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On economics, Yoon’s team sounds right

Published: 24 May. 2022, 20:35

Two of South Korea’s big corporate names have played a decisive role in upgrading the South Korea-U.S. relationship to a global comprehensive strategic alliance. Samsung Electronics Vice Chairman Lee Jae-yong showed off the world’s first 3-nanometer wafers to President Joe Biden on his first day in Korea. Hyundai Motor Group Chairman Chung Eui-sun pleased the visiting American leader with a $10.5 billion investment pledge before he left Seoul on Sunday. The American president’s first visit to Korea started with Samsung Electronics and ended with Hyundai Motor.

As soon as he was officially named to office, Prime Minister Han Duck-soo held an economy strategic meeting the same day Hyundai Motor announced its multibillion-dollar EV project in the United States. Han urged his cabinet to do their most to ease regulations and promote investment-led growth to combat “grave economic conditions.” It will have to be seen if the new government matches actions with its words, but its understanding of the economic circumstance and policy direction seem correct.

Corporate competitiveness now defines national competitiveness. Companies have come to play an important role in national security amid intensified contests over technology. Aggressive investment into new high-tech industries and commanding a strong presence in global markets have become essential for national as well as corporate viability and prosperity. Korean companies must partner with the U.S. to gain access to the world’s biggest market and its most technologically advanced country. Korea’s environment also must become desirable for investment.
The new government’s economic policy must prioritize creating a good business environment so that private sector investment can lead to increases in hiring. According to a survey of 322 companies by the Korea Chamber of Commerce and Industry, support to investment and infrastructure for the future and promotion of corporate innovation through deregulation was cited as the most urgent task for the new government.

The government must remove various stumbling blocks to investment. Easing or improving regulations is not enough. They must be radically removed. It is a national loss if companies lose the right timing for investment or take their investments elsewhere due to regulations and procedural hurdles. Special pardons for business tycoons also should be considered. As President Yoon Suk-yeol mentioned during a National Assembly address, labor reform is also urgent. Labor policy must be revised to raise the living standards for all workers, not just to please large labor groups. The corporate tax rate that was hiked by the last government also should come down. Many factors determine investment, but it’s obvious that high taxes should not get in the way.