Financial Times: “Korean Government’s Unstable Policy Hinders Investment”

For its front-page headline on July 27, the U.K.’s Financial Times (FT) reported that Korean enterprises are reducing investment and employment due to the government’s unstable policy and a decline in consumer consumption.

The FT pointed out that the main cause for the falling expenditure of Korean enterprises in the past two years is the political instability of the Roh Moo-hyun government, which emphasizes reform.

The newspaper reported that many entrepreneurs in Korea are analyzing that the current economic situation is worse than that of the one during the foreign exchange crisis.

Although growth is justified due to exports barely doing well, business sentiment has frozen and Korea is losing investments to China and low-wage countries in southeastern Asia because of an unstable labor-management relationship and burden from a wage increase.

Concerning the Roh Moo-hyun government’s encouragement of an even more transparent management structure for chaebols, including Samsung, LG, and Hyundai Motors, the newspaper reported that foreign investors agreed on one hand, yet are concerned about the anti-enterprise sentiment on the other.

Quoting a Korean economic expert, the FT analyzed that “the enterprise reform of the Korean government is becoming an obstacle for investment and employment.”

Dong-Won Kim daviskim@donga.com