violence in workplaces. However, as the current assessment by the Center for Free Enterprise shows, the Lee administration’s business friendliness can get a grade of 6.41 out of 10. Such a grade suggests not a good job.
For the next three years, the Lee administration should not try to make economic revitalization happen, but let it happen by only providing basic frameworks. I am hopeful that the Lee administration can achieve the goals of increasing business investments, creating new jobs and expanding social welfare all at once.
professor at Hansung University