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(LEAD) S. Korea will help North attract investment if it gives up nukes: finance minister

2014/08/28 21:24

SEOUL, Aug. 28 (Yonhap) -- South Korea will help North Korea get international investment if Pyongyang gives up its nuclear ambitions, the country's top economic policymaker said Thursday.

"If North Korea decides to abandon its nuclear weapons, we will cooperate with Northeast Asian countries to actively support North Korea's accession to international financial organizations and its attraction of international investment," Finance Minister Choi Kyung-hwan told a forum that discussed economic cooperation among Asian countries.

Choi promised that the government and other Asian neighbors will push to set up a development bank for Northeast Asian countries that would help the North build the infrastructure needed to support the lives of its impoverished people.

He said there is a "historic task" lying ahead for Asian countries to turn Northeast Asia into a "global economic hub," adding that the Seoul government recognizes the importance of regional cooperation to achieve that objective.

Emphasizing the particular importance of cooperation in the energy field, he said that Seoul will pave the way for East Asian countries to participate in joint natural resource development projects in the region.

"Northeast Asia is a region where countries with surging energy demand and countries with a great potential for energy supply co-exist," he said.

"We need to actively seek new measures for energy cooperation that can bring a win-win outcome and bring stability to the global energy market."

In a meeting with economic leaders, Choi warned that South Korea may be entering an early phase of deflation. His comments come as alarm bells have gone off in economic circles that structural and long-drawn weakness in consumer spending can trigger deflation.

Deflation is defined by general decline in prices, often caused by a reduction in the money supply or credit.

"There is a need to find some kind of momentum to revive the moribund economy," he said, adding that there is a pressing need to take action to revive the local real estate market.

Choi said that even topics such as increasing the fiscal deficit, that has been anathema in the past, needs to be considered.

The country's top economic policymaker said he advocates an expansionary fiscal policy stance.

"Fiscal spending increases for 2015 will be larger than the 3.5 percent level outlined earlier in the year," he said.

In regards to the labor market, Choi said there is a need to tackle the wage difference between regular workers and those hired through temporary contracts.

Moreover, he said many South Korean companies are unable to make quick decisions that are important in a rapidly changing economic environment because some business leaders are jailed for breaking the law or tied up in legal disputes.

The policymaker stressed the government is not interested in collecting more taxes, but wants to see a rise in investments, wages and dividend payments that can fuel spending and the overall economy.

Choi reconfirmed the need for a meaningful free trade agreement with China, and said ongoing negotiations will be carried out in a "low-key" manner due to many sensitive issues.

Finance Minister Choi Kyung-hwan speaks at a forum on economic cooperation among Northeast Asian countries on Aug. 28, 2014, in Seoul. (Yonhap)

Finance Minister Choi Kyung-hwan speaks at a forum on economic cooperation among Northeast Asian countries on Aug. 28, 2014, in Seoul. (Yonhap)