South Korean Prime Minister: "No Supplementary Budget in First Half... Will Actively Promote Foreign Investment"

"Yoon Administration's 'Investment-Led Growth'... Must Increase 'Total Factor Productivity' Through Structural Reform"

[Asia Economy Reporter Koo Chae-eun] Prime Minister Han Duck-soo stated, "To create a system where foreign investment is actively carried out, the Deputy Prime Minister for Economy and the ministers of relevant departments will actively go abroad to attract investment." However, he drew a line by saying that there will be no supplementary budget allocation for the time being.

Focus on Investment-Led Growth... Going Abroad to Attract Investment, Driving Three Major Reforms

On the 10th, at the Prime Minister’s official residence in Sejong, Prime Minister Han emphasized the importance of attracting foreign investment for investment-led growth during a meeting with the press corps. He said, "When the new government was launched, I mentioned that growth would be led by investment rather than income. This year, we will make efforts to attract foreign investment with almost the same importance as domestic investment. The Deputy Prime Minister for Economy and the ministers of relevant departments will actively go abroad to attract investment."

Regarding President Yoon Suk-yeol’s attendance at the World Economic Forum (WEF, Davos Forum), he added, "It will be an opportunity to globally announce that foreign investors are coming to Korea, creating jobs, and fostering an atmosphere of fair competition."

Prime Minister Han pointed out the lack of rule of law in the labor market and the relatively high corporate and personal income taxes compared to competing countries as factors hindering foreign investment. He said these two issues will be resolved to create an environment where foreign investors can invest with confidence.

He stated, "The rule of law and compliance in the labor market are not well established, and there were many opinions that the state should firmly protect against legal violations occurring there so that investors can make predictions. I can say there has been progress in that regard."

Regarding this year’s economic situation, he said, "The potential growth rate continues to decline, and there are predictions that it will soon fall to the 1% range." He diagnosed, "To overcome this, either the input of labor, capital, and technology must increase, or total factor productivity must rise." He emphasized the need for three major structural reforms in labor, education, and pensions, saying, "To increase total factor productivity, institutional reforms, improvements in labor-management issues, cooperation among political forces, and promotion of competition are necessary."

He added, "There will be no supplementary budget for the time being. We need to see what effects the concentrated spending in the first half of the year will have. (Even if a supplementary budget is made) it might be possible around the second half of this year."

"Difficult to Agree with Na Kyung-won’s 'Debt Forgiveness Plan'... Does Not View China’s Visa Suspension as Retaliation"

Regarding a question about the ‘debt forgiveness upon childbirth’ policy, which was promoted by Na Kyung-won, Vice Chair of the Low Birthrate and Aging Society Committee, but caused controversy, he said, "It is difficult to agree in terms of effectiveness and policy overlap."

Prime Minister Han mentioned various government housing measures targeting young people and said, "The plan to give 200 million won and forgive loans upon childbirth, as proposed by Vice Chair Na, is difficult to agree with both in terms of effectiveness and policy overlap." He added, "Vice Chair Na brought such a plan to report to me but then took it back." Vice Chair Na has expressed her intention to resign after clashing with the Presidential Office over policies that differ from the government’s stance.

Prime Minister Han also explained regarding the Presidential Office’s move to establish a public service inspection team, "It seems they judged that it is necessary to increase the functions that have quantitatively decreased due to the abolition of the Civil Affairs Office."

Currently, the Presidential Office is pushing to establish a public service inspection team under the Office of the Secretary for Public Service Discipline. In addition, the Prime Minister’s Office is seeking to add a team of about 10 members to the existing Public Service Management Office and is recruiting dispatched personnel from the prosecution, police, and National Tax Service. Regarding this, Prime Minister Han added, "We (the Prime Minister’s Office) are reinforcing the work we have been doing."