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In a Special Meeting at Cheong Wa Dae: Pres. Moon Asked the Country's Top Conglomerates And Large Firms to Increase Their Local Investments and Create More Jobs
President Moon Jae-in delivers an opening speech at his meeting with business leaders at the Yeongbingwan Guest House of Cheong Wa Dae on Jan. 15, 2019. The inscription on the wall behind him reads "A nation where business grows, Korea to become a country where everyone can prosper. Held in the format of a town hall meeting as part of the president's measures to boost the economy, the two-hour meeting saw more than 130 businesspeople from large companies and small and medium-size enterprises (SMEs) attend. Expressing a strong will to support business activities, President Moon requested that the business leaders take the lead in stimulating investment and job creation. "Employment and investment both serve as the foundation for companies to grow and secure future growth momentum," the president said. "Corporate competitiveness and quality jobs all come from investment," he added, asking the executives to create more business opportunities and raise investment.
Last year, President Moon Jae-in expressed his philosophy that indices for quality of life are more important than gross domestic product growth, during his meeting with visiting Angel Gurria, Secretary-General of the Organization for Economic Cooperation and Development (OECD) at Cheong Wa Dae. His remarks have been interpreted among most people that more households should shift their focus to leisure activities or shop-ping on the back of the government's policy direction.
People say the President may have wanted a paradigm change of the long-standing workaholic mind-set in so many work-places in South Korea. However, some commenters label the Moon administration's policy as "ideal," in the face of the high jobless rate and sales drop of overall businesses.
A poll from the Seoul Institute showed that Seoulites picked youth unemploy-ment and the real estate market as the two primary economic issues for next year. About a third of households, or 33.1% of the surveyed 1,013 residing in the capital, responded that the high unemployment rate for young Koreans is the most significant issue in 2019.
President Moon asked the country's top conglomerates and large firms to increase their local investment and create more jobs on Jan. 15, 2019, amid growing concerns of a possible slowdown that many believe may have been partly caused by his policy of boosting house-hold income. The call came in a special meeting held at the presidential office at Cheong Wa Dae, attended by the top executive officers and representatives of about 130 local companies.
"Employment and investment are the foundation for the growth of a company and its efforts to secure a future growth engine, while at the same time they are a way to contribute to the national economy and the people's livelihood," said the President.
The special meeting follows a similar session, also held at Cheong Wa Dae, with the leaders of small and medium-sized enterprises, in which Moon promised increased support for smaller firms. The President noted the large firms were better able to offer the kind of quality jobs preferred by job seekers.
"Companies with more than 300 employees have the jobs most preferred by the youth. The top 30 groups have steadily increased their employment over the past five years while companies with more than 300 employees accounted for nearly half of new jobs last year by increasing their employment by about 50,000," Moon was quoted as saying.
In 2018, the country added about 95,000 new jobs, the smallest gain since 2009, while its unemployment rate reached a 17-year high of 3.8%. Many local companies have blamed the recent increases in the wage for the apparent dip in the local job market.
Moon earlier vowed to increase the country's minimum hourly pay rate to KR\10,000 (US$8.90) by 2020, though he has hinted at a possible delay amid worsening economic conditions. Still, the minimum wage has jumped by nearly 30% to KR\8,350 per hour this year from KR\6,470 in 2017 when Moon came into office.
"Creating good jobs is the most urgent issue facing our economy. You have done well so far, but I ask you once again to spearhead efforts to create new jobs,paying special attention to the issue," said the President.
Moon's latest meeting with business leaders involved the top executive officers of the country's 22 largest companies, including vice chairman Lee Jae-yong of Samsung Electronics Co., who was also asked by Prime Minister Lee Nak-yon to help create more jobs during a rare prime ministerial visit to Samsung headquarters last January.
President Moon also asked the businesses to increase their investment, noting their facility investment has been on the decline since the second quarter of last year. "Creating an environment where companies can leap forward is our government's goal this year," he said.
"Especially, I sincerely hope to see more investment in new industrial sectors, new technologies and new products for the development of future growth engines."
