Three emergency actions needed
The author is an editorial writer of the JoongAng Ilbo.
The economy needs emergency actions to turn the tide. They may not work immediately, but will help strengthen our growth potential.
First of all, Korea’s export markets should be diversified. Our over-reliance on the Chinese economy was underscored when China retaliated for the deployment of a U.S. antimissile system. Lotte Mart, which once ran 99 outlets across China, became the main target. Its eventual exit from China raised alarms about over-investment in an economy controlled by the government. Companies must make inroads into other markets in Southeast Asia, Latin America and Africa.
Second, the anti-business and anti-market policies must stop. The side effects from steep hikes in the minimum wage, a cutback in the workweek and increases in corporate tax have become obvious. The government must closely examine the damage it has caused and make adjustments. Outdated regulations are the biggest stumbling blocks in the Korean economy. Of 100 innovations considered to be at the forefront of the so-called fourth industrial revolution, 57 are outlawed or cannot be introduced in Korea. Companies like Google, Apple, Facebook, Amazon, Alibaba and Tencent are revolutionizing the industrial landscape and lifestyles around the world, but even a simple ride-sharing service cannot be launched in Korea. The government claims it wants innovations, yet regulations stand in the way. Korea attempted to build a hydrogen fluoride plant to lessen its reliance on Japanese imports, but failed due to opposition from civic groups.
Third, the government must go all-out to lure Korean companies back home. It must offer incentives to reshoring such as lower corporate taxes, as well as withdrawing anti-market policies. When companies reinvest in Korea, jobs will increase and our reliance on China and Japan will diminish. Moreover, Korea must accelerate localization of parts necessary to sustain Korea’s competitiveness.