Domestic Business Environment Needs a Kick in the Pants
Domestic Business Environment Needs a Kick in the Pants
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  • 승인 2004.11.01 12:01
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Amid high oil prices and sluggish domestic consumption, domestic enterprises are poised to map out their management plans for next year.

The upward trend of oil prices and raw materials in the global market is showing no signs of abating. And consumption psychology still remains in the doldrums. To make things worse, the Korean won has been gradually appreciating against the dollar, casting dark clouds over the future for the nation's exports.

Under this bleak reality, enterprises are now agonizing over how to map out their management blueprint for 2005.

Oil prices in the global market reached the $54 level per barrel, a significant rise of 70 percent from a year ago. Needless to say, most domestic enterprises with a high dependency ratio on oil for plant operations are to be hit hard by high oil prices. In particular, airline companies, which have been one of the hardest hit by the soaring prices, have already entered an emergency management situation, receiving applicants for temporary retirement from office from their officials.

While mapping out the management blueprint, most enterprises anticipate oil prices will fluctuate in the $40 to $50 range next year.

Meanwhile, the international prices of major raw materials, including nickel and zinc, have been on a steady rise, imposing a heavy burden on domestic manufacturers.

At present, the Korean won stands at the 1,130 won level against the greenback. However, most enterprises are forecasting Korean currency will appreciate further next year with the won-dollar conversion rate falling below the 1,100 won level. If the Chinese yuan appreciates, the appreciation pace of the won currency will accelerate further, dealing a serious blow to domestic exporters.

In addition, there is no sign of improvement in the domestic management environment yet. According to a recent survey of enterprises on the regulatory reform conducted by the Federation of Korean Industries (FKI), regulations on business activities rather increased by 202 cases during the one-and-a-half year period since the inauguration of the participatory government. About 83 percent of respondents also expressed dissatisfaction over the results of the government's regulatory reform.

Unstable labor-management relations and the public's anti-business sentiment in the market are still dampening business activities.

While delivering an annual budget speech to the National Assembly on Monday, which was read on his behalf by Prime Minister Lee Hae-chan, President Roh Moo-hyun said that the government will exert efforts to reinvigorate the slumping economy with the Korean version of a "New Deal" policy.

We hope the government will come out with a series of powerful measures soon to improve the corporate environment and boost enterprises' facility investment.

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