South Korean Prime Minister Chung Sye-gyun and heads of five major business associations met on Thursday to discuss ways to recover the economy, which has taken a significant hit from the coronavirus pandemic this year. The prime minister asked businesses for investment and job retention while businesses requested more flexibility in working hours and full payments for social insurances. Considering that overcoming the current crisis requires concerted efforts of the government and businesses, they should have frequent meetings at all levels.
Businesses have been helping the government and the public in their fight against COVID-19 to the best of their ability despite facing a sharp decline in production and demand. Not only did the major conglomerates including Samsung and Hyundai Motor make large donations when the virus broke out, but they also opened up their training centers as quarantine facilities. They have imported mask materials using their vast network of global offices and provided consulting services for small and medium-sized companies. They have also stood behind their partners: They have paid one million won to each sales staff of their shops in department stores while other companies offer interest-free loans to their partners.
On its part, the government has revealed its plan to mobilize 100 trillion won to increase liquidity in aid of businesses. The financial market, which had been thrown into turmoil since early March, has stabilized thanks to measures taken by the government such as injecting dollars into the market using a currency swap facility. The Bank of Korea announced “Korean quantitative easing” on Thursday where it would provide unlimited liquidity for the first time in history to support the financial market and companies. These measures, however, are taking a long time to be implemented while the burden on businesses, small and large, is growing as the coronavirus crisis lasts longer than expected.
In a survey by the Korea Federation of SMEs (KBIZ), which was published on Thursday, 64 percent of small and medium-sized companies said that their business had been dealt a blow by COVID-19 while 42 percent said they might have to close down after three months. The struggle is not limited to SMEs: The impact of the coronavirus outbreak is becoming clearer as seen with 84 out of the top 100 businesses by market cap making downward revisions in their performance for the first quarter of the year.
Huh Chang-su, chairman of the Federation of Korean Industries (FKI), published a proposal on Wednesday to get through the economic crisis caused by the coronavirus. The organization’s proposal includes easing regulations for more than two years and extending simplified business reshuffle processes to more businesses. Nations all around the world are scrambling to inject money into the market in an effort to tackle the worst economic crisis, but governments can boost demand and investment by easing regulation, even without bearing a financial burden. Jobs can be retained only if businesses survive this crisis. The South Korean government should move quickly to reform regulations and provide unprecedented support for businesses to make sure they can bounce back from the coronavirus.