(SEJONG = Newsis) Some major foreign media and investment banks are showing interest in the Korean government’s three-year economic innovation plan.

The Wall Street Journal (WSJ) and other major foreign media said the Korean government is establishing a proper framework for the nation’s long-term initiative, according to the Ministry of Strategy and Finance on March 2.

The WSJ reported on February 27 that the three-year economic innovation plan is a proper solution for the development of the Korean economy as it pushes for private-led economic growth.

“Ms. Park’s proposal is a breakthrough in its focus on boosting productivity… This makes for a big contrast from Japan, where Prime Minister Shinzo Abe’s growth project is languishing amid a big looming tax increase and absent concrete policy reforms,” said the WSJ.

The newspaper also stated in its February 26 article that Park needs to secure political stability in order to carry out her economic plan before her term ends.

“Boosting the services industry could help Park lower the economy’s dependence on exports and lift growth potential to her target of four percent in the next three years,” Bloomberg said on February 25.

“It provided a correct diagnosis on the key challenges clouding the growth prospects of [South] Korea,” said ANZ senior economist Raymond Yeung, cited by The Diplomat, an international current affairs magazine in Japan.

Major investment banks including Barclays noted that the Park administration’s three-year economic innovation plan will focus on creating a dynamic and efficient economy to achieve the following goals by 2017: ▲ 4 percent potential growth rate ▲ USD 40,000 per capita national income ▲ 70 percent employment rate.

“What is also clear is the emphasis of policy has shifted decisively towards structural reform and away from short-term growth boosters, such as fiscal and monetary policy,” said Wai Ho Leong, an analyst at Barclays.

“The target of raising potential growth to 4 percent by 2017 is realistic, in our view,” Leong said.

Credit Suisse noted that the Korean government focused on “deregulation on the services sector and other red-tapes over business investments.” The investment bank also added that “the plan aims to normalize publicly owned enterprises by selling assets and streamlining operations” and that it is “aimed at helping raise labor productivity to offset the negative pressure over potential growth rate from a shrinking working age population in the coming years.”

Credit Suisse pointed out that the plan is similar to the Chinese government’s reform plan, as it focuses on achieving a balance between internal demand and exports, but may face more challenges than that of the Chinese government.

“The government needs to resolve various conflicts of interest between employees and employers, large corp. and SMEs, producers and consumers, etc.,” said JP Morgan.

ahk@newsis.com

Source Text

Source: Newsis (Mar. 2, 2014)

** This article was translated from the Korean.