South Korean President Park Geun-hye yesterday unveiled a three-year plan to rebalance the country’s export-reliant economy by investing US$3.7 billion on start-ups, boosting domestic spending and getting more young people and women into the workforce.
Park announced the plan on the day she completed her first year in office and said that it would deliver a potential economic growth rate of at least 4 percent by 2017.
“Our past ... way of growth that made us one of the world’s 10 largest economies has now reached its limit,” Park said in a national televised speech.
Asia’s fourth-largest economy faces a widening imbalance, with the export and manufacturing sector totally overshadowing the domestic consumer market and services industry, she said.
Park also highlighted the dangers posed by what she called South Korea’s “silent, looming disaster” — a rapidly aging population that threatens to slash the workforce and impose a heavy welfare cost.
“Unless we change the fundamentals of the economy and break from the trap of slow growth, there will be no future for us,” she said.
The nation’s economy grew 2.7 percent last year.
According to the three-year plan, the government will spend 4 trillion won (US$3.7 billion) by 2017 to help small start-ups and increase spending on research and development to the equivalent of 5 percent of the GDP, from the current 4 percent. It will also ease an array of regulations on five key service industries: healthcare, education, finance, tourism and software.
In a bid to spur domestic spending, the plan also aims to build more homes and offer low-interest loans for families desperate to enter the property market.
South Koreans’ household debt — mostly housing loans — amounts to nearly 140 percent of their disposable income on average, making it one of the highest rates in the world.
“Solving the issue of housing debt ... is the first priority to spur consumer spending,” Park said, promising to reduce the debt ratio by 5 percentage points by 2017.
While opinion polls have shown a healthy approval rating for the president after hew first year in office, she scores far higher marks for her foreign policy than for her handling of the economy.
A series of surveys commissioned by leading newspapers have put public disapproval of her economic policy at about 50 percent.
One of the country’s top dailies, the Dong-A Ilbo, compared her economic team to “a student who is full of motivation, but knows little about how to study and ends up being an underachiever.”
South Korea’s first female president came to office vowing more gender equality and in her speech yesterday, offered more childcare services for working mothers and incentives for companies that hire more women and young people.
“All aspects of our economy, including domestic spending and exports, manufacturing and services, big conglomerates and small and medium firms and the capital city and the rest of the country, should show balanced growth so that all South Koreans will be able to enjoy fruits of growth,” Park said.
Park’s plan aims to boost the employment rate from about 60 percent to 70 percent by 2017.
She also vowed to reform debt-ridden state-run firms long criticized for poor management, corruption and over-generous benefits for workers.
“Such long-running problems should no longer hamper our economic growth,” she said, warning of heavier punishment for corruption and tighter requirements on state-run firms’ financial health.