The President vowed increased support. "The government too will actively support your efforts to innovate. It will actively help develop new technologies, human resources and commercialize advanced technologies with its research and development budget that will top KR\20 trillion this year," he said.
Moon also promised stepped-up efforts to remove unnecessary or excessive regulations. "There are many forecasts that our economy, along with a slowing global economy, will face difficulties this year. But I believe we can surely overcome any difficulty and revitalize our economy if the government, companies and labor combine their strength," he said.
During his 2017 presidential campaign, candidate Moon Jae-in promised to create 800,000 jobs if elected. His employment pledge is estimated to have appealed to many voters, including among the youth.
The Moon administration has reportedly poured about KR\54 trillion (US$48.2 billion) in taxpayer money, involving a supplementary budget and stabilization fund, into the employment-related segment over the past 20 months. But the result at the present stage falls far short of the stated goal, according to data released by Statistics Korea last December.
As of November 2018, the "extended unemployment rate" among young people - which includes job seekers, those who have abandoned looking for jobs and workers looking for night jobs - reached 21.6%, which is the highest since the authority started its estimation.
Data from the Education Ministry was similar. The employment rate of about 570,000 college graduates stood at 66.2% as of the end of 2017, down 1.5 percentage points from a year earlier. That figure was under 67% for the first time since 2011. In addition, the total employment rate for the overall generation in 2018 is estimated to post 60.7% with the number of jobless people exceeding 1 million, according to Statistics Korea and Bank of Korea.
Amid the worse-than-expected employment segment score, President Moon said in a New Year's message to the public on January 2 that he would prioritize job creation along with justice in 2019's administrative affairs.
Once again, President Moon Jae-in's administration is facing louder calls to reconsider its plan to phase out nuclear power in the country. The impetus is the choking fine dust that blanketed most parts of the country for three consecutive days over the weekend. The Moon government adamantly adheres to its anti-nuclear stance, turning a deaf ear to a long list of costs critics say its misguided energy policy will incur.
In a meeting with a group of corporate leaders on January 15, Moon reiterated that nothing would stop this energy policy from moving forward. But he may find it hard to remain insensitive to growing public concern that increased coal-fired power generation - undertaken to make up for a decrease in nuclear electricity generation - has aggravated the fine dust problem.
A senior ruling party member mentioned the fine dust issue, together with other reasons, last week when he called on the government to reconsider its decision not to build any more nuclear plants. In a meeting with representatives of the nuclear energy sector, Rep. Song Young-gil from the Democratic Party of Korea raised the need to build at least two new reactors to replace aged ones and thermal power plants.
It marked the first time that a ruling party legislator had spoken out against the Moon administration's nuclear phaseout plan, suggesting skepticism might be spreading even among Moon's political supporters about the relevance of his energy policy. Soon after taking office in May 2017, Moon announced his intention to quadruple the proportion of renewables in the energy mix to 20% by 2030 and make the country nuclear-free over the coming six decades. The country's 23 nuclear reactors now generate about one-third of its energy needs.
The Moon administration cited the recommendation in deciding to scrap plans for several reactors, including the Shin Hanwool 3 and 4, a decision that Song proposed reconsidering. Despite the negative response from the presi-dential office, the four-term lawmaker came forward again to reiterate his proposal.
Song was right to suggest a separate public debate is necessary to decide whether to revive the Shin Hanwool project. The original purpose of the 2017 discussion, as he pointed out, was to decide the fate of a separate reactor construction project, which Moon suspended shortly after taking office.
Furthermore, it seems necessary to hold a public debate on a wider scale, if not a national referendum, on Moon's controversial nuclear phaseout policy. According to a survey conducted by the Korea Nuclear Society last year, 71.6% of respondents supported nuclear power generation and only 26% opposed it.
The 2017 debate, attended by 500 ordinary citizens, cannot be the final say on the future of nuclear power generation in a country that has the highest per capita electricity demand in Asia and imports much of its fuel from abroad. The presidential office should not cling to it as an excuse to shut down further discussion on this crucial matter.
