Park promotes exports just like her father did
It was the first time in 34 years that the sitting president convened such a major meeting on trade and investment. More than 150 government officials and business figures from the private sector attended, making it the biggest meeting Park has held at the Blue House since her inauguration in February.
Park Chung Hee, the president’s father, started regular export meetings in 1965 and upgraded them in 1966 to be official presidential functions. He held the meetings every month to spur exporters, which contributed to exports reaching $10 billion for the first time in 1977.
Park’s father convened 152 export meetings until his assassination in 1979.
During the Roh Moo-hyun administration, trade and investment meetings were held only three times and were suspended in 2004. The Lee Myung-bak administration held them irregularly.
A slowing economy has brought the meetings back.
In recognition of the fact that sluggish business investment is a major cause of the current economic slowdown, the government decided to ease regulations on large-scale projects, provide more incentives for small enterprises that invest and increase financial support for small exporters.
“The whole point of the latest investment promotion plan is to ease regulations on some projects that will have immediate effects on boosting the economy,” said Hyun Oh-seok, deputy prime minister for economy and finance minister.
The plan has three main parts.
First, the government plans to support business projects currently delayed due to various snags at the local government level.
The Ministry of Strategy and Finance found six projects eligible for government support. It estimated that by helping the projects proceed smoothly, about 12 trillion won ($10.9 billion) worth of investments will be made. S-Oil will be one beneficiary. The company has been trying to find some land within an industrial complex to build a factory, but it couldn’t.
The government will let a public institution lend some land in an industrial complex to the refiner.
A regulation on joint ventures between domestic and foreign companies will also be eased. Until now, a Korean company had to hold a 100 percent stake in a joint entity with foreign capital. Now the rule will be eased to 50 percent. The government expects this will increase foreign investments by 2 trillion won.
The second part of the policy package is to simplify administrative process for land approval.
By industry, the government will lower entry barriers for new players to increase investment potential. For example, American and European companies will be able to invest indirectly in up to 100 percent of shares of local telecommunications companies. The percentage is currently fixed at 49 percent.
The last part is to provide incentives for small enterprises that make investments. For those building facilities, the government will raise a 5 trillion won fund, up from 3 trillion won. Start-ups will also be exempted from taxes for seven years if they invest in building facilities.
The Ministry of Trade, Industry and Energy came up with a package of measures to increase government support for small exporters yesterday.
“Exports didn’t grow as much as we expected in the first quarter of the year due to the weak yen and global slowdown,” said Trade Minister Yoon Sang-jik. “Small exporters are in desperate need of measures to recover competitiveness.”
Small exporters accounted for 33 percent of the country’s total exports in 2012, down from 37 percent in 2009.
The Trade Ministry wants to alter the conglomerates’ dominance of exports and encourage small companies, leading to more investment and consumption in the domestic market.
By Song Su-hyun [email@example.com]