Dong-geun Lee, Vice Chairman of the Korea Employers Federation, "Global Economy Is Not Easy... Deregulation and Tax Support Must Be Achieved"

No Clear Solution Due to Global Factors
We Must First Solve Problems Within Our Control

[Asia Economy Reporter Kiho Sung] "The current economic situation is difficult, but the bigger problem is that there seems to be no proper solution. Ultimately, wisdom is needed to first solve the problems we can address, such as deregulation and tax support."

Lee Dong-geun, Vice Chairman of the Korea Employers Federation (KEF), analyzed in an interview at the KEF headquarters on the 16th that global factors are the larger cause of the current economic crisis. For this reason, he pointed out the urgent need for active economic revitalization policies as well as domestic incentives for attracting companies and investment.

Regarding the recent state of our economy, Vice Chairman Lee said, "Along with the slowdown in exports, trade deficits continue due to global supply chain instability and high exchange rates. Consumption and investment also fail to show clear recovery trends, and the national burden due to high inflation is increasing."

The cause is the global economic recession. Therefore, if external factors do not improve, it is unlikely that the economy will recover easily. He stated, "Going forward, our economy is expected to see a weakened growth trend compared to initial forecasts due to the prolonged Ukraine crisis, interest rate hikes in major countries, and the resulting global economic slowdown, which will dampen export growth."

Vice Chairman Lee cited the recently passed Inflation Reduction Act (IRA) in the United States as an example and emphasized the urgent need for active measures such as deregulation and tax support to overcome the current situation.

He said, "It is necessary to actively engage in negotiations through political and diplomatic channels to prevent increased damage to companies entering the U.S. market. In particular, support measures such as deregulation and tax incentives must be prepared so that our key industries like semiconductors and automobiles do not fall behind in global competition."

Regarding U.S.-China conflicts and changes in global supply chains, Vice Chairman Lee advised that raising the competitiveness of our economy is the top priority. He pointed out, "For our companies to overcome the complex economic crisis and improve competitiveness, productivity improvement through innovation is most important. Along with short-term risk management, mid- to long-term strategies such as expanding investment in technology development and securing core talent must also be prepared."

To this end, he holds the position that active support for the domestic entry of competitive companies is necessary. He analyzed, "The sluggish entry of foreign companies into the domestic market is mainly due to a business environment more difficult than competing countries, including excessive market regulations, rigid labor policies, adversarial labor-management relations, and high corporate and inheritance tax burdens, in addition to a relatively small domestic market."

He continued, "Excessive labor market and industrial safety regulations make it difficult to operate wages and working hours flexibly, and the more personnel hired, the higher the criminal liability risk for CEOs. Also, the high tax burden undermines corporate profitability and sustainability."

He added, "To expand domestic investment, it is urgent to create a business environment better than competing countries by reforming regulations, strengthening tax competitiveness, flexibilizing the labor market, and stabilizing labor-management relations. The new government’s active efforts in regulatory innovation, such as establishing a regulatory innovation control tower, are positively contributing to improving investment conditions. However, since major legislative regulations or core regulations that hinder investment mostly require legal amendments, I hope the government and political circles actively cooperate to legislate for improving the investment environment."

This content was produced with the assistance of AI translation services.