Seoul: The joint fact sheet released last week by the White House outlines a significant commitment from Korea to invest $350 billion in the United States. This includes a substantial $150 billion directed towards the U.S. shipbuilding sector, offered in exchange for reduced tariffs. However, this large-scale investment has sparked domestic concerns about potential industrial hollowing out within Korea. President Lee Jae Myung addressed these concerns in a meeting with business leaders on Sunday, emphasizing the importance of maintaining strong domestic investment.
According to Yonhap News Agency, President Lee urged Korean companies to consider the impact of their investment strategies on the domestic economy. He expressed hope that business leaders would prioritize domestic investment alongside their international commitments. In response, major Korean corporations announced significant investment plans aimed at bolstering domestic operations. Samsung Group committed to investing 450 trillion won ($310 billion) over the next five years, while Hyundai Motor Group revealed a 125 trillion won investment plan for 2026-30 focusing on research and development in artificial intelligence, robotics, and autonomous vehicles. SK Group, Hanwha Ocean, and HD Hyundai also unveiled plans for domestic investments.
These commitments, if realized, are expected to create jobs, stimulate the economy, and mitigate the risk of industrial hollowing out. However, the realization of these plans remains uncertain, and the government's role in facilitating their execution is critical. President Lee highlighted the necessity for the government to create an enabling environment for the private sector's growth and innovation.
During the meeting, Lee pledged to eliminate institutional and legal barriers that hinder private sector activities. He emphasized the importance of deregulation and expressed a willingness to address any obstacles brought to his attention. However, he drew a firm line against introducing tax cuts or intervening in labor-management relations, arguing that global firms should be capable of competing without relying on tax reductions.
Lee's stance on labor relations focused on encouraging mutually beneficial solutions between workers and management. He acknowledged the challenges faced by Korean exporters, particularly in the automotive and semiconductor sectors, due to increased U.S. tariffs and domestic labor constraints.
Korean automakers have been impacted by a 25 percent tariff on cars manufactured in Korea since April, following the U.S. government's policy changes. The new trade agreement reduces this tariff to 15 percent but still poses challenges for exporters. The semiconductor industry faces external pressures from tariffs and internal limitations due to the 52-hour workweek rule. The ruling Democratic Party of Korea and the main opposition People Power Party remain at odds over potential exemptions for the semiconductor sector.
In light of these challenges, President Lee called for unity among all stakeholders to ensure the nation's economic resilience. He urged all parties to make necessary concessions and demonstrated leadership by advocating for compromise across political lines to support the economy's growth and stability.