The eraser theoryLee Seung-cheol, vice chairman of the Federation of Korean Industries, is referred to by many Korean businessmen as Zhuge Liang, the famous strategist of the ancient Chinese Three Kingdoms period. He is full of fresh ideas, though most of them are, predictably,
representing the interests of Korea’s business sector. Three years ago, he came up with his “eraser” theory. He said everything should be lifted, removed and erased for the Korean economy to regain vitality. He used the tourism sector as an example.
“If you visit a national park in America — say Yellowstone National Park — you can take your car right up to the geysers and hot springs area,” he said. “The more popular a site is, the greater the accessibility. The facilities for barbecues and camping are all available. The tramway in Switzerland goes way up to the mountaintop. How about us? All our best sites are heavily protected. Cable cars cannot be built due to opposition from environmental activists. So people have to sneak up mountaintops. The best scenery is basically reserved for the young and healthy. Minors and senior citizens cannot make it to the mountaintops. Both tourism and the environment suffer. This is a lose-lose situation for all.”
About 70 percent of Korean land is made up of mountains, and they are heavily regulated. Lee proposes wiping out the regulations.
Chinese tourists could flood in and have places to go instead of crowding Myeong-dong for shopping and street snacking. Lee has been preaching this theory to everyone he meets. A year ago, he came up with a new campaign. He urged a greater government role in certain realms. He took the aircraft maintenance, repair and overhaul (MRO) industry as an example.
“Aircraft MRO is an up-and-coming industry,” he said. “Over six million parts go into an aircraft. A flaw in one bolt could lead to a catastrophe. Since an aircraft requires maintenance and repairs for more than 20 years, the client base is stable. Aircraft demand will rise due to growing numbers of flying passengers. The market reached $64.3 billion last year and is expected to expand to $96 billion in 2025. The state must lay the groundwork for the industry by providing test runways and other infrastructure to draw in private entrepreneurs. The automobile and ICT sector could not have grown if there had not been road and telecommunications infrastructure. Governments in China and Singapore are creating large-scale aviation industry complexes. Here, we only hear talk.”
The Ministry of Land, Infrastructure and Transport, in fact, told the president in February 2014 of a plan to create a complex for aviation MRO suppliers. Two companies joined with local governments to bid for the site. But the ministry backed out when competition heated up among local governments and a political decision was necessary from the president and lawmakers.
Meanwhile, low-cost air carriers reported a series of accidents from flawed parts. Due to lack of technology, equipment and manpower at home, the Korean aviation industry spent 756 billion won ($654 million) to pay overseas companies for maintenance and repairs in 2014. Money is going to waste and safety is at risk because we have delayed development of aviation MRO.
I relay the words of Lee because the election is now over. The Service Industry Development Act and a special law on regulation-free zones can help lift regulations. They have been neglected by the outgoing 19th National Assembly. The opposition disapproved of them because they were “economically necessary but politically inappropriate.” Even though there is an easier way out, Korea Inc. must endure a harsh environment. Solutions were deferred because of the election, but nothing is expected to change under the new legislature.
The government is no better. The Ministry of Environment last week announced that charging at stations for electric cars will no longer be free. Electric vehicle drivers will have to pay 313.1 won per kilowatt-hour. Industry subsidies for electric vehicles and chargers were cut although the industry is just at the fledgling stage. Korea currently has one electric charger available for 17.5 electric vehicles, compared with one for every two cars in the United States. Tesla wouldn’t have been able to launch its innovative Model 3 — designed to push electric vehicles into the mainstream — if other countries had infrastructure as poor as Korea’s. Deregulation measures are blocked by the legislature, and we do not know exactly what the government’s role, or even its intention, is. Although we will soon have a new legislature, we have little hope that the economy and people’s lives will get any better.
JoongAng Ilbo, April 14, Page 34
*The author is an editorial writer for the JoongAng Ilbo.