Turning global crisis into an opportunity

Font Size

Print

Feedback

Email

Discuss

: to provide further liquidity through long-term CRS trading. The bank also provided around $6.7 billion to commercial banks to support export and import financing. The government has pledged that it would continuously monitor liquidity and would intervene in case it is needed.

All the decisive steps of South Korean government seem to bring confidence in foreign investors to the Korean stock market. They turned to be net buyers during four consecutive trading sessions between November 26 and December 1, after a long period of net selling. It is also pertinent to mention recent improvements in the country’s current account balance and external debt structure.

In October, the current account showed a monthly record high surplus of $4.9 billion. On December 18, around one month before the schedule, the South Korean Ministry of Strategy and Finance (MOSF), Financial Services Commission (FSC) and the Korea Fair Trade Commission (KFTC) have announced their coordinated action plan, which is indicative of government willingness to early execute fiscal measures and other governmental policies in 2009 to cope up with the crisis and revitalise the economy.

According to the Action Plan, around 60-70% of the budget for major projects would be spent in the first half of 2009 on the basis of its economic effect on the overall economy. Budgets for public projects which can create jobs and budgets for easing financial difficulties will be executed in December 2008 itself. The government has also announced measures to revitalise consumption and investments by sub-regulations related to tax reduction acts. Thirty percent tax reduction will be given to automobile buyers to boost domestic demand. The tax reduction would be available till the first half of 2009. Government has also announced tax deduction for temporary investments to be extended for one more year up to December 2009. Private investment in social infrastructure projects will also be encouraged, which would include railways, harbour construction and highway construction. The government has announced that less business friendly regulations will be lifted or improved. South Korea has also been working on creating more jobs by its own New Deal policy in which the government has proposed to create more jobs by cleaning Korea’s four biggest rivers and building flood defences along them.