Special Interview 2Interview with Ji-hyun Kim, Tokyo Correspondent for The Korea Herald in South Korea

By Japan SPOTLIGHT
South Korea and Japan are facing some common challenges in their economies, such as the need toenhance entrepreneurship and female participation in their labor forces, both of which are expected toraise their economies’ growth potential. Asia’s trade and investment liberalization and regional integration
efforts can also be considered as engines for raising growth potential.
Ji-hyun Kim is the Tokyo correspondent for The Korea Herald in South Korea. She was previously thebusiness desk editor at the newspaper and a market writer for NHK World, as well as a regular panelist forSouth Korea’s English radio broadcasts including KBS World and tbsEfm. We had a chance to get her
views on the opportunities and challenges facing the South Korean economy.

Growth Potential of theAsian Economy

Kim: I do not know a lot about the other
Asian countries, but in South Korea theincome gap is pretty big. And there it is
JS: How do you assess thenot just about the figures, there is an
growth potential of the Asianemotional dimension to it too. In Southeconomy?
Korea in the past, even if you were among
the lowest income bracket there was a
Kim: I think in light of Brexit there havechance for you to be able to jump to abeen a lot of changes. But the bottom line
higher bracket and become rich. But now
has not changed, because when you lookstructurally there is no way to do so: if youat the Asian countries, the fundamentals
are born into a poor family you are justall seem to be in place. I think it is really
going to stay there. I think that is actuallydifferent from the past, when we were very
the biggest reason why people are sovulnerable to crises such as in 1998,discouraged. Society is changing in that
2008, or even 2011. Right now there isway; in the past there were rags-to-riches
more room for growth. If you look at thestories, the Miracle on the Han River, but
figures, for South Korea the GDP growth
now there is no real opportunity for people
projection has been slashed to 2.8%, but
to jump to another bracket.
that is still not low when compared withHaving said this, I believe — and have
European countries or the United States.
seen this happen a lot — that one of theJi-hyun Kim, Tokyo correspondent for The Korea Herald
Japan also has been seeing a lot of change
main reasons is that people are not in aand restructuring, and seems to be pretty
position where they can take a risk, andsolid right now; last year its GDP was also not too bad. In the end itthat is probably because there is no social safety net, and that means
may depend on China, whose official growth figure of 6.4% this year
no room for startups. To get the economy going, it is not only about
is a little low considering the past, but I do think Asia as a whole
the top or the middle but also about having new businesses and newseems not as vulnerable as before and has a lot of potential rightopportunities, and that is made up by the entrepreneurial spirit. Andnow.
I think right now there is none of that, which perpetuates thesituation where the income gap gets bigger and bigger.
JS: What kind of structural reform might be
There have been a lot of government policies in place to address
necessary to enhance this growth potential? Do you
this. In many cases these households are poor because they arethink the widening income gap between rich andhouse-poor, meaning that they have a lot of loans because ofpoor, in particular in some Asian countries, might bemortgages, which is still a big issue in South Korea. They have also
an impediment?
passed laws to help reduce debt, for instance by cutting the interest
rate and making loans more accessible for lower-income families.
Japan SPOTLIGHT • September / October 201643

Such policies are mostly on the fiscal side, but in my opinion it is notabout just giving people funds, but really about changing themindset.
JS: Japan is experiencing serious demographic
challenges such as an aging society anddepopulation, against a background of enormous
fiscal debt and a labor market with lots of nonpermanent workers whose conditions are not equal
to those of permanent workers — all of whichfurther affects growth forecasts and the income gap.
Is South Korea facing such problems as well?
Kim: I think we are facing the same problems. Fiscal debt has been
accumulating to astronomical figures, and there has been a huge
growth of non-permanent workers, leading to a lot of labor turmoil— as you know, South Korea is famous for its demonstrations. Thatin turn shakes up the economy and there is a lot of uncertainty
because of it. I was just looking up some figures, and found that inSouth Korea the household debt grew at the second-highest pace,right next to China, this year; that is also leading to a lot of problems
for the middle class.

