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2017-11-09 15:47
Deregulation, NK issue top priority

Tuesday marked the 17th Foreign Company Day, designed to celebrate foreign businesses’ contribution to Korea’s economic growth and to induce more of the same.

Foreign companies play an increasingly important role in the national economy. About 17,000 foreign-invested firms are operating in Korea, accounting for 12 percent of total corporate sales, 21 percent of exports and 6 percent of employment.

In the ceremony, Trade, Industry and Energy Minister Paik Un-kyu said, “The government will create an environment in which foreign-invested enterprises can concentrate on their business and grow as Korea’s economic partners.”

The Moon Jae-in administration needs more than just words, however. New foreign direct investment pledged to Korea in the first nine months of this year totaled $13.59 billion, retreating 9.7 percent from a year ago, according to the ministry tally. Actual investments made by foreign investors and companies in the first three quarters stood at $8 billion, up 9.1 percent year on year. As things stand now, however, it is uncertain this year’s total will reach the $10.6 billion recorded last year.

All these figures show Korea can hardly be called a country for foreign investors. Foreign direct investment takes up 12.9 percent of the nation’s gross domestic product, slightly higher than a third of the OECD member countries’ average of 35.6 percent. This is too low a level, even considering the “Korea discount” _ derived from security risks resulting from North Korea’s nuclear threats.

Increases in foreign direct investment not only expand the government’s tax revenue and create more jobs but helps to ease security concerns by making it harder for Pyongyang to make massive-scale military provocations.

Improving the business environment for foreigners should be one of the principal tasks facing the Moon administration not least because its priority in economic policy is providing more jobs.

Moon’s opponents criticize some of this administration’s moves for scaring away would-be foreign investors. They cite the rise in the legal minimum wage and shortened working hours as examples. Some foreign participants in the meeting of the presidential panel to create jobs reportedly made similar complaints.

Come to think of it, however, the increased minimum wage barely reaches the median level of that of OECD members, and Korean workers are still among those that work the longest hours in the club of relatively wealthy countries, even under the curtailed workweek.

That means the government should instead focus on something else, such as slashing administrative red tape, providing far better services for would-be investors and working out a contingency plan not to let security risks spill over to hurt the economy.
Luring foreign investment is vital, but Korea cannot go back to the labor conditions of some Third World countries in the 20th century.


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