Park urges drastic regulatory reforms to boost economy

President Park Geun-hye urged her economy-related ministers to zero in on drastically reforming Korea’s regulatory system to boost business confidence and investment amid an uncertain outlook for the global economy.

In a trade and investment promotion meeting presided over by the president at Cheong Wa Dae on Thursday, Park also called on regional governments and offices to work with the central government and businesses to improve the country’s investment environment.

“The key point (of regulatory reforms) is job creation,” the president told her ministers. “The central government, regional governments and the private sector should collaborate for efforts to mark an epoch in improving the investment environment.”

This comes as the Ministry of Strategy and Finance and the Ministry of Trade, Industry and Energy among other agencies reported to the president their second set of deregulatory measures aimed at boosting exports and investment.

Deputy Prime Minister and Finance Minister Hyun Oh-seok said that the first measures unveiled last May that included a wide range of deregulations on plant expansion and cogeneration power plant establishments in industrial zones should become effective in the fourth quarter of this year.

Its equity deregulation on holding company structures allowing their subsidiaries to attract and form joint venture ties with foreign companies is still in the process of being approved by the National Assembly, the finance minister noted during a press conference.

This may, for instance, lead SK Global Chemical, wholly owned by SK Innovation of SK Group, to establish joint venture operations with Japan-based JX Nippon Oil & Energy.

Its follow-up measures on Thursday will ease licensing regulations for companies seeking to participate in the development of enterprise cities.

The government will allow companies to set up research and development centers in specialized zones. For example, an auto parts manufacturer can establish its automobile R&D in zones focused on developing biotech or tourism industries.

Also, companies looking to expand their facilities or plants will be able to do so in some parts of green belts in industrial zones, while the government will support domestic companies to jointly invest with foreign companies in expanding plants near coastal areas and developing ports.

These measures are expected to open the door for conglomerates such as Samsung, GS, Hyundai Motor and Hanwha to invest and carry out projects including plant expansion in industrial zones in Korea.

The first set of measures announced last May is expected to attract some 11 trillion won investments, while the second about 10 trillion won, the Finance Ministry noted.

The Ministry of Trade, Industry and Energy reported to the president that it planned to support and insure domestic small and medium enterprises against the risk of foreign exchange volatility, and help them further make inroads into China’s high-tech materials and components markets.

The Ministry of Land, Infrastructure and Transport, meanwhile, will move to ease rules governing transactions of land owned by state-run enterprises to encourage them to relocate their bases to “innovative cities” for regional growth.

By Park Hyong-ki
(hkp@heraldcorp.com)