Women in the Labor Force
JS: Do you think raising the participation of womenin the labor force could be a good way to mitigate
the negative impacts of depopulation in Japan andSouth Korea?
Kim: In terms of fighting depopulation on the simplest terms – withsheer volume, yes, it would definitely help to have more women.
That’s just math. The problem is that this is not yet happening inSouth Korea. The average employment rate for women was around
55% in 2014. That put South Korea in 27th place out of 34 OECDnations. The rate for single women was 76%, but falls to 58.2% formarried women. This compares with the 79.3% for single men and93.5% for married men. Yes, in temporary positions, we are seeing
more women. But not enough. As a working mother myself, I do
understand and feel the pressure. But I also believe there is a limit to
how much society can help in putting women back in the workforce.
The women themselves need to change too and decide having a job
is just as important. Unless this happens and we actually physicallysee more women in the workforce, we won’t even have a chance to
see how they affect social and economic problems like depopulation.
JS: In Japan there is a lot of discussion of quotas,
such as for numbers of women board members.
Would that work, do you think?
Kim: We do actually have some quotas. I think it might work, butthen there is the problem of whether that is fair. Personally I would
want to just compete fair and square instead of having a quota. And
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also, I do not know about Japan, but in South Korea one of the bigissues right now is that there is a big growing animosity between
men and women, and we can see this struggle online. For instance,
have you heard about the latest crimes being conducted against
women? There are random men going around killing women, andwhen you ask them why, the reason is just because “she’s awoman”. And this is because there is a general feeling that men arebeing exploited: they need to have a good job, to have a house inorder to get married and be stable, they do not see a lot of women
working, it is mandatory for South Korean men to serve in the army— and they are directing that anger towards women. South Korea isalso dominated by Confucianism, and among some people there is
still that thought that men should be superior. So I think this is reallyturning into a social problem as well. So perhaps a quota may justexacerbate the situation.
JS: What do you think about entrepreneurship inSouth Korea, including women’s role?

Kim: I think the government has been really pushing for more
startups to get the economy jump-started. But that is the problem:
entrepreneurship cannot be top-down. Right now in South Korea
there is not much from the bottom, even though there are a lot oflaws in place, such as on access to low interest rate loans or places
you can get help. Starting a startup is still considered very risky. We
do have specific funds given only to women, though, and a lot ofreally detailed incentives, also as part of South Korea’s fourthindustrial revolution which outlines women’s participation in all areasof the economy, especially startups. So there is a lot of interest inthat area, that is true.

Trade Policy & Regional Integration
JS: What do you think about trade liberalization inAsia, such as the TPP and RCEP?

Kim: Well, my opinion is that there is actually no other strategy topursue right now: South Korea cannot stand alone, especiallygeographically, and there is also the North Korean issue and risky
geopolitical situation. RCEP has seen little progress, although theTPP has been moving along, so we will have to see. But I think Brexit
also changed the dynamics a little bit. We are seeing some countries
moving away from bloc economies, and I think it is because theglobal economy is slowing down, meaning that trade is going toslow down too. So there is no real profit gained from bloc economies
now, and I think the rest of the world is seeing that.
But for Asia, especially for South Korea and also Japan andSoutheast Asian countries, I think this is probably the only way to go
for now. Britain could perhaps afford to leave the EU, but South
Korea could not afford to leave an economic bloc, even though it is a
powerful economy, because it is so dependent on trade: we depend
for about 80% on exports. We are in a position where we cannot say
no or yes, and just have to try and find the best economic bloc tobecome a part of, while not really having a say in what arrangements
are better or worse, because that is just not how our economy isbuilt.

another such issue, because it is still so prevalent and is keeping
investors out. These are all issues that have to be resolved together
with political circles.

