|
The government has come out with a W14 trillion economic stimulus package made up of W11 trillion in fiscal spending, including a W10 trillion rise in the 2009 budget, and W3 trillion worth of tax breaks (US$1=W1,264). The fiscal spending will primarily go on support for low-income families in provincial economies. With the exception of the Gangnam, Seocho and Songpa districts of southern Seoul, all other areas of Seoul will no longer be limited by rules for property speculation zones that restrict buying and selling of homes there. Other real estate regulations have been cut as well. Through the latest measure, the government hopes growth will rise from 3 percent to 4 percent next year, while the number of employed Koreans will rise by between 120,000 and 200,000.
The plan is a massive dose of medicine that includes more government spending and a wide range of financial and real estate policies. If we include fuel rebates and other existing measures, the entire scale of the economic stimulus measures amounts to W33 trillion. The government has mobilized pretty much all of the resources it has.
The latest measure will help prevent the rapid decline of the economy. But it is not enough to change the direction of the entire economy. We must leave open the possibility of additional measures if the global economy slows down further and our own economy worsens as well.
More fine-tuning is needed in the execution of the budget. Jobs are not created and domestic consumption does not jump back to life simply because the government spends more. Thorough screening must accompany spending, be it for infrastructure or support for small businesses or self-employed people or low-income families. That is the only way to prevent a waste of taxes.
Government measures alone have limitations in saving the economy. Businesses must take the initiative and make their operations more efficient, and the government must encourage this. Before it is too late, restructuring and resuscitation measures must be prepared for savings and loans companies, which are at risk of insolvency due to their exposure to loans to troubled builders.
|
