Published : 2014-08-14 21:12
Updated : 2014-08-14 21:12
The government announced this week a set of deregulations and policy programs to support the services sector. Specifically, seven industries were targeted ― health care, tourism, content, education, finance, logistics and software.
The initiative seems well timed because the Korean economy needs to turn more to the services sector and mitigate its reliance on manufacturing and exports. Moreover, the services sector is key to boosting domestic consumption, which has been held back by the Sewol ferry disaster, and expanding job markets.
The services sector, which accounts for 60 percent of the nation’s gross domestic product and 70 percent of its employment, generates more jobs than manufacturing. Government statistics show that 900,000 jobs have disappeared in the manufacturing sector since 1990, while the services sector generated 8 million jobs during the same period.
So there are ample reasons to develop the services sector. The 135 tasks announced by the government include some bold ones ― like the opening of more casinos, authorization of for-profit hospitals and easing of visa regulations on foreign visitors and students.
Officials said the four integrated resorts to be opened on Yeongjongdo Island and Jejudo Island would include casinos and hotels, and they would be able to induce 8.7 trillion won in new investment.
The government will also allow foreign-invested for-profit hospitals on Jejudo Island and in free economic zones, and ease or remove regulations for foreign universities opening campuses here.
The government measures also include plans to develop commercial and cultural facilities along the Hangang River and installing more cable cars on two mountains, Namsan in Seoul and Seoraksan on the east coast.
Measures to boost the financial sector are highlighted by the increase of the daily price fluctuation limit of listed stocks to 30 percent from the current 15 percent, which has been in place since 1998.
Officials said altogether, the package of policy programs would be able to draw 15 trillion won in new investment and create 180,000 jobs. They would also help increase the number of foreign tourists to 20 million in 2017, compared with 12 million last year, and the number of medical tourists to 1.5 million, from 650,000 last year.
But there are reasons to remain skeptical about these rosy forecasts. Over the past 10 years, successive administrations have vowed to develop the nation’s services sector as a new growth engine and put forward numerous policies.
But most past initiatives faltered because of little progress in deregulation and opposition from special interest groups, local governments and politicians. Prime examples are the plans for casinos, cable cars and for-profit hospitals, which the government has repeatedly failed to carry out because of negative public sentiment or opposition from pressure groups.
The success of the latest government initiative will thus depend on whether officials will be able to put the programs into action by persuading or reaching a compromise with the groups.
It is also essential that the National Assembly follow up on the government initiative with legislative actions. The package of the latest government initiatives requires revision of at least 16 bills by the parliament.
It might be a tall order to have the Assembly act quickly on the government proposal, in view of both the past cases and the fact that about 30 economic bills have been held up by the parliament for months amid the standoff between the rival parties over the Sewol special act. This commands us to impose stronger pressure on lawmakers.