Skilled immigration, Japan ties key to rebooting Korea's growth: KCCI
South Korea needs to attract 5 million highly-skilled foreign professionals and forge an economic alliance with Japan to tackle its demographic headwinds and counter rising trade protectionism, the Korea Chamber of Commerce and Industry proposed Wednesday.
In a policy booklet roughly translates to "New Order, New Growth" delivered Tuesday to the government, parliament, and presidential office, the business lobby outlined structural fixes to help Korea escape the trap of slowing growth and a shrinking labor force.
'This is a time when growth is more necessary than ever. The global landscape is shifting dramatically, and the Korean economy, having failed to bring about lasting change, now faces the risk of zero growth,' wrote Chey Tae-won, chairman of SK Group and KCCI, in the booklet's preface.
'We must work with the new government to build future growth engines for the Korean economy. It's essential to find actionable solutions to reduce high costs by joining hands with global partners.'
The proposal comes as the Lee Jae Myung administration works to finalize its national policy roadmap, with input from a new planning committee that is actively soliciting feedback from business and civil society.
Among Korea's most pressing structural concerns is a declining working-age population coupled with a limited domestic market. The KCCI argued this can be alleviated by attracting skilled talent from countries such as Vietnam, Indonesia and Malaysia.
Beyond addressing labor shortages, an influx of foreign professionals could be expected to stimulate consumption and increase tax revenues.
Supporting this approach, studies cited in the proposal showed that a 3 percent increase in skilled and unskilled foreign labor leads to GDP growth of 1.46 percent and 0.85 percent, respectively, in the US, with comparable figures in Japan, underscoring the economic benefits of immigration.
The plan recommends visa reforms inspired by Germany's Green Card system tailored for IT professionals, along with family friendly settlement policies.
It also proposed reshoring major overseas semiconductor fabs to Korea to attract highly skilled workers on a large scale.
In tandem with immigration, the KCCI urges Korea to deepen economic cooperation with Japan, a nation grappling with similar demographic and industrial challenges.
The report argues that aligning the two economies could create a $6 trillion economic bloc, eclipsing Germany and positioning Korea and Japan as global rule-makers in trade and regulatory standards.
'If Korea and Japan become each other's second-largest domestic market, they can enjoy productivity gains even in aging societies,' the report said.
Joint LNG procurement and coordinated production networks spanning Asia, the US, and the EU could lower costs and enhance competitiveness.
The proposal envisioned an emerging Asian economic zone — including Korea, Japan, and other developing countries that could grow to $47.7 trillion by 2030, becoming the world's largest economic region, 1.3 times the size of the US economy.
The booklet also called for a fundamental shift away from Korea's longstanding dependence on goods exports, which have fueled remarkable growth -- over 10,000 percent in GDP over 70 years -- but are now hampered by shrinking profit margins and rising protectionism.
Manufacturing profitability has steeply declined, with net income per 10,000 won ($7.35) in sales dropping from 830 won in 1995 to just 320 won in 2024, reflecting structural challenges in the sector.
To counter this, the KCCI advocated boosting service exports and primary income through strategic overseas investments, pointing to Japan's returns from foreign assets and the UK's robust service economy as benchmarks.
One example the group suggested was the industrialization of Korean food and culture exports, including recipe licensing, cooking classes, kitchenware, and interior design, aiming to capture untapped non-tariff export value and open new global markets.
To implement these changes, the KCCI proposed expanding Korea's regulatory sandbox into a 'mega sandbox' model. This framework would offer wide-ranging regulatory exemptions, aggressive private sector incentives, talent matching platforms and global-standard living conditions to attract and retain top international talent.
