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S. Korea: Gov't Invests KRW 41 Trillion to Boost Economy
Source: korea.net
Source Date: Friday, August 01, 2014
Focus: Institution and HR Management
Country: Korea (Republic of)
Created: Aug 05, 2014

The economic team of the Park Administration has decided at a recent meeting to provide over KRW 41 trillion in economic stimulus to the domestic economy. The decision came out of concern that the nation's economic growth continues to be slowing and that the current recovery remains fragile. The newly-announced policies are expected to help improve the domestic market and the overall state of the economy.

The new policies can be divided into two parts: fiscal policies and financial and foreign exchange policies. For each of the two categories, some KRW 11.7 trillion and KRW 29 trillion will be invested, respectively.

As part of the efforts to revive the economy, the government plans to reform tax measures, targeting a balanced income redistribution. First, they will provide tax incentives to corporations that have increased incomes above the average rate, or which have increased spending and investment over the past three years. However, firms that sit on cash reserves without conducting any activities will face additional taxes.

Efforts to support lower socio-economic groups will also be stepped up. There will be new guidelines for non-regular workers by this October to assure them of job security. Part of the plan includes the government providing wage support, encouraging employers to increase regular employment and improving the working conditions for non-regular employees.

The government will also work to increase employment opportunities for females and young adults. It plans to strengthen institutions that offer job training services for young adults. Daycare service centers will also be enhanced and expanded in partnership with central and local governments and corporations, to help provide a working environment where parents can better balance child care and employment.

In addition, a new fund will be established to support small businesses. It will be spent on helping them stage-by-stage, from the beginning, through their development and onward to success.

To help boost the real estate market, the government will ease the loan-to-value ratio (LTV) and the debt-to-income ratio (DTI) for mortgages. The ratio will be increased to 70 and 60 percent, respectively. With these eased restrictions, the ability for young families to purchase their primary residence will be increased.

Also, in a bid to boost consumption, the government will increase tax deductions for money spent using credit and debit cards. As much as a 40 percent deduction will be applied if one spent more than the previous year.

There will be other types of benefits, too, to help reduce the burden of living expenses on a wider range of citizenry. There will be tax benefits for retirement pensions, personal pensions and monthly rent pensions, as well as for medical expenses and for infertile couples. 

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