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Deputy Prime Minister and Minister of Strategy and Finance Kim Dong-yeon talks with reporters in the press room of the Sejong Government Complex on May 2. (Ministry of Strategy and Finance)
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Minister of Strategy and Finance says developments of North Korea-US Summit will directly affect economic cooperative measures
Deputy Prime Minister and Minister of Strategy and Finance Kim Dong-yeon said the South Korean government is “considering various scenarios” for an inter-Korean economic cooperation system and related financial issues. But Kim also stressed that Seoul plans to “pursue things in a calm and orderly fashion while watching the North Korea-US summit and other agreements with the international community.” Speaking with regular beat reporters at the Sejong Government Complex on May 2, Kim said that the Panmunjeom Declaration at the Apr. 27 inter-Korean summit “marked an important first step toward the peace and prosperity of the Korean Peninsula.” “Cooperation between South and North Korea will lead to the use of physical and human resources and increased consumption and investment that will generate an economic synergy effect and improved quality of life for the South Korean people,” he said. At the same time, he cautioned, “We have to watch the North Korea-US summit and other developments, since there are areas of inter-Korean economic cooperation that require the international community’s agreement.” “The government is preparing response plans to different scenarios in terms of how and how fast to pursue [inter-Korean economic cooperation] and how to procure the resources for it,” he added. In their Panmunjeom Declaration on Apr. 27, the South and North Korean leaders agreed to “actively implement the projects previously agreed upon in the 2007 October 4 Declaration, in order to promote balanced economic growth and mutual prosperity” and to “adopt practical steps towards the connection and modernization of the railways and roads on the eastern transportation corridor as well as those between Seoul and Sinuiju for their utilization” as a first step. Item 5 of the October 4 Declaration refers to promoting economic cooperation investment, expanding infrastructure, developing resources, establishing a special peace and cooperation zone in the West Sea, and creating a joint fishing zone and maritime peace zone. Regarding measures to fund inter-Korean economic cooperation, Kim said, “Disbursement of the Inter-Korean Cooperation Fund is heavily affected by inter-Korean relations. “Since there has been a change in situation with the Panmunjeom Declaration, it would not be appropriate to talk about things in terms of the past Cooperation Fund scale.” Kim added that funding measures would “have to be prepared while observing the situation in terms of resolving and making progress with the preconditions.” The Inter-Korean Cooperation Fund, which is used to fund inter-Korean economic cooperation, received a project budget of 959.3 billion won (US$890.7 million) for this year. A possible rise in South Korea’s national credit rating has also been predicted with the mitigation of the “North Korea risk.” “While the response from international credit rating firms [to improvements in inter-Korean relations] has been positive, they also insist we’ll need to see what happens with the North Korea-US summit and how things unfold after that,” Kim explained. “In terms of a rise in South Korea’s credit rating, they will conduct a closer examination when they do their analysis,” he added. Special financial commission to examine tax reforms to fund inter-Korean cooperation fund Kim also said the Special Commission on Financial Reform would be producing a recommendation by the end of next month on a possible increase in the possession tax. “In revising the possession tax, we will take the full range of factors into account, including equity of the tax burden, the respective percentages of transaction and possession taxes, and stability in real estate prices,” he said, reaffirming his previously stated plans to proceed with changes. At the same time, he insisted, “While we will consider the intermediate- to long-term stability of the real estate market, we will not implement [changes to the possession tax] as a way of increasing tax revenues or deterring real estate speculation in particular regions.” The commission currently discussing changes to the possession tax is made up of 30 members, including tax and financial experts and representatives from business groups, civic groups, and the administration. They plan to examine potential reform tasks to promote tax fairness and fiscal soundness, holding a public debate process with surveys and hearing before producing a recommendation by the end of June. By Jeong Eun-ju, staff reporter Please direct comments or questions to [english@hani.co.kr]
