President talks about solutions for economic recovery

President Park Geun-hye said in her Independence Day remarks Thursday, “We have built a framework for sustainable economic development while improving laws and systems for economic revitalization. Going forward, we will put more focus on the recovery of economic vitality and job creation.” Few would have hope from her remarks, however, as the proposed revised tax bill is still controversial and conglomerates are in distress from the Park administration’s heavier taxation.

An idealistic approach such as “welfare without raising more taxes,” which is unlikely to be realized, could cause a “financial bomb” rather than economic vitality and job creation. A case in point is southern Europe facing a crisis after issuing treasury bonds to finance its budget. If Korea continues low growth like southern Europe with being indulged in universal welfare, it could become an aging country before joining developed countries.

The government should play an important role by keeping sustainable finance to revive the potential growth that ranged from four to five percent until the early 2000s. As President Park said, “I’ll create a right country by bringing abnormalities of the past back to normal,” she needs to show a strong determination to correct her abnormal presidential pledges.

“I’ll create an environment where all economic entities fairly compete each other,” President Park said. “Both large companies and small and medium enterprises will growth in coexistence under the market economy based on principles.” The top priority to achieve both fair competition and coexistence is eliminating deep-rooted regulations. When the government announced its measures on the service industry last month, however, it did not change key regulations such as approving for-profit medical organizations and attracting private schools from developed countries. Deputy Prime Minister and Finance Minister Hyun Oh-seok said in an interview with the Dong-A Ilbo last week, “Relevant ministries are discussing how to address the delay (of the foundation of for-profit medical organizations) in free economic zones.” It is doubtful, however, as the government has lost political leadership after the controversy over the tax increase.

If job creation is clearly the administration’s top priority, President Park needs to show her political capacity. It is difficult to achieve something if the administration cares about the backlash of the privileged and ministerial egoism. President Park should meet opposition party people, persuade stakeholders and prove her achievements to the people, instead of serving as a judge or a critic.