More Investment, More Economic Development, Says President Roh

The Roh administration reportedly said that only more investment could boost the sluggish economic situation in Korea. The administration, therefore, plans to raise the tax deduction on temporary investment by 5% before the end of this year.

So far, when people sell or buy land, they lower the transaction value on the certified contract. But a new measure will take effect by 2005, forcing people to report the real transaction value so that they could not evade tax.

The above announcements came out at a cabinet meeting held yesterday at the Government Complex in Kwachun, which President Roh Moo-hyun himself presided. Additional measures were also adopted to boost the sagging economy.

According to the government figures reported at the meeting, the national economy will get worse than last year. In detail, the economic development, this year, will not make much progress, while the consumer prices and unemployment rates will go up. The trade deficits, however, will be lowered from $6.1 billion last year to $2-3 billion this year.

Senior official of Ministry of Finance and Economy, Park Byung-won confirmed, "If the situations like labor dispute and lack of investment continue and the government fails to respond appropriately, we may have to face a less than 3% development."

In response, the administration will raise the deduction cap on temporary investment from 10% to 15% only during the latter two quarters of this year. As a result, South Korean companies can save more than 200 billion won this year.

Instead of the complicated income tax computation for the employees of multinational companies, according to a government plan, they may be able to pay a flat-rated (18%) tax on their incomes.

On the other hand, the pro-labor Roh Moo-hyun administration reportedly plans to enforce much tougher labor policies and regulations. So far, the unions have paid union officials even after their retirement or dismissal. The administration will come up with the new measures by October.

The Roh administration also intends to get rid of the various benefits and protections for the regular workers. Instead, it tries to set up more protective measures for the temporary workers.

In addition, it will allow expansion and improvement of Samsung semiconductor manufacturing facility in Hwasung, Kyunggi Province, and the auto factory of Ssangyong in Pyungtack City.

At the meeting, President Roh stated, "We will make a one-stop government agency to induce more foreign investments. If something comes up, lying outside the jurisdiction of the agency, the Blue House will interfere directly to resolve all the problems for the foreign investors."

He also told his cabinet members, "We have to reign in the real estate speculation. It should remain within the range of the consumer price increase. All agencies and ministries should build an infrastructure with which the government can monitor all the transactions and their supposed real prices."

As to the labor disputes and strikes, "I will enforce the law strictly against the illegal labor strikes. But we have to think about the fairness. Strict enforcement of law does not necessarily go hand in hand with cracking down on the strikes. A policy measure introduced to entice more investment, under which some portion of the corporate tax or income tax is waived by the government for the investment made by 25 industries like construction.