Choo Kyung-ho: "South Korea's External Soundness is Good... Easing Regulations to Promote Corporate Investment"

First Korean Economic Briefing for Overseas Investors in New York
Promoting Regulatory Innovation to Expand Corporate Investment and R&D
Strengthening the Korea-US Alliance... Maintaining a Reciprocal Stance with China

Deputy Prime Minister and Minister of Economy and Finance Choo Kyung-ho is answering investors' questions at the Korea Economic Briefing held at Lotte Palace Hotel in New York, USA, on the 11th (local time), attended by investors based in New York. (Photo by Ministry of Economy and Finance)

Deputy Prime Minister and Minister of Economy and Finance Choo Kyung-ho recently emphasized that despite growing concerns about an economic slowdown amid the global high interest rate environment, South Korea's economic fundamentals and external soundness remain solid. He stated that to revitalize the Korean economy, efforts will be steadily made to enhance the attractiveness of the domestic capital market through deregulation, secure fiscal soundness, and strengthen cooperation between Korea and the United States and China.

On the 11th (local time), Deputy Prime Minister Choo held his first Korean economic briefing since taking office in New York, addressing overseas investors. The briefing was attended by 20 senior executives from global investment banks and asset management firms, including Michael Chae, Chief Financial Officer (CFO) of Blackstone, the world's largest private equity firm, Bill Powell, Chief Operating Officer (COO) of Brookfield, the world's largest alternative asset manager, as well as representatives from JP Morgan, Goldman Sachs, Citi, BlackRock, and Carlyle.

Deputy Prime Minister Choo explained to overseas investors the diagnosis and response directions on key concerns such as fiscal soundness, the new government's economic management priorities, household debt, and external stability. He said, "Since all crises stem from excessive debt, it is urgent to establish a sound fiscal stance to ensure fiscal sustainability, especially in times of great uncertainty." He added, "To this end, next year's budget has been prepared to reduce the fiscal deficit from the 5% range to the 2% range relative to GDP, and efforts are underway to promptly legislate fiscal rules."

He emphasized that while maintaining a sound fiscal stance, the government will expand support budgets for vulnerable groups through expenditure restructuring and ease tax burdens on the middle and lower classes as well as corporate income taxes. Furthermore, the government will make every effort to promote cross-ministerial regulatory innovation to encourage active investment and research and development (R&D) by companies, which are key to expanding investment and creating jobs. The government intends to focus more on supporting regulatory reforms that enable entrepreneurship to create new added value rather than leading changes itself.

To this end, Deputy Prime Minister Choo reiterated plans to introduce tax incentives to encourage the repatriation of overseas retained earnings by large corporations and to promote the venture ecosystem as a growth engine by raising the tax-exempt limit on stock options and introducing multiple voting rights. In particular, he stated that labor reforms focused on enhancing labor market flexibility will be implemented swiftly to foster long-term economic growth.

Regarding household debt, Deputy Prime Minister Choo noted that the recent increase rate is stable at around 1-2%, and the real estate market is gradually stabilizing. However, since excessive debt growth could burden the economy, the policy stance to maintain market stability, including regulations such as the Debt Service Ratio (DSR), will be consistently upheld.

Domestically, efforts will be made to secure fiscal soundness, while externally, trust will be enhanced through measures to stabilize the foreign exchange market and strengthen the Korea-US alliance. Concerning the won-dollar exchange rate soaring past 1,400 won, he explained measures to alleviate supply-demand imbalances, such as currency swaps between foreign exchange authorities and the National Pension Service, and stated the principle of actively implementing market stabilization measures against excessive concentration.

Deputy Prime Minister Choo said, "To maintain the current account surplus trend, we will continue to seek structural improvement measures such as strengthening export competitiveness and diversifying import sources to reduce dependence on China." He added, "We will enhance the attractiveness of the domestic capital market through foreign exchange market modernization and efforts to join the World Government Bond Index (WGBI), including exemptions from capital gains and interest income taxes on foreign investment in government bonds."

He also mentioned the rising geopolitical risks due to the Russia-Ukraine war, stating, "While firmly maintaining the Korea-US alliance, we will respond by upholding mutual respect and a reciprocal stance with China, our largest trading partner."

New York = Reporter Moon Je-won

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