SEOUL, KOREA - On February 27th, 2014 The Korea Forum for Progress (KFProgress) held a meeting at the Federation of Banks in Seoul to discuss any problems and solutions for the Korean economy. The monthly forum gives a chance to collect ideas and opinions from economic thinkers to help seek solutions to any ailments the Korea economy may be suffering.
Attending the forum this month was Ahn Choong-Young from Foreign Investment Ombudsman, Brad Buckwalter, the President of ADT Korea, Toru Nakajima, President of Mitsui Korea, and Sergio Rocha, President of GM Korea.
The KFProgress began with Ahn Choong-Young pointing out the critical crossroads that the Korean economy currently finds itself in. He emphasized domestic problems such as the high youth unemployment rate, household debt, Korea’s low investment ratio to GDP as well as the fragmented and non-competitive service sectors, and the importance of small-medium -sized enterprises. External issues mentioned included a depreciating Japanese yen and Chinese products that are rapidly catching up in terms of quality with others in the global market.
Ahn, who is also a distinguished Professor and a member of KOTRA, explained that the Park Geun-Hye administration needs to create a business environment that is friendly towards foreign direct investment (FDI) but also should focus on protecting domestic business entities. Having a myopic and narrow minded attitude towards FDI rather than a more holistic approach is unlikely to close the gap between inbound and outbound investment. Also opening up investment opportunity is likely to contribute to economic growth, quality job creation, and allow for a 20 percent increase in total exports.
Ahn closed his comments by saying that President Park’s development of the “creative economy” and “three-year economic innovation plan” are expected to be very important and will play a key role in the Korean economy.
Mr. Buckwalter, who besides being the President of ADT Korea, is also on the Amcham Board of Governors. He spoke on the inherent advantage less government intervention gives businesses when they are allowed to operate in an environment based upon free competition and supply and demand only. He also commented on the strong relationship of trust ADT has between its labor force and management. Buckwalter suspected that this lack of trust may be one of the biggest obstacles in the recent wage issues between some of the chaebol companies, such as Samsung and KT, and its employees.
While Mitsui Korea President, Toru Nakajima, was generally optimistic about the Korean economy he avoided answering specific questions about the ordinary wages issues. He went on to say that unexpected and frequent tax audits within Korea's legal system as well as other institutional frameworks leads to Korea being a less investment oriented country.
Nakajima original positivity was not just due to the recovery shown by the economy index or only to anecdotes from hisdaily business activities with his partners. He also felt that Korea has a lot of good fundamentals in its favor, some of which may have not yet been noticed or utilized. He suggested that Korea should have technology and efficiency collaboration with a competitive power.
The last speaker of the forum was Sergio Rocha, President of GM Korea. He spent his time speaking on maintaining competitiveness, manufacturing economic growth, job creation, and labor competitiveness. Rocha spent time emphasising labor competitiveness. He stressed that Korea's global competitiveness has been stagnant mainly due to lack of labor competitiveness, Korea's overall competitiveness ranks 22nd out of 60 for the past 3years however Korea's competitiveness in labor relations ranked 56th out of 60 in 2013. This comes after placing 53rd out of 59 in both 2011 and 2012 (source: IMD World Competitiveness Center).
The monthly talks at the Korea Forum for Progress allows for a free exchange of ideas and is a great opportunity for thinkers and players in the Korean economy to come together at try and come up with explanations and solutions to some of the problems that Korea currently faces.