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[Editorial] Looking Forward to Candidates’ Deregulation Plans

[Editorial] Looking Forward to Candidates’ Deregulation Plans

Posted October. 24, 2007 08:12,   


Economic organizations and business leaders have come up with various policy agendas as the presidential election gets closer. The Roh administration publicly, but anachronistically, has renewed its intent to toughen up its regulatory grip until the last day of Roh’s presidency. Corporations, however, no longer heed the administration, which is notorious for introducing new regulations.

Roh-initiated regulations are irrational and anachronistic. The Roh administration, for example, allows foreign workers to work only for manufacturers or eight types of business establishments in the service sector, including restaurants. But the administration bans the logistics industry from employing alien workers, an industry that is bleeding severely due to a workforce shortage.

Furthermore, a factory owner does not have to pay the huge integrated real estate tax, while the hospitality industry does not enjoy the privilege. A hotel owner has to pay taxes on the land on which his or her hotel exists if its value exceeds 400 million won. To make up for the tax spending, the owner has to raise the service rates, and the higher rates in turn drive away tourists from South Korea.

Structurally, the service sector constitutes 56.3% of Korea’s gross domestic production as of last year, and employs 65.5% of the total national workforce. In other words, the service sector leads, not assists, manufacturing industries.

The Roh administration is still obsessed with old economic ideas and designs everything around the manufacturing sector. No wonder regulations have not yet caught up with reality.

The story does not stop there. President Roh has broken ground all over the nation to realize his balanced national development project, which has driven South Korean corporate investments to its lowest level. LG Electronics, for instance, had to cough up a 7-billion-won mandatory contribution in return for a permit to build an R&D center in Geumcheon-gu, Seoul.

The Roh administration is indiscriminately and absurdly imposing this “fine,” even on research facilities, to deter the concentration of investment in the Seoul Metropolitan area. To attract quality human resources, however, a research institute has to be in the vicinity of Seoul. Everyone understands the need. Unfortunately, Roh and his administration won’t listen.

Every candidate chants that the future under his presidency will be bright and business-friendly. Each of them also promises to create 2.5 to 5 million new jobs, along with a 6-8% economic growth. We have heard enough of slogans. We need details on how to create momentum, how to achieve goals with what tools, and how to revamp the system.

Instead, some candidates are trying to pull South Koreans into a regional hegemony sensationalism. We don’t need that. We need details on how to eliminate the numerous regulations that Roh has created, and to restart our sagging economy. We want to see them compete in that area. That is the best way to seal tax loopholes, create jobs, and take care of citizens.