Prevent Excess Inflow of Foreign Funds
Minister Yoon Jeung-hyun of the Ministry of Strategy and Finance delivers his speech at
a reception for the financial community held at Lotte Hotel in downtown Seoul on Jan. 5.
Minister Yoon Jeung-hyun of the Ministry of Strategy and Finance recalled that there were many difficulties for the economy and the country but our economy has been able to end the year with excellent performance results envied by other countries due to cooperation by the people, businesses and the government.
Minister Yoon, in his New Year's statement made at a reception for the financial community held at Lotte Hotel January 5, said growth, earnings, employment, and inflation rate have all been improving. The financial market, too, has secured a stable growth, overcoming geopolitical uncertainties and other tough problems owing to every one of those in the financial community and related areas.
The minister said he projected that economic growth this year would be somewhat lower than last year due to unstable European economy and rises in international raw materials prices and the uncertain flow of international funds to name some.
Yoon said the government has a number of problems to be taken care of this year such as creating jobs, the recovery of economic conditions well enough to be felt by the public, balanced growth in exports and domestic growth, expansion of new growth engines and strengthening cooperation overseas commensurate with KoreaOs economic development, among others.
Under such conditions at home and abroad, the macro-economic policies will be flexibly managed in consideration of inflation rates.
We aim at having 5 percent growth in the economy and while keeping the price index at around 3 percent and improve structural factors and pre-emptive measures will be taken to eliminate uncertain factors in the way of meeting our growth and inflation rate targets, the minister said.
In order to back up the stability of our real economy, boosting health of the financial sector is a must. We have to manage risk factors in such areas as home loans, business firms with limited growth and project financing for real estate and other assets to improve structures and also strengthen management of non-core liabilities and increase capital funds so that the economy would not be shaken by external impacts. He said the healthy management of the foreign exchange sector is more important than others to prevent the crises and utilize the international fund flows effectively for the small open economy like ours.
In this connection, the government will build a safety net including limits on foreign exchange positions already in operation and results are already seen in the foreign exchange holdings and maturity periods. We have also been charging pre-assessment taxes on interest earnings on bonds and monetary stability bonds from this year. We will make decisions on levying the macro-soundness charges on excessive inflow of capital so that it will not disturb the capital market.
The global financial crisis has been like a war, a matter of life and death for policy planners as well as those in the forefront of the financial market and in order to prevent such economic crises from happening again, a new financial system is under consideration centered around the G-20 nations now.
We have come through various difficulties and gained important lessons, which is confidence in ourselves to overcome the problems and this year would be a crucial year for us as our financial industry would jump a step up with the help of the enviable results so far we won, Yoon said.
I hope the financial industry would be able to preempt all the problems to be globally competitive by responding to all the demands from the people and businesses.
In the meantime, Minister Yoon in a New YearOs interview with a local daily said low-birth rates and an aging society cannot are the problems that cannot be solved easily. We would probably need to set up an immigration authority and an independent population office to attract talented emigrants from abroad based on such government policies. He said Japan has been suffering from the aging society because it did not open its doors to emigrants and we have to find the ways to open our doors to emigrants unlike Japan to solve the problems of an aging society and low-birth rates. We have to welcome talented emigrants without quotas and let them into Korea as much as possible, the minister urged.
On the direction of his new economic team this year, he said we cannot waste our time on talking about being a good government and as the current government has only two years left to govern, we have to speed up and harmonize our policies, he said.
The most urgent problem is to let the service industry grow and advanced and the government will support it with two step policies. He said he will first see reform of the Pharmaceutical Law that deals with over the counter sale of general drugs that prevents the entry of various service businesses.
He said an advanced service industry would create jobs and prevents a greater reliance on external transactions, while perking up domestic economy.nw