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President Park Geun-hye implored top conglomerates Wednesday to increase investment and hiring so as to help spur South Korea's slumping economy, promising to address business concerns about her push for "economic democratization" and other issues.
Park made the appeal during a lunch she hosted for the chiefs of the 10 largest conglomerates, the first of its kind under her government. The move shows Park is trying to reach out to key economic players who have been wary of her drive for "economic democratization" centering on reining in their influence.
Park has repeatedly stressed that she will place top priorities on re-energizing Asia's fourth-largest economy and creating more jobs in the second half of the year. Cooperation from conglomerates, also known as chaebol, is key to such efforts.
"Signs of economic recovery are emerging little by little, but there are still many difficulties," Park said during the meeting. "The highest priority for revitalizing the economy is expansion of investment."
Park stressed that South Korea has pushed through economic difficulties with "bold and preemptive investments" as so far demonstrated in the cases of the heavy chemical industry, the electronics industry and the auto and information technology industry.
"Now is the point where each company is required to make active and leading investments. Job creation, which our people yearn badly for, can happen only when businesses, not the government, are willing to do so."
She also promised to accelerate efforts to remove regulations hampering business activity.
Park said she understands the business concerns over her government's "economic democratization" campaign and promised to make sure the drive won't turn into repression of conglomerates or excessive regulation.
"Economic democratization," one of Park's key campaign promises, calls for creating a level playing field for every economic player amid widespread perceptions that conglomerates have abused their market dominance to prey on smaller firms.
Business lobbies have expressed concern conglomerates could be discriminated against.
Park also said the government will conduct a careful review of a government-proposed revision of the Commercial Act in consideration of business concerns. The revision calls for, among other things, limiting the voting power of the largest shareholder to 3 percent when electing an auditor member of the board.
Park sought cooperation from the top conglomerates for her "creative economy" vision as well. The economic growth strategy calls for creating new business opportunities, industries and jobs through the fusion of information and communication technology, culture and other realms.
She said the government is preparing to open a website to collect creative business ideas, adding that she will try to take a look at all ideas and technologies posted on the site. She also asked conglomerates to offer advice and mentoring for such ideas.
The invited conglomerates are Samsung, Hyundai-Kia Automotive Group, SK, LG, Lotte, Hyundai Heavy Industries, GS, Hanjin, Hanwha and Doosan. Officials said POSCO was excluded as the planned meeting is for purely private conglomerates.
GS Chairman Huh Chang-soo, who heads the Federation of Korean Industries, South Korea's largest business lobby, outlined investment and hiring plans the top 30 conglomerates have for this year, saying the companies plan to make a combined 155 trillion won of investment and hire 140,000 people.
"I hope the opinions of businesses will be listened to, so that the annual investment and employment plans will be carried out without a hitch," he said. "I also ask for help in resolving difficulties in business activities so that we can take the lead in economic revitalization."
Samsung Chairman Lee Kun-hee said that the government's deregulation efforts have been a big help for businesses amid global economic difficulties, adding that Samsung will make sure to carry out its investment and hiring plans.
Lee also said Park's "creative economy" vision is the right path for South Korea's economy.
Concerns have grown that South Korea's economy might be falling into a prolonged low growth phase as uncertainty persists at home and abroad. The gross domestic product grew less than 1 percent on-quarter for eight straight quarters until this January-March period.
The economy grew 1.1 percent in the second quarter from three months earlier.
The government has worked hard to stimulate the slowing economic recovery by expanding fiscal spending and front-loading its budget. In May, the National Assembly endorsed a 17.3 trillion won (US$15.5 billion) extra budget, weeks after the government drafted the proposal to jump-start the economy.
Source: Yonhap News (Aug. 28, 2013)