Posts tagged ‘consultancy’
On 23 March 2011, the Presidential Secretary for National Security Strategy, Kim Tae-Hyo, announced that South Korean NGOs will be able to resume humanitarian aid for North Korean infants in April 2011, while rice and corn shipments will be considered only if North Korea apologizes for the Cheonan and Yeonpyeong Island incidents. Read more
Corruption in Korea is once again making an appearance in media reporting with the ongoing investigation into allegations of abuse of authority by former National Tax Commissioner, Han Sang-Yool. Han is suspected of involvement in a series of incidents prior to his resignation from the National Tax Service (NTS) on 16 January 2009 and also suspected of receiving USD400,000 from 10 companies during a two-year stay in the United States after resignation from the NTS. Read more
On 21 February 2011 the Chosun Ilbo newspaper reported that an operation by National Intelligence Service (NIS) officers to obtain information on Indonesian negotiating strategies for the procurement of the Korea Aerospace Industries (KAI) T-50 ‘Golden Eagle’ Trainer Jet. Read more
At a press conference on 13 February 2011, Democratic Party chairman, Sohn Hak-Kyu, stated that the Democratic Party (DP) would return to the National Assembly.
The decision ends the DP’s two-month boycott of the National Assembly, which commenced 8 December 2010, after the ruling Grand National Party (GNP) forced through its 2011 budget bill. One of the key upcoming agenda items will be legislation to implement the Korea-United States (KORUS) Free Trade Agreement (FTA), after both sides signed the supplementary agreement on 10 February 2011.
Both the DP and Democratic Labor Party (DLP) oppose ratification, claiming the original FTA has been altered by the supplementary agreements, making it necessary to undertake a complete review of the FTA. However, the DP will find it difficult to rally wider public support in opposition to the KORUS FTA.
Throughout 2010-11, the DP has maintained a policy focus on social issues, including universal welfare services; such as school lunches, healthcare, and childcare; and the financial, taxation and regulatory reform required to support these policies. It will prove difficult for the DP to present opposition to the KORUS FTA in the same frame. In addition, anti-Americanism is currently at a low-level as a result of proactive USFK and US State Department measures, as well as increased public concern regarding North Korea. Wider public support for opposition to the KORUS FTA is unlikely to materialize.
On 10 February 2011, Minister for the Knowledge Economy, Choi Joong-Kyung, stated that the proposed carbon trading scheme to be implemented by 2013 may not proceed as planned in order to avoid ‘adverse repercussions’.
This reiterates the 7 February 2011 statement by Presidential Secretary for Green Growth, Kim Sang-Hyup, that the scheme could be delayed following substantial industry lobbying. Key industry lobby groups, including the Federation of Korean Industries (FKI), have called for the implementation of the scheme to be postponed until after 2015, claiming it will lead to substantially higher costs and loss of international competitiveness.
The government affiliated research institute, the Korea Institute for Industrial Economics and Trade (KIET), has issued a report detailing potential implications. These include a rise of 1.27 percent in domestic production costs; a 0.18 percent contraction in exports; and 0.58 percent contraction in gross domestic product (GDP); which could result in 0.40 percent reduction in employment. The steel, cement and petrochemicals sectors would be hardest hit, with a contraction against business-as-usual of 7.0-9.0, 2.0-3.0, and 0.8-0.9 percent, respectively.
The United States and Japan have postponed indefinitely plans to introduce carbon trading schemes, amidst concerns regarding economic recovery and growth. However, a carbon trading scheme was considered a central platform in the Lee administration’s plans to establish Korea as leader in the ‘green growth’ era.
China, a key competitor in ‘green growth’, is set to announce a range of green initiatives in its 12th Five Year Plan (2011-2015) to be announced in March 2011. This is rumored to include a carbon trading scheme to be implemented by 2014, with pilot schemes in economic zones and/or industrial sectors to commence as early as 2012.
On 7 February 2011 in a meeting with presidential secretaries, President Lee Myung-Bak once again reiterated the administration’s aims to address growing public concerns regarding inflation, emphasising rising energy and food costs.
The focus on these two issues, which are of current public concern, was accompanied by a vision to prepare Korea for longer-term food shortages that could result from climate change.
