South Korea’s economic chief called for active investment by private firms Wednesday, vowing all-out government efforts to eradicate any uncertainties for businesses and the whole economy.
“With slow recovery and possible deflation in some countries, concerns are growing over the global economy that it may have entered an extended period of mediocre growth,” Deputy Prime Minister Choi Kyung-hwan said while speaking at a meeting of the Korea-U.S. Business Council.
“Korea is also not free from the low growth trap, as recovery momentum weakens due to sluggish investment and uncertainties growing in the global economy,” said Choi, who is double-hatted as minister of strategy and finance.
Choi’s remarks follow a recent report from a local market researcher that the combined cash reserve of the country’s 10 largest businesses has surged 15.1 percent from about 109 trillion won at end-2013 to 125.41 trillion won (US$116.4 billion) as of the end of September, possibly meaning the companies are stashing away instead of investing their available assets.
The deputy prime minister, however, said joint efforts by the government and private investors could still turn current difficulties into a “blessing in disguise.”
To this end, the deputy prime minister said his government was taking what he called “bold and proactive” measures aimed at revitalizing the economy while also improving its very fundamentals.
“First, in order to restore consumer confidence, we planned the budget for next year in an expansionary manner,” he said, according to a copy of his speech release by the finance ministry.
“Second, Korea introduced three Tax Packages to Boost Household Income, to restore a virtuous cycle between corporate profits and household income,” he was quoted as telling Korean and U.S.
business leaders at a luncheon in Seoul.
Choi added that government efforts to promote investment included regulatory reforms, pointing out the recent introduction of the so-called sunset clause, under which regulations will be eliminated automatically after a set period of time.
“We believe that our efforts will not only restore the economic fundamentals, but also lay the foundation for our economy to take another quantum jump,” he said.
Turning to the Korea-U.S. free trade agreement (FTA) that went into effect two years ago in March, Choi insisted the trade pact has proven to be mutually beneficial to the two countries by expanding their bilateral trade and investment.
He then asked for U.S. support for South Korea’s participation in negotiations for a regional FTA, called the Trans-Pacific Partnership (TPP), should the country decide to join the U.S.-led negotiations currently involving 11 other countries, including Canada and Japan. (Yonhap)