The 250-page report was compiled by 13 experts, ranging from think tank researchers and law professors to industry consultants, including Kim Chang-wook, Boston Consulting Group's semiconductor lead in Korea, Suh Dong-hyun, economist at the Bank of Korea, and Kwon Seok-joon, a chemical and polymer engineering professor at Sungkyunkwan University.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Korea Herald
17 minutes ago
- Korea Herald
What North Korea's removal of loudspeakers means for South Korea
NK's removal of loudspeakers signals tension alleviation, but risks exist, experts say North Korea's recent move to dismantle some of its loudspeakers along the border can be interpreted as a sign of Pyongyang seeking alleviation of military tension between the two Koreas, but several risks exist, experts said Sunday. 'North Korea has immediately reacted to South Korea's decision to dismantle its own loudspeakers targeting the North along the border, and this can be seen as Pyongyang's intention to avoid further escalation of tension,' Lim Eul-chul, a professor at Kyungnam University's Institute for Far Eastern Studies, said. 'This is a strategic choice aiming to control the level of inter-Korean tension and conveys the North's preference towards military tension alleviation on the Korean Peninsula at the moment,' he added. On Saturday, the South's military noted that the North had begun dismantling some loudspeakers used to broadcast its propaganda for its regime across the border. The signs came within a week after the South completed the removal of its own 'anti-Pyongyang' loudspeakers amid the Lee Jae Myung administration's efforts to improve inter-Korean relations. Lim added that the North's recent reaction to the South's 'preemptive' move to alleviate tensions is expected to define Pyongyang's stance towards inter-Korean ties. 'This is a reaction to the South's preemptive action, and it presents a possibility that the North will continue to react whenever the South decides to make such moves to alleviate the tension first,' he said. Another North Korean expert echoed Lim's sentiment, saying that the North's dismantling of its loudspeakers is Pyongyang's 'new way' of dealing with relations with the South. 'It can be interpreted as the North's new way of dealing with its ties with the South and a passive move towards the Lee administration's active and preemptive measures,' Yang Moo-jin, president of the University of North Korean Studies in Seoul, said. But uncertainties exist: the latest exchange in actions lacked a solid communication channel or an agreement on the process, the Seoul-based North Korea expert noted. Yang believes a lack of "agreements based on face-to-face negotiations, ... presents uncertainties and limits to (this new type of inter-Korean exchange).' 'It means that the tension could always escalate again when either the South or the North misinterprets gestures and signs,' he added. Lim also pointed out that the North's decision to only partially remove its loudspeakers at the moment means that Pyongyang is seeking to 'only cooperate when its conditions are met.' Instead of expressing willingness to fully revive dialogue with the South and cooperate with Seoul, Pyongyang seems to be strategically focusing on short-term outcomes, he added. Since 1963, both the South and the North have engaged in a low-level military conflict involving loudspeaker broadcasts along the border, following the 1950-53 Korean War, which ended in an armistice, not a truce or a peace treaty. Both sides have repeatedly halted and revived the loudspeaker broadcasts depending on inter-Korean relations.
Korea Herald
2 hours ago
- Korea Herald
Proposed US shipbuilding law reforms could put wind in MASGA sails
Moves to revise century-old shipmaking laws aim to strengthen US and allied naval capabilities Korea's 'Make American Shipbuilding Great Again' strategy, or 'MASGA," is gaining momemtum as the two countries' authorities recently saw eye to eye on the need to revise the United States' legislation to allow more practical shipbuilding collaboration. According to the Defense Acquisition Program Administration on Friday, Vice Minister Kang Hwan-seug met with Jason Potter, assistant secretary of the US Navy's research, development and acquisition, in Washington earlier in the week and discussed cooperation in naval shipbuilding and maintenance, repair and overhaul services. The Korean authorities told Potter about ways its shipbuilding industry could help maintain and strengthen the US Navy, such as by producing block modules for ships and delivering them to US shipyards for final assembly. The DAPA said the two sides agreed that regulations, such as the Byrnes-Tollefson Act whih requires US warships to be built at US shipyards, need to be eased to allow more shipbuilding cooperation. They decided to set up a new working-level group to discuss further specifics for that matter. US lawmakers have also been taking action to expand shipbuilding ties with US allies. US Reps. Ed Case of Hawaii and Jim Moylan of Guam proposed the Merchant Marine Allies Partnership bill on Aug. 1. The bill targets Merchant Marine Act of 1920, known as the Jones Act, which limits domestic shipping to US-built, US-flagged vessels that are owned by US citizens and crewed by permanent US residents. The newly proposed bill exempts the current 50 percent import duty on major vessel modifications, as long as the work is performed at shipyards in US allies. The legislation would allow ships built in those nations to qualify for the US domestic trade while laying out a pathway for foreign-built and foreign-crewed vessels operated by companies in allied countries to take part in US domestic trade. 'According to the Grassroot Institute of Hawaii, maritime employment in the US shipbuilding and repair sector has declined by 15 percent over the past 23 years,' said Case. 'The Merchant Marine Allies Partnership Act is a bipartisan, commonsense step toward maritime policy that reflects 21st-century challenges and opportunities.' US Sen. Mike Lee of Utah presented Ensuring Naval Readiness Act in February this year, aiming to authorize exceptions to the prohibition on the construction of US Naval fleets at foreign shipyards. Meanwhile, Lee So-young, a military judge, pointed out that the Korean government and companies should take proactive measures to back up such efforts to amend US laws. 'Stakeholders in the US shipbuilding sector realize that outsourcing the US naval warships is a serious threat to the US shipbuilding industry and oppose the idea while demanding more investments in the US shipbuilding infrastructure,' said Lee in an article published in the Journal of the Korea Association of Defense Industry Studies. 'The (Korean) government needs to strongly lobby and make an appeal that it is better for the US if Korean shipbuilders take charge of building US warships. Korea should raise US law experts and get advices on what steps to take during each phase of legislation.' Lee added that Korean shipbuilders should look to secure an edge over Japanese and Indian rivals in advance as the competition is expected to heat up once the US warship market becomes open for overseas shipyards in allied countries. Korea previously credited the MASGA initiative as one of the key factors in cutting the final tariff deal with the US at the end of last month as US President Donald Trump repeatedly stressed his administration's drive to revive the American shipbuilding sector. Seoul pledged a $150 billion shipbuilding cooperation fund for Korean shipbuilders to invest in the US and support the American shipbuilding sector's revitlaization.
