Policymaker stresses reforms to boost growth momentum

Korea’s top economic policymaker on Wednesday stressed the need for timely and sweeping reforms in order to boost the country’s growth momentum that has struggled to meet expectations.

Speaking at a ministerial meeting in Seoul that assessed the latest economic developments, Finance Minister Choi Kyung-hwan pointed out that despite some positive signs like the drop in crude oil prices and more free trade agreements (FTA) reached between South Korea and trading partners last year, more must be done to vitalize the economy.

There has to be swift spending of the budget to support key development projects and get companies to invest more, he said.

“It is vital that the public actually feels the beneficial changes taking place,” he argued, adding that while there are plenty of challenges, it is best that government officials refrain from being overly pessimistic.

Choi said detailed plans to encourage companies to invest should be ready by the end of this month so they can be pursued in February.

The government plans to earmark 30 trillion won ($27.5 billion) up to 2017 to facilitate large-scale infrastructure building projects.

The minister said a bill that would permit growth of private sector home rental businesses needs to be submitted to the parliament next month. The bill is expected to include various incentives that will allow rental businesses to be set up more easily. Such a move could stabilize home rent prices that have soared in recent years.

The official, who doubles as deputy finance minister, also called for a consensus on labor market reform at the tripartite government-labor-management dialogue panel by March. The government is seeking a more fluid job market that allows companies to more easily hire and dismiss workers.

For financial sector reform, Choi said second-phase steps should be established by the first half of this year. The second phase aims to revamp the way lenders do business to facilitate the flow of money to businesses. A shortage of funds has been a major complaint among companies in the past.

The Financial Services Commission said in its annual policy goal announced earlier that it will create a 510 billion won “innovative economy” support fund to help companies with good business ideas and provide more than 100 trillion won in financial support to companies with considerable growth potential.

In a luncheon meeting with corporate leaders later in the day, Choi called for more painstaking efforts and fearless spirit of entrepreneurship in order to overcome the current economic slump.

“As the government makes efforts to boost the economy and create business-friendly environment, companies have to secure surviving capabilities by carrying out structural reform or engaging in business alliances,” he said. “I hope that local business leaders face the challenge armed with the spirit of venture.”