No More Factory Construction in Seoul

President Roh said that the government would no longer allow plant construction except in exceptional cases in the Seoul Metropolitan area on January 4.

Hynix Semiconductor may now have to cancel its 13.5 trillion won projected wafer plant in Icheon, Gyeonggi Province by 2010, and other investments in the area will also be unlikely.

The president’s remarks came during a meeting on national economic review in the presence of top officials including Prime Minister Han Myeong-sook and Deputy Prime Minister Kwon O-gyu at the Government Complex in Gwacheon.

President Roh said that the country should avoid centralization of the capital in pursuit of long-term vision over immediate gains, highlighting that decentralization has become a global trend. This implies that regulation on investment in the metropolitan area will not be eased during his term.

He added that his administration will not place a burden on the next one by thoroughly managing the economy this year, though it neither achieved remarkable economic growth nor did it address the social polarization issue.

Regarding heightened limits on the debt-to-income ratio for mortgage loans by banks, he hinted at support for continued regulations, saying that financial institutions’ attempts to lend loans based on debtors’ credit ratings is consistent with economic principles.

Meanwhile, Prime Minister Kwon predicted 4.5 percent growth this year in the “2007 economic forecast and policy direction” report at the meeting. He also said the labor market will add 300,000 new jobs this year, down from last year’s 400,000.

Kwon also talked about the revival of the won-yen exchange market, which was abolished in 1997, and a potential establishment of a direct market for non-dollar foreign exchange transactions to tackle the recent drop in won-yen exchange rate. Prevention of household financial crises by expanding fixed-rate mortgage loans was also on his agenda.

In addition, the government will push for reduction in credit card transaction fees for the small scale self-employed. It will also extend by two years the system where value added tax that restaurant owners pay decreases in relation to food product purchase. It was scheduled to be abolished at the end of last year.

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