JS: Today foreign direct investment (FDI) is

JS: Do you think women might play a key role inthese kinds of issues?

considered an important locomotive for growth. To
encourage FDI, perhaps there should be some sortof international regime to address it. Do you thinkregional schemes like the TPP and RCEP should beconsidered important in that light?

Kim: Of course, those kinds of frameworks encourage investment,and show investors that there is a safety net. But I do not think they
are going to play a really big role: Brexit again has been shocking
because it shows that just as you can create an economic bloc you
can also come out of it. While the TPP can create a kind offramework to encourage investment, especially for Asia, I think thatwith Brexit that confidence or trust has been eroded, because we seethat these frameworks are not lasting. I think eventually what might
happen is that each country will be on its own, and they will learn
that if you want an FTA you might not have to do it with, say, the EU,
but might want to consider having an FTA with each country. That
could result in the weakening of these economic blocs in general,
which is definitely not good for Asian countries.
JS: Regional integration has both political andeconomic aspects. How do you assess the politicalimpediments?

Kim: I think in the case of Asia it is probably more economic issues
that are hindering regional integration. There is such a big gap
economically between all the Asian countries: look at China andJapan, Japan and South Korea, South Korea and Cambodia, SouthKorea and other countries, or even Taiwan and Hong Kong. Closingthat gap will be really difficult, and South Korea is in a uniquesituation because it also has North Korea to contend with. And there
is also China, which also has interests in North Korea. When you
take these into consideration, I think it will be very difficult to create
working and viable integration in Asia. I also think South Korea,
Japan and China will play a critical role in whether or not the bloc
can perform in a positive way.
JS: To help overcome these impediments it might begood for Asian countries to start discussing
common social and political challenges too, such as
disaster mitigation, human security andenvironmental cooperation. Do you agree?
Kim: I would say so, definitely. This is just one example, but
especially when you look at China and pollution: that is one areawhere China really has to step up. And you cannot do that
economically: political leaders have to come together to get theChinese factories to stop emitting so much pollution. Corruption isKim: Absolutely. I think in the past, economics was kept separate
from politics and these issues you just raised, and it was mainly aboys’ club. But these are areas where women would be very good in
negotiating and mediating between countries, which would be one of
the biggest issues, as these are all problems that do not have asingle answer. You need a lot of discussion and communication, andI think for women that is a great opportunity.

Social Issues as New Challenges
JS: Do you think dialogue among the Asian countries
on social issues such as income inequality orpoverty should also be on the agenda?
Kim: Yes, I fully agree. When you look at surveys there are a lot ofmiddle-class people who say they are unhappy, not because they arelacking in money, but because they are generally unhappy with life.
They do not want to spend all their money trying to buy a house, oron education, which happens in a lot of Asian economies. These are
all common problems, and discussing them might actually help
more than increasing trade or growing the economy more. Obviously
the Asian economies are not doing that bad, but despite it, forinstance, South Korea has the highest suicide rate in the OECD, andthe world’s highest or second-highest divorce rate, and so on. And
Japan is in some ways similar, and in Southeast Asian countries I am
sure there are a lot of similar issues. Corruption too, of which South
Korea is seeing a lot, means that even if the pie is getting bigger, it is
not being distributed fairly. So we could discuss and share ourexperiences in how to eradicate corruption.
Aside from GDP, there are global indicators for happiness such as
the suicide rate and measures for overall quality of life. But it might
be good to have a separate index just for Asia, concerning the main
issues there such as corruption, education fees, the income gap andwomen’s rights, for example. I think right now what the world
economy needs is not a new way to suddenly make growth or trade
explode, because there is just no way we can do that anymore.
Social issues are coming to the fore — we are becoming moreconcerned about whether people are happier. It is a more maturekind of growth that we are seeing right now, a kind of post-crisis
situation where we need people who can manage the economy as
opposed to keep pushing it forward. In that respect, I think women
as excellent communicators could play a really big role.

Written with the cooperation of Chaobang Ai, a Tokyo-based editor andblogger.

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