Korea is begging for investment
The author is the economic news editor of the JoongAng Ilbo.
The Blue House reportedly told Finance Minister Kim Dong-yeon “not to beg” for investment and hiring during his planned visit to Samsung Electronics’ cutting-edge semiconductor plant in Pyeongtaek, Gyeonggi on Monday. The country’s biggest company was expected to announce an ambitious investment plan to the tune of 100 trillion won ($89 billion) timed with Kim’s visit.
After media reports caused a stir in the administration, Kim held a meeting on Friday with senior officials from the Strategy and Finance Ministry and issued a statement expressing regret. Samsung put off the expected announcement to a more “appropriate” time.
The fact that the Blue House was unhappy that Kim seemed as if he was “begging” for generous hiring and investment from the country’s richest company reflects its general antagonism towards big corporations.
In a rare personal statement, Kim said that it was “inappropriate” to call encouraging companies to hire more and invest to aid the economy “begging,” and that it would not help the government’s drive to generate innovation and jobs. The media cited an unnamed Blue House official.
Depending on the context, Kim’s comment that he “regretted” the “inappropriate” view toward the promotion of corporate investment could suggest the top economic official disagrees with the Blue House.
It’s not known who in the Blue House is displeased with the government turning to Samsung for help creating jobs. The presidential office remains mum on the issue. Due to its silence, the belief that the Blue House is a hive of anti-business sentiment only gained ground.
It was President Moon Jae-in who personally asked for more investment from Samsung while attending the opening ceremony of a smartphone factory in India. While touring the factory, Moon told Samsung Electronics Vice Chairman Lee Jae-yong that he wished to see more investment and hiring from Samsung in Korea as well.
It is natural for the president to plead for more investment and hiring from the country’s top company. It is not the government, but companies, that hire and invest. A presidential aide unhappy about Deputy Prime Minister Kim courting Samsung should be critical of the president as well. The country’s economy will be at risk if presidential aides who are hostile towards big corporations are in charge of economic policies.
Economic data has worsened to the level of the 2008 financial crisis. At the time, the local economy fared poorly due to global trends. But now Korea alone is struggling, while most developed economies are recovering at a fast pace.
Korea’s gross domestic product grew a mere 0.7 percent, raising doubt over whether growth can meet the downgraded annual estimate of 2.9 percent.
Industrial investment plunged by 10.8 percent, the biggest fall since the 2008 crisis. Sluggish corporate investment has led to fewer jobs and lower domestic demand. The government should go all-out to stimulate investment, not discourage the top policy chief from “begging” for investment.
Kim, a career bureaucrat, stressed that innovative growth should be led by large companies as well as small-and mid-sized enterprises. The Korean economy cannot run without large companies. Without them paving the way, Korea Inc. cannot make progress on the innovation front.
The fiasco should not dampen corporate will on investment. President Moon must set an example and show how responsible leadership can encourage corporate investment.
JoongAng Ilbo, Aug. 6, Page 27