Economy Minister stresses need for regulatory and corporate tax reform : The DONG-A ILBO

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Deputy Prime Minister and Minister of Economy and Finance Choo Kyung-ho pledged to bolster the weakened growth potential of the Korean economy through a government-wide regulatory overhaul and the corporate tax improvement, at the 2022 Dong-A International Finance Forum on May 26. Nobel laureate in economics and Professor David Card of the University of California, Berkeley, pointed out that Korea’s slowing economic growth is attributable to the low birth rate and aging population which are worsening the faster in the world, and offered concrete solutions, such as intensive training of young talents in science and engineering.

Diminishing growth potential, one of the main topics of discussion at the forum, is the biggest challenge currently facing the Korean economy. In the 2021 report, the OECD predicted that, without extraordinary policy measures, the current potential growth of around 2% would fall to less than 1%. The myth that the rate of economic growth declines by 1 percentage point every five years turns out to be true, despite several cycles of power transfer.

An old approach to “Galapagos Island regulations”, which only exists in Korea, and higher corporate taxes than in other advanced countries are reported as the main factors that hamper business activities and hamper the potential growth. That’s why Minister Choo pledged that day to “remove all sandbags that weigh on the autonomy, creativity and enthusiasm of businesses, as well as financial supports, including tax advantages “.

The country’s economic challenges discussed by Professor Card raise awareness of the need for regulatory reform. He added that “unlike other countries, where highly educated people are more likely to find jobs, Korea is falling behind with a staggering 20-30% of young people not finding jobs after college. “. While the number of young people is decreasing due to the low birth rate and the aging of the population, young talents remain inactive because of an education system that has nothing to do with finding a job. Dr. Card stressed the importance of intensive talent training in STEM field, but the reality in Korea is that it cannot provide the manpower in the areas of semiconductors, electric vehicles and batteries that lack manpower, due to university quota regulations.

Korea University Professor Lee Jong-hwa described the current situation of the Korean economy as a man being pushed to the last extremity, which means we need to move forward in overcoming the triple crisis of low growth, high inflation and polarization. Over the past few days, the top 10 companies pledged to invest 1,055.6 trillion won and create 400,000 jobs within five years, while Samsung Electronics announced a 450 trillion won investment plan. wons. This is an invaluable opportunity for the country to reinvigorate its lagging engine of growth which was barely enough to bring it into the ranks of advanced nations.

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