Korea Herald
3 hours ago
- Korea Herald
Leaders of S. Korea, Vietnam to discuss partnership upgrade over defense, infra, AI
Vietnam leader's state visit kicks off big month for Lee's diplomacy ahead of talks with US, Japan President Lee Jae Myung and his administration are set to face several crucial diplomatic tests in the coming weeks, starting with a state visit by Vietnam's top leader this week and potential talks with his US and Japanese counterparts later this month. Lee, who returned from his weeklong summer vacation on Sunday, is set to hold summit talks on Monday with the general secretary of Vietnam's Communist Party, To Lam. This marks the first visit by a foreign leader since Lee took office on June 4. Lam's four-day visit to South Korea began Sunday, according to the presidential office. The two leaders plan to discuss ways to deepen ties between the two countries, including bilateral economic cooperation, said presidential spokesperson Kang Yu-jung. They will touch on a wide range of topics, including politics, security, trade, nuclear power, smart cities, high-speed rail and more, Kang added. Vietnamese Deputy Prime Minister and Foreign Minister Bui Thanh Son also said in an interview with Yonhap News that the Southeast Asian country looks forward to a wider range of cooperation with Seoul, including diplomacy, defense, security, infrastructure, advanced technology, semiconductors and artificial intelligence. Lee was due to hold a state dinner Sunday evening with several major business leaders, including Chey Tae-won, who is chief of SK Group and the Korea Chamber of Commerce and Industry, as well as heads of Korean conglomerates doing business in Vietnam, including Samsung Electronics, Hyundai Motor, LG, Posco, Hanwha, HD Hyundai and Daewoo Engineering and Construction. The presidential office highlighted Vietnam as a key comprehensive strategic partner and expressed anticipation that Lam's visit would advance ties between the two countries in a 'future-oriented' direction. Since diplomatic relations were established in 1992, South Korea and Vietnam have become each other's third-largest trading partners. The two countries are targeting $150 billion in annual trade by 2030. Regarding Lee's planned summit with US President Donald Trump, Seoul and Washington have been coordinating a date for the summit in recent weeks, Seoul officials noted. Several diplomatic sources in Seoul and Washington have said that the summit between Lee and Trump is likely to take place on Aug. 25. The two sides recently clinched a trade deal that set a lower-than-expected 15 percent tariff on imports from South Korea, in return for a $350 billion investment pledge in key US sectors, including energy and shipbuilding. With a major trade hurdle removed, both Lee and Trump are likely to focus on security issues, including threats stemming from North Korea's advancing nuclear weapons program, in the upcoming planned summit, observers say. The issue of a potential reduction in the size of US Forces Korea and a possible shift in its role toward deterring threats from China, is likely to be a key agenda issue. With the Lee administration continuing to pursue an inter-Korean thaw, the topic of North Korea policy and Seoul's role in a potential revival of dialogue between the US and North Korea on denuclearization could be discussed as well. Seth Bailey, acting deputy assistant secretary in the State Department's Bureau of East Asian and Pacific Affairs, recently said during a public event that the US has noted a recent statement by Kim Yo-jong, the influential sister of North Korean leader Kim Jong-un, "with interest.' In the statement, Pyongyang signaled its openness to reviving talks with Washington, but said it rejects any dialogue on denuclearization. A summit between Lee and Japanese Prime Minister Shigeru Ishiba is likely to take place by the end of the month, according to Japan's Asahi Shimbun on Saturday, citing sources in Tokyo. Seoul and Tokyo have been discussing the details of the potential summit, likely to take place in Japan's capital around Aug. 23, the report said. Seoul's presidential office said the same day that while the two sides have been discussing the summit, the schedule has yet to be confirmed. The two countries agreed on their intent to revive reciprocal visits by their leaders during a meeting between South Korean Foreign Minister Cho Hyun and Ishiba on July 30. If it materializes, the meeting between Lee and Ishiba could take place before a planned summit between Lee and Trump. The presidential office said Sunday that a group of special envoys will be dispatched to Indonesia for a three-day visit starting Monday. The envoys plan to visit Jakarta and deliver a letter from Lee to Indonesian President Prabowo Subianto outlining Seoul's efforts to deepen ties with Jakarta, said presidential spokesperson Kang in a message sent out to reporters.
