Leaders of Korea’s major business organizations in unison have called on the government to carry out regulatory reform. They expressed frustration over the growing set of regulatory bills, rising tax burdens and the deterioration of labor competitiveness.
Indeed, with no economic drivers except for the semiconductor industry, the Korean economy is mired in long-term low growth. This year, a plunge in memory chip prices led to a negative growth in exports. The government’s optimism over the recovery of exports next year is founded on the upward trend of the semiconductor prices. Virtually, no large-scale growth is expected in manufacturing and other industries.
Especially, Park Yong-man, chairman of the Korea Chamber of Commerce and Industry (KCCI), who personally visited the National Assembly several times to beg for regulatory reform, expressed his frustration and hopelessness frankly toward political circles at New Year’s press conference on Dec. 29. “I’m so frustrated as to hurt myself,” said the chairman, remarking especially about the three data bills’ failure to pass at the Legislation and Judiciary Committee.
“I believe structural barriers are a serious obstacle to the continuing growth of the Korean economy,” said Chairman Park, adding “My biggest concern is that barriers against invested interests may become so entrenched that a new industrial change is no longer possible and thus the overall dynamics of the economy decreases.”
The Korea Chamber of Commerce & Industry (KCCI) said that while seven companies newly entered America’s top 10 list in Fortune’s annual rankings of global companies over the past ten years, only two company newly entered in Korea’s top 10 list.
Huh Chang-soo, chairman of The Federation of Korean Industries (FKI), also emphasized the necessity of regulatory reform. “Unprecedented innovations are being developed fast across all industries including distribution, energy, manufacturing and biotechnology,” said the chairman, adding “It is time to establish a new framework in a completely new way.”
Some say that measures should be taken to reduce the burdens of companies. Sohn Kyung-shik, chairman of the Korea Employers Federation (KEF), stressed that creating the environment in which companies are willing to expand investment and production should be regarded as one of the nation’s top priorities.
Chairman Sohn said, “Korea’s business sentiments have been dampened by the nation’s domestic policies, including excessive minimum wage increase and the implementation of the 52-hour workweek without exception, which add more burdens to companies than those of other competitive nations, as well as external factors such as global economic slowdown which go beyond our control.” He also observed, “The role of government finance for a short-time economic stimulus and others is important, but national economic policies should be established to ensure that the competitiveness of private companies are enhanced by the market.
Meanwhile, some observed that the government, along with companies, should make some innovative changes to Korea’s exports which are mostly manufacturing goods and heavily depend on China and the United States. “The paradigm of economic growth should be converted from volume of exports to the quality and added value,” said Kim Young-joo, chairman of the Korea International Trade Association (KITA), adding “Extensive innovation needs to be made across all areas that constitute the fundamentals of trade, including the structure of trade, manufacturing capacity, corporate ecosystem, and supporting policies and regulations.”