During the final day of the parliament’s audit of the Ministry of Strategy and Finance (MOSF), ruling and opposition lawmakers have unanimously sounded an alarm over a potential crisis in the national economy. 

Members of the National Assembly Strategy and Finance Committee urged the government and the Bank of Korea to draw up new growth strategies to cope with the economic challenges. They shared the view on Oct. 14, wrapping up the 20-day parliamentary audit of the committee. The lawmakers sitting on the committee, dealing with economic policies of the national economy, stressed the need for action. 

Rep. Yoo Seung-min of the Saenuri Party said, “Even though outlooks for the 2017 economic growth rate differ, if things go like this, we will be lucky next year.” But he noted that no one  could predict the arrival of the 1997 Asian financial crisis. 

“In 1997, the then-president got a briefing on the fact that foreign exchange reserves were drained four days before the nation received a relief fund from the International Monetary Fund (IMF),” Rep. Yoo said. He went on to say that now is not the right time to raise the corporate tax rate by 1 to 2 percent and lowering interest rates. 

Rep. Yoo said the president, the final decision-maker, should be informed of “mines and bombs” that might present themselves this and next year. He warned that security and economic crises had never happened simultaneously, but this time,the two might come together. In particular, the Bank of Korea and Korea Development Institute (KDI) were one step behind during the 1997 Asian financial crisis. “The Bank of Korea should show the way, and I want the BOK to stay away from the MOST and take an objective stance,” he said. 

Rep. Kim Sung-shik, the People’s Party’s economic policy chairman, said, “With the MOSF and the BOK, at the center of macroeconomic policies, they are now drifting. And they should have the courage to break a vicious cycle and talk about visionary policies, and now is the time when they reset mid- and long-term growth strategies while communicating with people on how to change them.” Rep. Kim stressed the need for shifting the conglomerate-oriented paradigm to an open innovation regime in which they draw up new growth strategies to enliven innovative momentum within the corporate ecosystem. “The creative economy does not exist without the creation of welfare,” he opined. Kim emphasized start-up youth’s views that they need to be allowed to recuperate from initial failures, saying that they should be given chances to demonstrate their capabilities fully if they are guaranteed with basic welfare.   

Rep. Kim called for the BOK’s discerning money policies. He said the BOK tended to take an inert attitude while watching the global situation. He demanded that the BOK should send a signal that they cannot continue to maintain a low-interest policy if they can’t come up with microeconomic policies to cope with household debts. 

He cited the term “Womanomics,” a combination of women and economics, saying, “The population enabling growth will decline starting next year, and it is significant that women are involved in more economic activities.”

Rep. Lee Jong-koo of the Saenuri Party urged the government to come up with solutions, saying that now is not the time when it is engrossed only in diagnosing the national economy, and even if all have joined forces in uttering difficulties. 

Rep. Kim Kwang-lim, chairman of the Saenuri Party’s Economic Policy Committee, expressed worry about the opposition side’s demand for a raise in taxes, including corporate tax. Rep. Kim, citing the fact that Korea’s highest corporate rate stands at 22 percent, questioning, “Where they are willing to invest?” He explained that the National Assembly discussed steps to eliminate the temporary investment tax credit, raising the lowest corporate rate and disband the basic tax credit for creating jobs and maintaining a tax credit for R&D, which has been cut during negotiations, instead of not raising the corporate tax. Kim stressed that the steps have now resulted in having an effect of raising revenues from the corporate tax by 4.8 trillion won annually.

A New Airport in Southeastern Region

The National Assembly Land, Infrastructure and Transport Committee got briefings from the Ministry of Land, Infrastructure and Transport (MOLIT), the National Agency for Administrative City Construction (NAACC) , and Saemangeum Development and Investment Agency on Oct. 24. Ruling and opposition members of the committee focused on a plan to expand the existing Gimhae International Airport instead of a new airport in the Southeastern Region during the parliamentary audit of the government. Rep. Park Maeng-woo of the Saenuri Party said evaluation surveys showed that the construction of a new airport in Gadeok Island, Milyang and Gimhae will cost about 10 trillion won, 6 trillion won and 4 trillion won, respectively. He raised questions about how Gimhae New International Airport will meet a rise in future flight demand and what functions will it have. 

MOLIT Minister Kang said, “Gimhae International Airport will be likely reborn into a new airport that will have capabilities to fully meet a rise in aviation demand by the upcoming 2040.” The expanding of the existing Gimhae Airport as a new airport will have synergetic effects with tourism and convention and other related industries, thus bringing bigger job creation and production induction effects, Minister Kang added. 

Public Hearings on Tax Revisions

As the revision of tax laws has emerged as the most contentious issue of the upcoming presidential election slated for December 2017, Chairman Cho Kyung-tae of the National Assembly Strategy and Finance Committee said, a public hearing on the corporate tax and income tax will take place at the parliament on Oct. 26 and 27, respectively. He said he will have in-depth discussions on the topics with the lawmakers sitting on the committee. Ruling and opposition sides are at loggerheads over the issues. The Minju Party of Korea and the People’s Party have proposed bills on a raise in the corporate tax and the income tax, while the Saenuri Party put up opposition, saying that a raise in the taxes could damp efforts to turn around the sagging national economy. .

Allegations of Naver’s ‘Power-Wielding Contractor Mentality’

Minister Choi Yang-hee of the Ministry of Science, ICT, Future Planning (MSIP) told a session of the National Assembly Science, ICT, Future Planning, Broadcasting and Communications Committee that it is necessary to regulate any unfair practices if Naver resort to them by abusing its market power and monopolistic position while signing contracts.  MSIP Minister Choi made the remarks while replying to a question on the allegations of Naver’s so-called “power-wielding contractor mentality” during the committee’s audit of the ministry on Oct. 14. 

Rep. Kang Hyo-sang, a ruling party member of the committee, said, “Naver does neither reveal revenues for posting ads related to news stories nor divide revenue dividends.” He alleged that Naver’s returning 90 percent of video advertisement revenues to broadcasting companies, but not dividing revenues to printing media for carrying their stories amounts to a kind of power-wielding contractor mentality.