Finance minister, BOK chief call for structural reforms to spark growth in first-ever visit

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Finance minister, BOK chief call for structural reforms to spark growth in first-ever visit

Published: 30 Sep. 2024, 18:05

SHIN HA-NEE
shin.hanee@joongang.co.kr

Minister of Economy and Finance Choi Sang-mok, left, shakes hands with Bank of Korea Gov. Rhee Chang-yong during Rhee's visit to the ministry's headquarters in Sejong on Monday. [MINISTRY OE ECONOMY AND FINANCE]

Minister of Economy and Finance Choi Sang-mok and Bank of Korea Gov. Rhee Chang-yong called for structural reforms to address the country’s slowing economic growth on Monday.

The latest meeting, which followed Choi’s previous visit to the central bank in Seoul in February, marked the first time for a chief central banker to visit the Ministry of Economy and Finance.

The move “signifies an expansion of the partnership between the two institutions, from macro-economic policy cooperation to sharing wisdom for the future generation,” said the ministry in a release.

The town hall meeting, held at the government complex in Sejong, was attended by some 150 officials from the Bank of Korea and the Ministry of Economy and Finance. Choi put emphasis on the service sector, while Rhee called for a balanced regional development.

"Korea's economic development has been mainly led by the manufacturing sector and exports," said Choi during a panel discussion with Rhee, stressing that "we now need to change our perspective on the service sector."

Stating that tech services have become tradable goods, the minister said Korea should seek a new growth driver in the service sector, saying the government "will look into measures to adopt information and communication technologies into the traditional industries to enhance productivity."

Choi also addressed Korea’s population crisis fueled by its ultra-low birth rate, saying that regulations related to attracting foreign talents should “be applied more flexibly.”

Meanwhile, Rhee called for balanced regional growth, suggesting that it would be difficult to achieve the intended purpose in terms of investment efficiency and sustainability with decentralized regional investments amid a shrinking population.

During a press briefing before the town hall meeting, the governor addressed the recent controversy surrounding the central bank’s bold report proposing a region-based university admissions quota.

“The report should not be misinterpreted as suggesting that living in ‘Gangnam’ [exclusive neighborhoods in southern Seoul] districts is wrong,” Rhee told the press,

“Universities around the world take diversity into account in their admissions, but Korea is overly fixated with the idea that merit-based ranking is the only fair standard,” said the governor.

The central bank has recently stirred buzz with a series of controversial reports, the latest one suggesting that a region-based admission quota may curb the excessive demand for real estate in affluent neighborhoods where education infrastructure is concentrated.

Regarding the recent controversies, the finance minister said, “I believe it is desirable for the Bank of Korea to weigh in on issues involving structural problems,” adding that “looking into various societal issues and seeking solutions is a natural responsibility of the central bank.”

The meeting between the country’s two economic policy chiefs came ahead of an upcoming rate-setting meeting scheduled for Oct. 11.

BY SHIN HA-NEE [shin.hanee@joongang.co.kr]