Six free economic zones to be specialized in medicine, education, tourism

Seventeen policies, which are focused on improvement of governance structure of conglomerates (chaebol); creation of free economic zones specialized in medicine, education and tourism; reform of elementary, middle and high school education; and easing of entry barriers to professional jobs requiring business licenses including lawyers and medical doctors, have been picked as three key tasks under the "three-year economic innovation plan" under the Park Geun-hye administration.

Banking on these policies, the government will start in March to seek to "catch two birds with one stone," namely economic growth and social reconciliation. Experts judge that though the policies are generally in right direction, conflict will escalate in the course of implementation unless social compromise is reached over core issues, including the galvanization of the service sector.

According to a report on “key tasks in major sectors for the three-year economic innovation plan,” which The Dong-A Ilbo acquired on Wednesday, the three-year plan will be implemented to carry out 17 tasks by category, including three tasks to normalize abnormalities, three tasks concerning creative economy, and 11 tasks related with promotion of domestic consumption. The plan is designed to change the "single wheel type economic structure," centered heavily on export into a stable structure buttressed by the two wheels of export and domestic consumption, to place more emphasis on "boosting domestic consumption."

Regarding normalization of abnormalities, the government has decided to improve structural problem with the majority stakeholder’s controlling the entire conglomerate with his or her small stake, only to the extent that such efforts would not dampen galvanization of the economy. Originally, the government sought to revise the Fair Trade Act in a way that would prohibit the majority stakeholder from using stakes held by people in special relationships such as relatives when he or she exercises voting right through his or her stakes in financial affiliates. However, by taking into consideration that such a measure could jeopardize the majority stakeholder’s managerial control, the government has decided to enable the majority stakeholder to receive help from people in special relationship when exercising voting right for a manufacturing unit through a financial affiliate.

The centerpiece in the creative economy segment is a measure to give benefits such as levying a lower tax rate on gains from transfer that are generated after a private sector institution invests in a venture firm or exempting such gains from the tax, and thus to encourage investment in venture firms. Also, by expediting mergers and acquisitions, the government has decided to enable such an investor to sell a venture firm that has secured solid business footing to another global firm to recoup their investments.

Additionally, the government will push to transform six free economic zones nationwide, including those in Incheon, Busan, Jinhae, and the Gwangyang Bay area, into districts specialized in medicine, education, and tourism. The government has also decided to ease regulations that pose burden on the real estate market, including sale price cap on new apartments, and the system redeeming through taxes capital gains from reconstruction of old apartments, which have been burdening the realty market, while strengthening social safety net, including prevention of personal information leaks.