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Korea: A friend to business

Korea’s new government, led by president Lee Myung-bak, is committed to free market economics and business-friendly policies, according to the country’s top economic policymaker.

Kang Man-soo, Korea’s finance minister, says: "Heavy regulations, higher tax rates and distribution-oriented policies have reduced investment and consumption. It’s time to revitalize the Korean economy."

For that reason, he adds, the government has drawn up a new economic programme – colloquially termed MBnomics after the president’s initials – that will seek to foster economic growth driven by pragmatic but market-friendly policies.

Speaking at an investor presentation in London last month, Kang said that MBnomics had seven core principles including competition, policies based on economic rationale rather than political consideration and regulatory reform. Specific policies included a commitment to a lowering of corporate income tax and a lifting in the ceiling that foreigners can invest in a local company. "I can say with full confidence that the new government is committed to equal treatment for foreign investors," said Kang, a statement that international investors will welcome but treat with caution given the country’s history.

Korea has a reputation for making life difficult for foreign investors, which has held back any chance that Seoul has of becoming a financial hub for the region. In 2006, US corporate raider Carl Icahn faced a hostile reception when he tried to force through change, and then acquire tobacco company KT&G.

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