[Q&A] Hong Nam-gi: Government stance unchanged, "Basic income system is not appropriate"

Hong Nam-ki, Deputy Prime Minister for Economy and Minister of Economy and Finance (center), is holding a joint briefing with related ministries on the "Second Half of 2020 Economic Policy Direction" at the Government Seoul Office Building on the afternoon of the 1st.
[Image source=Yonhap News]

[Sejong=Asia Economy Reporter Joo Sang-don] Hong Nam-ki, Deputy Prime Minister and Minister of Economy and Finance, stated on the 1st, "There is still no change in the (opposition) stance regarding the introduction of the basic income system."

Deputy Prime Minister Hong made this remark in response to a question about the government's position on the introduction of the basic income system immediately after the briefing on the '2020 Second Half Economic Policy Direction' held at the Government Seoul Office.

He said, "The basic income system was not specifically discussed this time, but it has been continuously raised during government questioning sessions in the National Assembly for several years. The government's consistent response has been that, given our current conditions, it is not yet appropriate to introduce a basic income system," adding that this tone was conveyed to the National Assembly.

The following are the main Q&A highlights between Deputy Prime Minister Hong and the press corps.

▲The government forecasted 0.1% growth for the Korean economy this year, but some say this is too optimistic.

=Regarding this year's economic growth forecast, the government presented a positive 0.1%. As I explained earlier, considering various indicators and economic trends, it is not possible to rule out the possibility that the Korean economy might experience negative growth this year. However, taking into account the effects of the third supplementary budget and the economic policy effects announced today, the government internally has figures based on models reflecting these supplementary budget and policy effects. It is not appropriate to disclose these figures now, but the government plans to comprehensively consider these conditions and aims for +0.1% growth next year with full efforts. The International Monetary Fund (IMF) forecasted -1.2%, and the Bank of Korea forecasted -0.2%, but the Korea Development Institute (KDI) recently projected a positive 0.2%. Some foreign institutions have also forecasted positive growth, so the government set its forecast after considering various factors.

▲Why did the government decide to ease regulations to allow large corporate holding companies to own corporate venture capital (CVC)?

=The amount of new venture investment formation and investment has continuously grown for 13 years. Especially recently, it had grown significantly, but in the first quarter of this year, due to the impact of the COVID-19 pandemic, we believe that the amount of newly formed domestic venture funds decreased by about 20%, and actual investment decreased by about 4%. The government has been implementing intensive policies to foster venture investment. In response to the impact of COVID-19, the government had to devise special measures. There is a venture holding company system that promotes venture investment by large corporations while maintaining the principle of separation between finance and industry, but the requirements have been strict, limiting its activation. Therefore, the government proposed significantly easing regulations on venture holding companies in this measure. Additionally, we plan to consider allowing general holding companies to own CVCs in a limited way.

In fact, the venture industry has strongly demanded such measures to revitalize venture investment. However, I must say that the Fair Trade Commission has expressed some opposition to allowing general holding companies, especially holding companies, to own CVCs even in a limited way as part of corporate policy. Nevertheless, considering the venture industry's demands and the government's policy will to activate venture investment, we decided to review the limited ownership of CVCs by general holding companies. We believe that if this measure is introduced, it will greatly contribute to revitalizing the venture market by bringing in new venture funds and activating the recovery market through mergers and acquisitions (M&A), creating a virtuous cycle.

▲Among the Korean New Deal projects, examples of the non-face-to-face industry include remote health management through wearable or mobile devices and AI speakers. Does this imply consideration of permitting telemedicine in the future?

=Regarding telemedicine, as we mentioned previously, it will be initially implemented in pilot projects. We have a public hospital system centered on profit-making hospitals or large hospitals, and there is no intention to change this public medical system. The priority is to improve medical convenience for citizens through remote non-face-to-face medical services. Separate measures will be developed mainly by the Ministry of Health and Welfare and related ministries. The Ministry of Economy and Finance will also actively support this. Separately, the related matters included in the Korean New Deal are promoted as part of fostering the non-face-to-face industry after COVID-19, covering not only medical but other fields as well. Therefore, I think this is somewhat different in level from the telemedicine I just mentioned.

▲The Korean New Deal will invest 76 trillion won by 2025. Please explain the necessity of this project.

=I mentioned that the scale of the Korean New Deal is 76 trillion won by 2025. The comprehensive plan for the Korean New Deal is expected to be announced in early July. Today, I spoke mainly about the third supplementary budget and the second half economic policy. The 76 trillion won investment plan is divided into the first phase, with 31.3 trillion won invested by 2022, and the second phase, with 45 trillion won invested thereafter. I expect there may be some changes in scale or project content when the comprehensive plan is prepared by early July. The reason for promoting the Korean New Deal is twofold: one is the short-term need to overcome the crisis and create jobs, and the second is to prepare proactively for the post-COVID-19 era. Taken together, it is a national development strategy to transition to a globally leading country. When you see the third supplementary budget to be announced on Wednesday, it includes about 5 trillion won worth of projects to be intensively promoted in the second half of this year as part of the Korean New Deal policy. I think you will be able to see the big picture of the projects the government will pursue until 2022 through these 5 trillion won worth of projects.

▲Are there plans to provide additional emergency disaster relief funds?

=Regarding emergency disaster relief funds, the government has not considered this at all yet. As the person in charge of fiscal affairs, I would like to say that the government is not considering additional emergency disaster relief payments.

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