The government plans to further open up its state-run enterprises’ cash reserves to increase investment in business projects and human capital in the hope of encouraging the private sector to follow suit this year.

Deputy Prime Minister and Finance Minister Hyun Oh-seok said in an economic-related meeting on Wednesday that it will support its state-run enterprises to invest another some 1.5 trillion won ($1.4 billion) during the rest of the year.

The 1.5 trillion won scheme includes 100 billion won that had initially been set aside by state-run enterprises for investment next year, the Finance Ministry noted, adding that it will more efficiently manage its public funds for regional project development.

This comes as the government’s fiscal stimulus is losing steam as it had already used up more than 70 percent of its spending as of the third quarter of this year.

It has also reached the limit in narrowing this year’s tax revenue shortfall and is relying solely on fiscal stimulus.

The government, therefore, aims to further mobilize its state-owned enterprises to lead in implementing projects, create quality jobs with flexible working hours, and eventually help improve confidence in the private sector.

The deputy prime minister said that Korea is at a crucial “turning point” where Asia’s fourth-largest economy could make or break in fully recovering from prolonged low growth.

“The country could either fully make a turnaround or fall back into the low-growth path,” Hyun said in the meeting.

“We are seeing economic momentum. But it is too soon to relax as there are growing risks stemming from the impending monetary stimulus cuts (in the U.S.), increasing foreign exchange volatility and difficulties in raising funds from some of the industries.”

The Finance Ministry and other government agencies including the Ministry of Employment and Labor and the Ministry of Health and Welfare will push policies promoting a flexible employment system in the public sector.

The ministries also put their public enterprises and institutions at the forefront to create part-time jobs for seniors and working moms as part of efforts to achieve an employment rate of 70 percent in the next four years.

They will devise policies that encourage the private sector to follow the public sector’s lead by providing incentives to private businesses that create such jobs and a welfare system for workers seeking flexible hours.

By Park Hyong-ki (hkp@heraldcorp.com)