Government should take steps to expand domestic investment, shore up key industries through reforms
The summit between President Yoon Suk-yeol and US President Joe Biden wrapped up its three-day schedule Sunday, but its impact is still reverberating among Korean policymakers, businesspeople and the media.
In all fairness, Biden reaped plenty of benefits by visiting Seoul as the first stop of his Asian tour -- something that he hopes will boost his standing in the eyes of US politicians, especially those who want to see the president playing a key role in expanding America’s economic clout in a way that counters China.
The positive result is thanks largely to the massive investment plans unveiled by Korean conglomerates during Biden’s visit. Not only the country’s two flagship companies -- Samsung Electronics and Hyundai Motor Group -- but also other conglomerates such as LG, SK and Hanwha pledged to expand their investment in the US market.
Perhaps the most memorable moments include Biden’s visit to a Samsung Electronics semiconductor facility in Pyeongtaek, Gyeonggi Province, accompanied by President Yoon and Samsung’s Vice Chairman Lee Jae-yong. At the site, Yoon and Biden shared a stage to confirm the two nations will work together on semiconductors, supply chains and other technology fields.
The reasons Biden chose Samsung’s chip facility are twofold. First, it appears that Biden wants a stronger partnership of the two countries in the global supply chain, which is hit by a pandemic-induced shortage, especially at a time when the US’ rival China is flexing its economic muscle in Asia and beyond.
Yoon’s formalization of Korea’s participation in the Indo-Pacific Economic Framework, an initiative proposed by Biden, is also in line with the strategic move to keep China at bay, though how the new economic bloc works remain vague at best.
Second, for Biden and other US policymakers alike, the top Korean chipmaker -- which wields an enormous influence in the global semiconductor market -- is one of the important foreign firms building a plant in the US and creating more jobs there.
Biden’s business-centered Seoul schedule also included a banquet where a dozen Korean business leaders, including Samsung’s Lee, Hyundai Motor Group Chairman Chung Euisun, SK Group Chairman Chey Tae-won, and LG Group Chairman Koo Kwang-mo, were invited.
Biden’s visit drew to a close with the announcement of a massive investment plan by Hyundai Motor Group over the weekend. On Sunday, Hyundai said it will invest an additional $5 billion in the US for robotics and autonomous driving software development. It came a day after Hyundai unveiled an investment plan worth $5.5 billion to build an electric vehicle plant in the US. Just as Samsung’s Lee attracted the limelight by guiding Biden at the chip plant, Hyundai chief Chung announced his company’s US investment plan in his meeting with the US president on the last day of the tour.
Yoon and Biden, of course, discussed expanding other crucial issues such as expanding joint military exercises to deal with missile threats posed by North Korea, but the trip, starting with Samsung’s chip plant and ending with Hyundai’s large-scale investment plan, is widely seen here as a sign that business issues took center stage during the summit.
Biden’s focus on business comes as the US is sparing no effort to lure in foreign firms with unprecedented policy incentives. Samsung’s decision to build a foundry plant in Texas, an investment valued at $17 billion, came as the US promised to offer a large sum of tax incentives. Similar benefits were proposed for Hyundai planning to set up an electric vehicle factory in Georgia.
Yoon and Korean policymakers should ponder the implications of what Biden has secured here. Forward-looking policy measures, such as removing regulatory red tape and lowering corporate taxes, should be implemented to encourage local firms to invest in South Korea. This will help create much-needed quality jobs and shore up strategic industries.
By Korea Herald (email@example.com