President Lee called for the establishment of a whole-of-government strategy on agricultural and fishery products, and the establishment of a national organization comprised of civilian and government experts to conduct research into Korea’s future food security.
Korea imports approximately 70 percent of its food and is already in the process of implementing reforms to stabilize food resource imports. This has included steps to establish a state-owned grain trading company to address price volatility in international markets; steps to purchase stakes in key grain supply facilities in the United States; and promotion of commercial investment in agricultural resources and facilities in developing countries.
On 6 February 2011, the Financial Services Commission (FSC) announced that it was investigating the sharp fall in the benchmark Korea Composite Stock Price Index, or KOSPI, which occurred in November 2010.
On 11 November 2010, the KOSPI ended the day 53.12 points, or 2.7 percent, down at 1914.7310. Around USD2.16 billion in sell orders from foreign investors were processed during the last ten minutes of trading.
The bulk of these orders were processed through the local securities unit of Deutsche Bank AG. The Financial Supervisory Service (FSS) has taken the case a step further, and is currently undertaking a review to determine the nature of penalties that could apply, after which the case will be forwarded to prosecutors.
On 11 January, the FSC and FSS put in place new rules regarding the equity-derivatives market to avoid a repeat of the incident. This has included limiting the positions in KOSPI 200 options and futures for each brokerage account held by an institutional investor to 10,000 contracts on option expiry dates.
The efforts of both agencies have been focused on short-term protection of the domestic financial system from rapid foreign-capital flows. This has to a degree detracted from longer-term efforts to promote the growth of local investment banks and ease regulations on local private equity and hedge funds in order to expand the financial market and ultimately, to provide increased financing for Korean companies operating abroad.
On 31 January 2011, the Ministry of Knowledge Economy (MKE) announced a target of USD15 billion in foreign direct investment (FDI) for 2011.
In 2010 Korea attracted approximately USD13.1 billion. Key sectors to be targeted will include green energy, biotechnology and information technology convergence, manufacturing and distribution services.
Investor confidence resulting from free trade agreements (FTAs) with Europe and the United States is expected to increase inbound investment from traditional source countries, however, particular attention will be paid to newer and potential sources, including emerging economies in Asia and the Middle East along with Russia and India.
The economic and policy challenges of ageing in Korea are well known and are frequently the subject of review by both private and public research providers. However, despite Korea’s significant trade dependence, the effects of ageing in key economic partners has not attracted substantial attention.
Changes in labour productivity, GDP growth, saving and consumption in the economies of China, Japan, Europe and the United States will have significant effects on the Korean economy. China serves as an example.
The Chinese population will age at a rapid pace after its working age population peaks around 2020. China currently does not have the same mechanisms to cope with ageing as advanced economies and is lacking in the tax structures, capital markets and developed health and pension plans that can ameliorate the economic implications of ageing.
In addition, China will face potential demographic imbalances between rural and urban populations as well as between the sexes, potentially leading to more significant social disruption. Ageing in China may prove particularly difficult and will impact Chinese consumption and import demand.
China’s inflation policy is now considered a distinct variable in the short-term assessments of the Korean economy. Research providers are beginning to realise that China’s ageing policy should also be considered a distinct variable in longer-term assessments of the Korean economy.
On 29 January 2011, Korea signed a preliminary agreement with Ghana to cooperate on port development projects.
The Korean Government will provide support and training in port development in exchange for Ghanaian support for Korean company participation in port projects. Ghana is currently extending the port of Takoradi to include dedicated oil terminals, dry docks and vessel handling equipment to serve the oil rich Western Region.
Korea’s relations with Ghana have grown substantially over the past five years. However, this has not been without controversy.
There remains a degree of local criticism regarding the relationship. Local media has criticized the use of Ghana’s oil reserves for collateral to secure STX Korea Group’s USD10 billion deal to construct 200,000 housing units, 30,000 of which will be used for the security services. Local media has also criticized Korea’s supply of a Fast Attack Craft (FAC) to the Ghanaian navy to protect the Jubilee Oilfields.
While the local criticism is not yet mainstream, backlashes against collateralization of oil reserves and the supply of military equipment to protect foreign interests in natural resources have occurred in Nigeria and Angola, two countries with what may prove to be similar development experiences.
