No time for showDespite assurances of “strong fundamentals” from President Moon Jae-in, economic conditions have been worrisome. Industrial data for March showed improvements across factory output, consumption and investment, but the indicators remain in the dumps. ING Group predicts the economy will grow by a mere 1.5 percent this year. Exports have been contracting for the fifth month in a row, while the coincident and leading indices pointing to where the economy is heading has been falling for the 10th consecutive month.
Reviving business sentiment is pivotal. President Moon has recently become eager on the business front. During a secretariat meeting at the Blue House, he ordered more aggressive and long-term plans to foster non-memory semiconductor, bio-health and future mobility industries. On Tuesday, he joined Samsung Electronics’ latest wafer fabrication facility to announce the government’s new campaign promising its support for “System Semiconductor Vision” and cheered the top chipmaker’s latest ambitious plan to become as big in the non-memory sector as in the memory sector by 2030 through a whopping 133-trillion-won ($114.3-billion) investment.
In August last year, the president hosted an event to declare the government’s support for internet-only banking business and vowed to remove Korea’s version of the Red Flag Act that had existed in Britain in the 19th century to protect the locomotive and carriage industries against the ascent of motor vehicles. Moon promised to remove barriers to the new financial sector so that Korea does not end up like the British motor industry that fell behind those of Germany and the United States due to outdated regulations. As a result, the caps on industrial capitals’ ownership of banks was eased for the online banking sector, allowing for the establishment of additional internet banks in the country.
The semiconductor front has been challenged because of the quick rise of Chinese companies. Beijing has been pouring in heavy investment to raise its self-sufficient rate of memory chips to 75 percent by 2025 under its ambitious Made-in China 2025 campaign. Korea’s memory dominance may not last. Korea has been lagging behind its U.S., Japanese and even Chinese rivals in system semiconductors.
Korean companies have been fleeing the country due to rigid labor practices and heavy regulations. LG Electronics is taking its premium smartphone lines to Vietnam. The president’s business tour must not be a showpiece. Actions must take place to keep businesses alive and kicking within Korea.
JoongAng Ilbo, May 1, Page 30