South Korea began to seek free trade deals in 1999, when it started negotiations with Chile, its first partner for a free trade agreement (FTA) that took effect in April 2004. Over the past 20 years, 15 FTAs between Korea and its counterparts have taken effect, with 52 partner countries in total. The 15 FTAs include those with three continental economic blocs: the European Free Trade Association four countries, the Association of Southeast Asian Nations (10) and the European Union (28).
Korea has also signed FTAs with five countries in Central America, which will take effect after ratification by legislators. In addition, Korea is negotiating FTAs with such countries as Ecuador and the South American trade bloc MERCOSUR consisting of Argentina, Brazil, Paraguay, Uruguay and Venezuela. Preliminary meetings with Mexico are also underway to embark on FTA negotiations.
Among these talks, the move led by the Ministry of Trade, Industry and Energy to see the effectuation of deals with South and Central American nations is aimed at gaining an advantageous position in the emerging market before Japan or China, according to the Govern-ment officials.
Likewise, Korea is focusing on emerging markets in the area of FTAs, in line with the road map unveiled by Trade Minister Kim Hyun-chong last year. "It is necessary to diversify export destinations targeting emerging countries," he said. He added that Korea plans to expand FTA deals up to the level at which partners account for about 90% of the world's gross domestic product in the coming years, from the current 77%.
Korea has no FTA counterpart in the Middle East. Although it held preliminary meetings with the six-member Gulf Cooperation Council in 2008, bilateral preparation procedures have halted after their third round of meetings in July 2009. The six members are Saudi Arabia, Kuwait, United Arab Emirates, Qatar, Oman and Bahrain.
Market insiders point out that more fundamental access is needed to revitalize talks with the GCC or make inroads into other markets involving Africa. A company executive cited the role of the local private sector, which include builders and petrochemical businesses with long-term experience of operations there.
"Significance lies not in a signature itself but in the content of the agreement or communique," said the executive. "There is no reason to hurry amid the global trend of protectionism. Considering that a FTA is a give-and-take through tariff-easing, prudence based on high-end negotiation strategies is needed."
Meanwhile, the government is poised to resume meetings with the Muslim countries. Minister Kim visited Qatar and Oman earlier this month to discuss economic cooperation. He reportedly met with senior officials from sovereign wealth funds and trade ministerial counterparts in the two countries. The Korea Chamber of Commerce and Industry welcomed the Trade Ministry's policy toward diversification.
South Korea's trade volume with China reached US$247.3 billion in the first 11 months of this year, rising to the level reached before a diplomatic row over the deployment of an anti-missile system here took a toll on trade between the two countries, government data showed Wednesday.
Korea's No.1 export and import market has been China since the South Korea-China free trade agreement was inked in December 2015, accounting for roughly 25% of Korea's trade turnover and about twice the volume with the United States, according to the Ministry of Trade, Industry and Energy (MOTIE).
Korea's exports to China recorded US$150.3 billion and grew 17.2% on-year between January and November this year, according to data from The hike in exports to China was led by semi-conductors, petroleum goods and computers, due to the Chinese govern-ment's push to foster its IT and high-tech manufacturing businesses.
South Korea shipped US$48.6 billion worth of semiconductors, followed by US$10.8 billion of flat panel displays and US$8.6 billion of petroleum goods. Shipments from China - mostly made up of direct purchases of computer-related products such as solid state drive, PC and computer screens - rose 8.6% to US$97 billion.
Meanwhile, trade with Vietnam also grew 7% on-year to US$62.6 billion and continued its upward trend, the ministry said. Vietnam is South Korea's No. 4 biggest export and import market and No. 1 among ASEAN countries. South Korea clinched a FTA with Vietnam in December 2015.
According to the Trade Ministry, Vietnam is a key production base for Korean companies, as a growing number of companies are choosing to relocate factories from China to Vietnam. South Korea is the biggest investor there, with US$2.8 billion invested there in the January-September period this year, up 24.5% on-year and largely centering on high-value goods, such as polypropylene and camera modules, the ministry said.
Due to such trends, Korea's imports from Vietnam totaled US$18.1 billion and jumped 22% on-year. Shipments to Vietnam from Korea increased 1.9% on-year to US$44.5 billion, after recording a 48.4% surge last year.★