[Editorial] Economic Concerns

At a breakfast meeting of the Korea Chamber of Commerce and Industry yesterday, Minister Chung Sye-kyun of the Ministry of Commerce, Industry and Energy called the bipolarization between export-oriented companies and domestic demand-oriented companies, the manufacturing sector and the service sector, and large conglomerates and small and medium-sized enterprises (SMEs) as the Korean economy’s biggest problem. Employment, income, and regional bipolarization were also mentioned as causes for concern.

According to Chung, Korean society is being divided between the “well-off minority” and the “fallen-behind majority.”

It would fair to say that the 300 business leaders of large conglomerates and SMEs who attended the meeting heard about President Roh Moo-hyun’s agenda for this year.

Despite his bipolarization lesson, most of the questions Chung received from the attendees were unrelated. Instead, he was asked what measures are in place to respond to a China that is fast catching up with Korea thanks to a narrowing technological gap. Some pointed out that the government is not doing enough to tackle falling exchange rates. Others were concerned with the introduction of the work permit system that will put an end to the industrial trainee system.

Regardless of the size of their firms, many of the business leaders present expressed their sense of crisis regarding the weakening won, high labor costs, and low- priced Chinese products.

According to a recent survey conducted by the Federation of Korean Industries on Korea’s top 600 export companies, 59 percent of the companies will suffer from price competitiveness issues if the won-dollar exchange rate falls to the 970 won level. The won closed at 969.10 against the dollar yesterday.

The rail strike that began on Wednesday is also expected to wreak havoc on export companies. America, the EU and Japan are intensifying their competitive focus on Korea’s key export products, with their main targets being IT products and home appliances. And the trade surplus, which was a mere $1.038 billion in January and February, is very likely to decline further. Energy issues, including high oil prices, require comprehensive, short, medium, and long-term responses.

The world is waging an industrial, trade, and energy war. This is not the time for Chung to be giving a lecture on bipolarization to business leaders. In fact, Cheong Wa Dae and the Uri Party are giving enough attention to this issue. Chung must not waste the valuable time that he has to spend overseeing Korea’s exports and imports, managing our trade surplus, fostering a business-friendly environment, and stabilizing our energy supply.