[Editorial] Facilitate Investment

The report that the government announced yesterday, “Directions for economic management in the second half,” was quite different from previous ones in that it puts much emphasis on economic recovery and investment facilitation. After suffering a landslide defeat in the May 31 local elections, the ruling Uri Party reflected the public opinion on its “16 suggestions” to change the course of “Roh-nomics” that focuses on alleviation of socio-economic disparity through a tax hike.

The government refrained from scrapping non-taxation and exemption measures in an endeavor to facilitate investment. Its decision to overhaul the total equity investment regulations within this year, which large businesses have pointed out as an obstacle against investment, is a significant change compared to what the Roh Moo-hyun administration has argued so far. By allowing businesses to get trade finances with approvals of purchase alone, the government finally resolved long-standing complaints of small-sized enterprises.

In order to meet the goals of achieving a 5% economic growth and creating 350,000 new jobs this year, however, the government needs to lift regulations in a more resolute manner. Spending the budget of 88.8 trillion won in the second half might rather trigger an unnecessary waste of budgets than stimulating economic recovery. It would be much better to lift and overhaul regulations related to business startups and investment imposed on by the central and local governments.

Without specific financing and execution plans, however, even the essential policies may end up losing the public’s trust. A case in point: “welfare packages” that the government suggested with no budgets available. “Facilitation of the service sector”—again included in the plan for the second half as if it were an “assortment” at the department store—is such an obscure concept that it is not clear what the government plans to do and how. In its real estate plans, ways to alleviate the burdens of ordinary citizens and the middle class are only minimal.

The government’s adoption of some investment facilitation plans is seemingly most affected by the pressures from the Uri Party concerned about the presidential election next year. If it chose a public sector-led economic stimulation in order to revive the middle class, that would be something to welcome. We need to be cautious, however, as to whether there is a political intention to improve business indicators before the presidential election. The people are not those who are so easily tricked that it needs to take care of only right before and during the presidential election. At least to reduce economic and market uncertainties, President Roh should make it clear whether he definitely changed his direction toward growth-oriented policies.