Why politicians cannot match corporate leaders

Yeom Jae-ho
The author, a former president of Korea University, is the president of Taejae University.

The 21st century world is undergoing a seismic shift. The advent of AI foretells an epochal change in civilization, and the collapse of the liberal world order has started to neutralize global value chains. The confusion is being fueled by the deepening Sino-U.S. conflict, the Ukraine war, the Israel-Hamas clash and the alarming solidarity between North Korea and Russia.

Amid the tumultuous transition, each country is desperately trying to protect its own industry. Former U.S. President Donald Trump declared he would impose a 60 percent tariff on all imports from China if he is re-elected president in November. This eerily reminds us of the Smoot-Halley Tariff Act the U.S. Congress passed to levy an average tariff of 60 percent — sometimes up to 400 percent — on imports from Europe during the Great Depression in the 1930s. The protectionist move only exacerbated the ravages of the depression.

The United States wants to build a self-sustaining chip production habitat on its home turf by spending a whopping 73 trillion won ($53 billion) to produce at least 20 percent of chips globally. China created its third semiconductor fund exceeding 65 trillion won to emerge as a global chip power. Japan secured a total budget of more than 35 trillion won to back Rapidus, a chip consortium of top Japanese companies like Toyota and Sony, support foundry behemoth TSMC’s first factory in Kumamoto, and pursue other innovative programs.

What is Korea doing amid the far-reaching tidal change? According to an analysis by the Korea International Trade Association, exports account for 86.1 percent of the country’s economic growth rate. Start-up exports also rose to 3.3 trillion won, a nine-fold increase from 2017 at an average annual growth rate of 48.3 percent. Companies are urgently drawing up a survival strategy, but politicians do not have such a sense of crisis.

Chips are Korea’s No.1 export item. Samsung Electronics and SK hynix meet approximately 20 percent of the global chip demand. Of the 34 trillion won in corporate tax paid by 1,975 listed companies in 2021, Samsung’s share was 7.7 trillion won and SK’s 3.6 trillion won. When the two companies couldn’t pay corporate tax due to a slump in the chip cycle in 2023, the country’s fiscal health took a heavy blow.

Although the National Assembly passed a bill to try to revitalize the chip sector, the government is only providing financial assistance and tax benefits for chip producers for fear of public antipathy toward chaebol. To make matters worse, the construction of a massive chip cluster in Yongin, Gyeonggi, is being delayed due to the Nimby syndrome. Samsung and SK plan to build chip factories there by investing 300 trillion won and 122 trillion won, respectively. And yet, politicians’ sense of crisis is nowhere to be seen. A bill to upgrade electrical grids to meet the growing demand for electricity for chipmaking and a revision to extend the term for tax benefits for chipmakers were both submitted in the 21st National Assembly, but couldn’t be passed due to the two major parties’ ideological battle.

Just two years before the Japanese invasion of Korea in 1592, King Seonjo of the Joseon Dynasty dispatched two senior officials, surnamed Hwang and Kim, to Japan to detect any signs of invasion after Toyotomi Hideyoshi unified the country. After returning to Korea the following year, Hwang reported to the court that Japan would soon invade Joseon. But Kim, Hwang’s deputy, said he could not find any indications of invasion. The Book of Corrections, written by then-Prime Minister Ryu Seong Yong, explains why the officials made different reports. When Ryu asked Kim why he underreported the possibility of invasion, Kim said, “I also agree to Hwang’s assessment. But I gave a different explanation because I worried about repercussions from Hwang’s extreme rhetoric.” A sheer dismissal of international politics just for domestic politics led to a colossal devastation of the country one year later.

The 22nd National Assembly opened last month after the opposition’s landslide victory in the April 10 parliamentary elections. But lawmakers from both sides of the aisle are still bent on fighting each other for partisan interests by exploiting radical supporters without presenting any visions for the future or strategies to help the country overcome the tough challenges ahead.

The fundamental question daringly posed last month by SK Group Chair Chey Tae-won — “Will the Republic of Korea be fine if left unattended?” — still reverberates. Lawmakers must end their exploitative politics and die-hard factionalism for a paradigm shift for the country before it is too late.

Translation by the Korea JoongAng Daily staff.