Seoul`s economic czar calls for more corporate spending

SEOUL, July 15 (Yonhap) -- South Korea's top economic policymaker called for
local companies on Wednesday to expand their capital spending in an effort to
bring the slumping economy back on track.
The call comes amid growing concern that the nation's potential economic growth
rate may fall to the 3-percent range this year because of sluggish corporate
investment and consumer spending.
"Up until the end of the first half, fiscal spending had buttressed the economy
but now is the time for the private sector to pick up the baton," Finance
Minister Yoon Jeung-hyun told a weekly economic policymaking meeting. "(To that
end), facility investment needs to be expanded."
He said that facility investment is vital to raise the growth potential of the
nation's economy, saying corporate spending on facilities has plunged over 20
percent since the economic crisis started last year.
The potential growth rate, or the maximum possible rate at which an economy can
grow without triggering inflation, had remained in the range of 4.5-5 percent
until 2007.
The government has been seeking to ease regulations and provide tax benefits to
encourage corporate spending. Earlier this month, the finance ministry said that
it will establish a 20 trillion won (US$15.6 billion) fund to help boost facility
investment.
"The government is doing its best by unveiling comprehensive measures to
encourage R&D investment and ease regulations in line with those for other OECD
countries," Yoon said.
Calling for businesses to increase investment, Yoon singled out the auto
industry, for which the government has provided tax reductions to boost sales.
The industry will also benefit from recently-concluded negotiations on a free
trade pact with the European Union, he added.
"The auto industry for its part has to do something in commensurate with such
government efforts," the minister said.
kokobj@yna.co.kr
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