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ROK/US summit boosts foreign confidence in Korea

  Three months after the center-left Roh Moo-Hyun was inaugurated as president, the economic policy direction of the new administration is taking shape. Investment, stability and reform are among the keywords needed to understand the economic policy direction of the administration.
  Mr. Roh¡¯s recent visit to the United States helped reassure markets of the solid alliance between Seoul and Washington. It also enhanced foreign investors¡¯ confidence in the economic policy direction of the new administration, finance and economy ministry officials said. The two leaders agreed on the importance of working together to promote prosperity in their two countries, in the region, and around the world. They also agreed that Korea¡¯s economic fundamentals are strong and expressed high confidence in the prospects for continued increases bilateral trade and investment as well as growth of the Korean economy. President Bush welcomed and supported President Roh¡¯s commitment to continued structural reform of the Korean economy and his goal of making Korea a regional hub for trade, finance, and investment in Northeast Asia. The two leaders agreed that progress on open trade, investment, and transparency are essential to making the hub concept a reality, and recognized the important role of the private sector in this effort. Mr. Bush and Mr. Roh expressed a desire for enhanced bilateral economic cooperation, reaffirmed their commitment to resolving bilateral trade issues through consultation, and agreed to explore ways to further strengthen the already close economic and trade partnership. Recognizing the importance of global trade liberalization, they expressed their determination to work together to achieve a successful conclusion of the Doha Development Agenda. The leaders also agreed to strengthen cooperation in the APEC forum.
  Surprisingly enough, the joint statement issued after the summit by the two leaders included encouragement from Mr. Bush of Mr. Roh¡¯s ambitious plan to make South Korea a regional business and finance hub.

New incentives unveiled to lure foreign investment

  With some new incentives for foreign investors the Ministry of Commerce, Industry and Energy hopes to compete with up-and-coming investment marts like China. Under the first of the five Foreign Direct Investment (FDI) promotion initiatives the ministry announced, the government will give cash grants of between 10 percent and 20 percent of project costs to investors in highdemand fields like high-tech industries, parts and materials and research and development.
  Countries such as Britain, Ireland and China are already offering similar incentives. The cash grants are generally used for land leases, factory construction, facility investment and recruiting and training of employees.
  The specific amount to be granted will be decided on a case-by-case basis, a ministry official said. In another attempt to keep up with the neighbors, the ministry plans to give cash awards to those organizations and individuals . excluding government officials . that successfully procure foreign investments. The award rate will most likely match that of China, which is between 0.6 percent and 1 percent of the total investment amount.
  To reduce discrimination against foreign investment, the government said it would also expand the variety of special benefits given to investors to those starting businesses outside special districts designated for foreign investment. Formerly, only those firms locating in these districts could qualify for incentives like tax breaks. In addition, the Korean government will unify its extant ¡°Foreign Investment Zone¡± (FIZ) and ¡°Foreign-exclusive Industrial Complex¡±(FEIC) into a single designation to be known as the ¡°Foreign Investment District.¡± However, the necessary funding for these initiatives has yet to be secured, particularly the cash-grant and the award programs. The proposals will be put to the Cabinet Council for final approval at the end of July.

All firms to be on equal footing in Economic Free Zones
  The Korean government will treat both foreign and Korean businesses equally in the envisioned Economic Free Zones and gradually extend the rules of these zones to the rest of the country, Minister of Finance and Economy Kim Jin-Pyo said. Attending a luncheon meeting hosted by the European Union Chamber of Commerce in Korea, Kim reconfirmed that areas around Incheon International Airport, Busan and Gwangyang will be designated as special zones in the second half of this year. The move is part of the government¡¯s efforts to develop Korea into the economic hub of Northeast Asia over the next five to 10 years.
  The minister said that broad tax incentives would be offered to those companies setting up operations in the zones, where state regulations and administrative requirements will be minimized. These eased rules will be expanded to the rest of the country. Mr. Kim also said foreign schools in the zones will be open to the general public. This, he claimed, along with the construction of top-class hospitals and leisure facilities, translates into an upgrade of living conditions for foreigners and an enhancement of the image of the country as an optimal business locale. Mr. Kim pointed to the government¡¯s easing of foreign business restrictions in the greater Seoul area as well as to the participation of large European concerns, like Philips and AMEC, in large projects as indications of strong ties between Korea and the European Union.

Samsung Electronics 67th on global 500 list

  Samsung Electronics snatched the 67th spot in this year¡¯s list of the top 500 global conglomerates selected by the Financial Times.
  According to officials of Samsung Electronics, SE posted $40.4 billion in aggregate listed stock value. This is equivalent to $244.60 per share, a jump of 18 places from last year¡¯s 85th ranking. Microsoft Corp., pushing last year¡¯s top-ranked General Electric into second place, grabbed the top spot by achieving an aggregate listed stock value of $264 billion.
  Exxon Mobil Corp. nabbed third place with $241 billion, followed by Wal-Mart with $234 billion, and Pfizer, famous for its Viagra medication, with $196 billion. In a list of leading information technology firms selected from the top 500 conglomerates, SE ranked among the top 10, edging out such multi-national IT giants as Siemens, with a stock value of $37.5 billion, Sony with $33.8 billion and Texas Instruments with $30.1 billion. Other Korean conglomerates ranking among the top 500 included SK Telecom at 331st place with $10.6 billion, KT in the 349th spot with $10.3 billion, Korea Electric Power Corp. at 412nd with $8.9 billion and Kookmin Bank at 443rd with $8.3 billion.

Highways to double by 2020

   According to a long-term plan of the Ministry of Construction and Transportation, the nation¡¯s major highway network will undergo enormous expansion by 2010. The ministry projects that national highway length will nearly double in this time from 2,778 kilometers as of the end of last year to over 4,000 kilometers. Part of a drive to maximize efficient use of land and balance regional development, the extension will be carried out in stages lasting until 2020, when the entire highway span will eventually reach 6,160 kilometers, the ministry said. The ratio of national roads with at least four lanes will increase from the current 34 percent of all roads to 50 percent by 2010. This expansion would significantly cut transport expenses, thus reducing logistical costs and so improving industrial competitiveness. In the initial stage of the extension program this year, the ministry will commence construction of four major highways that will connect Jeonju with Gwangyang in Jeolla Province, Jumunjin with Sokcho in Gangwon Province, Seoul with Chuncheon in Gangwon Province and Seosuwon with Pyeongtaek in Gyeonggi Province. Expansion work on the Gyeongbu highway¡¯s Gyeongji-Unyang section from the current four lanes to six lanes will also begin within the year. Next year, all sections of the central highway will be opened, along with the Gangneung-East Sea highway and an extended section of the Jeungyak-Okchon highway. The ministry has drafted other projects to extend the nation¡¯s highways and is currently waiting for the results of a study by the Korea Institute for Human Settlements on the longterm implications of the highway network plan.