Man with a plan

New Deputy Prime Minister for the Economy and Finance Minister Choi Kyung-hwan has come up with a package of special prescriptions to rejuvenate the stagnant Korean economy including full utilization of fiscal, financial and tax resources. His recipe is aimed at making the effects of economic recovery felt by the public through comprehensive policy rather than by simply reacting to individual issues as governments have done in the past.

Such shock therapy shows Choi’s determination to employ even controversial policies - such as easing financial regulations on the real-estate market, for instance - in order to put the sluggish economy back on track based on expansive macroeconomic initiatives and boost domestic demand until the effects are actually felt by the average Mr. and Mrs. Kim.

Choi’s extraordinary action plans reflect the Park Geun-hye administration’s judgment that Korea’s sluggish economy is entering a serious stage and that the slump could evolve into structural low growth in the near future. Added to the anemic private consumption since the Sewol ferry disaster are the economy’s chronic problems such as an alarming level of household debt, an outdated services sector, stagnant household incomes and a critical loss of economic vitality in the corporate world. “If such a dire situation is not turned around as fast as possible, we will most likely follow in the footsteps of Japan and its two ‘lost decades,’” Choi said. We agree with his diagnosis of the current state of the Korean economy and his sense of urgency.

However, suspicions loom over the effectiveness of Choi’s economic prescriptions. He said that his team’s policies will serves as a “game changer” that can drastically turn our existing economic paradigm around and reinvigorate the depressed economic and social atmosphere.

We hope Choi’s bold economic revitalization plans will bear fruit given his different approaches to raising household income and normalizing our nearly moribund property market. An input of fiscal resources amounting to nearly 40 trillion won ($38.9 billion) is also expected to help achieve some kind of economic recovery. Most importantly, the government has planted hopes in the minds of economic players by showing a strong will to lead a recovery.

But being overzealous can lead to failure. The government’s plan to levy a tax on companies’ cash reserves or limit their hiring of part-time workers needs delicate adjustments in the course of legislation. Choi’s initiatives also lack a consideration of fiscal integrity. We hope the government achieves tangible results as it promised.

JoongAng Ilbo, July 25, Page 30