S. Korea seeks closer ties with N. Korea

By Riyadi

SEOUL (JP): South Korea is aiming to become a primary business center in Northeast Asia but must overcome the daunting obstacle of its sister North Korea before it will be able to do so.

Soogil Young, president of the Korea Transport Institute, said at the third International Next Generation Leaders' Forum here Monday that South Korea seeks reunification with North Korea, at least economically, to become a strong economic force in Northeast Asia.

"Through the economic integration of South and North Korea, the inter-Korean community will be realized and will emerge as a primary economic force in Northeast Asia," Young told the forum, organized jointly by the Korean Foundation and the Institute for Global Economics.

Speaking on South Korea's economic vision for the 21st century, Young noted that the country is seeking to become a "first rate nation".

He projected that the real per capita income will increase to over US$30,000 (at 1995 constant prices) in the year 2020 from $10,163 last year.

To become a primary regional business center, however, South Korea must first solve an intractable problem, the North Korea factor. All accept that the current tensions between North and South Korea must be ameliorated peacefully before union can be achieved.

South Korea has been insisting on reunification with North Korea for many years. However, the latter seems to be uninterested in the process, complicated by the presence of major powers in the region, including the United States, Japan, China and Russia.

Many Koreans believe that North Korea will not be able to continue with its isolationist stancefor very long and it will eventually come to terms with South Korea, according to South Korea's Deputy Prime Minister and Minister of National Unification O-Kie Kwon.

Speaking at the forum's opening ceremony, Kwon noted that North Korea's economy is very inefficient, as a result of the country's communist system. It has been shrinking since the early 1990s, with the gross domestic product decreasing by 4.5 percent annually.

"We don't want to see North Korea collapse nor exist in isolation," Kwon said, adding that South Korea wants to help North Korea solve the differences between the two nations in a peaceful manner.

Reform

Concurring with Kwon's view, Young noted that South Korea will support the reform of North Korea's economy through a National Joint Development Plan, a system of cooperative economic policies between the two countries.

"To be able to accept the economic burden accompanying reunification without excessive hardship, the Korean economic capacity will be continuously expanded," Young said.

South Korea believes that, in terms of economic scale, it will join the Group of Seven leading industrial nations in the year 2020, by when its gross domestic product will be $4 trillion and export volume US$1.2 trillion.

To reach the target, Young said South Korea is currently improving its economic efficiency by pursuing a freer and fairer market economy and creating fiercer but better competition among domestic economic players.

"By actively participating in the formation of an open and fair global economic order, Korea will emerge as a globally central country in the 21st century," Young said.

He noted that South Korea has been actively participating in the formation of an open and fair global economic order. It is an active member of both the Asia Pacific Economic Cooperation forum and the Asia Europe Meeting. It will host the Asia Europe Meeting in year 2000. It has played an active role in the World Trade Organization.

The country is also raising its international standing by increasing its support and assistance to developing countries with which it maintains complementary relations, Young added.

Besides, Young noted, South Korea is continuously opening up its market and assimilating itself to international trade and investment standards.

Domestically, economic and social efficiency can be maximized by promoting autonomy and competition in the private sector, through the acceleration of deregulation and the improvement of government productivity, which is the basis of national competitiveness.

The present Kim Young-Sam government has been committed to deregulation from its outset. As soon as he came to power three years ago, Kim launched, within the Economic Planning Board, a special task force charged with deregulation. In two years this body managed to abolish or relax 200 regulatory measures out of 800 that had been identified for abolition.

South Korea is currently conducting a general review of government functions. "Unnecessary functions will be abolished and functions which the private sector can assume will be resolutely transferred to the private sector," Young said.

In its search for efficiency, the South Korean government has merged a number of ministries and downsized the civil service.

In Dec. 1994, for instance, the government merged the Ministry of Finance and the Economic Planning Board to become the Ministry of Finance and Economy and the Ministry of Construction was merged with the Ministry of Transportation to become the Ministry of Construction and Transportation. The government also cut the number of civil servant positions in central government offices by 1,000 to 5,000.

To elevate national competitiveness, the Kim government has undertaken further investment in such social capital projects as the Soul-Pusan high speed railway, the development of a new international airport on Youngjon island, off Inchon, and the development of deep sea ports in Pusan and Kwangyang Bay.

"The Inchon International Airport will be developed as the main airport of Northeast Asia, and the Pusan and Kwangyang harbors will become the primary ports for international trade," Young said.

In the manufacturing sector, South Korea will convert its scientific technology development system from the current imitation-oriented system to an innovation-oriented system, Young added.

He noted that the country's competitiveness will be strengthened by increasing the productivity of the financial and services sectors, which have lagged behind those of their competitors as a result of a growth strategy focusing mainly on the manufacturing sector.