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Untie sandbags from businesses

Posted May. 26, 2022 07:50,   

Updated May. 26, 2022 07:50


Samsung unveiled a plan to invest 450 trillion won for the next five years to develop future industries, including semiconductors and biologics. Hyundai Motor Group and its affiliates will invest 63 trillion won for the next four years in electric vehicles and robotics. Lotte and Hanwha announced an investment plan of 37 trillion won and 20 trillion won, respectively. SK and LG will soon announce a long-term investment strategy as well. Businesses are coming up with a series of massive investment plans for development of future industries and new engine for economic growth in response to the new administration’s policies with emphasis on economic and technology security leveraging private-led growth and future industries.

Samsung’s investment plan has grown by 120 trillion won from 330 trillion won invested for the past five years in both domestic and overseas operations. The company aims to maintain a super gap in the memory semiconductor market, where it is ranked the world’s No. 1, and increase its foundry competitiveness, which is currently behind Taiwan. Biotechnology, whose strategic importance has been highlighted during the COVID-19 pandemic, is another key area where Samsung will put efforts to generate another legend like that of semiconductors.

The latest set of investment plans will mitigate concerns that Korean businesses will increase only foreign investments and create jobs in other countries. 80% of Samsung’s investment, 360 trillion won, will be put into R&D sector in South Korea and expected to generate 16,000 jobs annually and 80,000 jobs in the course of the next five years. This is equivalent to creating new quality jobs, the figure of which is the same as 70% of Samsung Electronics’ staff and executives in South Korea. Hyundai Motor Group’s investment in South Korea is five times its investment in the United States, which the carmaker announced during President Joe Biden’s visit to South Korea. This shows the company’s resolve to develop South Korea as the hub for electric vehicles.

The ball is now in the government and the National Assembly. To remove regulations is the utmost priority, so that businesses can freely compete. The construction of semiconductor plants, which can be completed in two to three years in advanced countries, takes seven to eight years in South Korea because of various regulations. However strong the willpower of businesses is, too much regulations will hold back investment. Labor shortages in semiconductor, electric vehicle, and battery industries are not improving because of college enrollment caps. The corporate tax system that imposes two to three times more taxes on South Korean companies than businesses from other countries also need to be overhauled.

The existing global supply chain has demolished, and major economies are creating regional trade blocs to maximize their benefits, giving rise to big shifts in the world economy. South Korea’s survival depends on its businesses with competitiveness in cutting-edge industries. The government should spare no effort so that audacious moves by Korean companies bear fruit of new engine for economic growth.