Large Corporations’ New Investment Will Benefit from Five-Year Tax Cut

New measures, including a tax cut, aimed at boosting large companies’ investment in new business are expected to introduce—which has benefited only starting companies so far.

Deputy Prime Minister of Finance and Economy Lee Hun-jai said yesterday, “I will reactivate the incubater system for starting companies under which companies will be free from any intervention from the government and receive a five-year tax starting from the time of their establishment.”

Minister Lee had a meeting with Kang Shin-ho, acting chairman of the Federation of Korean Industries, in the morning at Namboo Country Club (Yong In city) and stressed his will to support such measures for industrial investment.

Vice Minister of Finance and Economy Kim Gwang-lim, attending the meeting together with Lee, said that the plan would benefit not only starting enterprises, but also large companies, which make investments in new businesses.

The Lee-Kang meeting has drawn great attention because it makes people wonder whether the relationship between the government and business, which has been estranged so far, will finally enter into a “cooperation phase” and whether such action can be regarded as a watershed for a drastic change of government policies on business.

The government has maintained regulation-oriented policies on Chaebol’s investment in new business. The aim has been, they argue, for the prevention of any ill practice of fleet type management.

Lee also said, “ It takes at least four or five years to produce any outcomes of industrial investment. Thus, rather than enterprisers’ focusing on management, who put emphasis on short-term profits and lack the ability to administer business with a macro-perspective, Korea should prefer enterprisers focusing on investing in new business such as Bill Gates in the United States.”

And he added, “We have to learn a lesson in that the United States has outrun Japan, that is lacking such entrepreneurial spirit.

Lee and Kang also agreed on the necessity of support on exports, especially on plant exports, marketing strategies fitting to each country based on cooperation between the government and the business, and the establishment of sound channels for such cooperation.

On top of that, Lee promised examination for the support of public corporations in terms of equipment and human resources, in order to revitalize major export projects.

Besides, aiming to build a healthy channel of communication between the government and business, Lee announced a one-year dispatch of servants in Ministry of Finance and Economy into the Federation of Korean Industries and setting up a new department, in charge of the cooperation between the two within the ministry will be examined.

Due to rain, the original plan—while playing golf, together with Vice Minister Kim and Hyun Myung-kwan, the Vice Chairman of the Federation of Korean Industries, the two will have a talk about some issues for the first time since Lee’s inauguration—changed into the meeting with breakfast together.

Jong sik Kong Chi-Young Shin kong@donga.com higgledy@donga.com