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South Korean Ambassador Won Sam Chang
By Cathrine Weerakkody
Q: How long have you been in Sri Lanka and what are your impressions of Sri Lanka?
A: I have been here for less than one year since the end of April last year and this is my first time in Sri Lanka, but I could say it was love at first sight. Sri Lanka is like paradise to me, with beautiful natural surroundings and the warm hospitality of the Sri Lankan people.
Q: Where was your last posting? Any insights you like to share?
A: Since I joined the Ministry of Foreign Affairs of Korea in 1984, I have been posted to the United States of America, Bangladesh, Japan and most recently to Beijing, China. As you can see, my career has been mainly in Asia and I am sure this background will be very helpful in fulfilling my job to further enhance our bilateral ties. Personally, I think even though Korea and Sri Lanka are geographically rather far away, our two countries share many common aspects.
For example, we are proud of our long history, multi-cultural and religious backgrounds, strong will of people and rich human resources. As once colonised nations, we have been victims of the power-politics of big neighbouring countries. Both countries also experienced painful civil wars and democratic evolvement. In that sense, we can read each other’s minds better than anyone else. In particular, I am confident that the development experience of Korea is sure to be a great help to Sri Lanka as it seeks to make a new leap forward.
Q: According to a recent CNN report, South Korean household debt is rising faster than their income. What are the reasons for this and how is the government responding to this challenge?
A: The household debt in Korea has increased by approximately 68 trillion KRW ($ 60 billion) in 2014, which means an increase of 1.34 million KRW (approx. $ 1,200) per capita. This surge was due to the lowered interest rates and the increase of banking mortgage loans by individuals triggered by the deregulation of mortgage lending.
The Korean government is trying to address the growing concerns of household insolvency by adopting policies such as the increase of instalment repayments ratio to mortgage loans. This would reduce the burden of repaying a large amount of money at the expiration of loans. In addition, the Korean government plans to conduct a fact-finding research on the current situation regarding non residential mortgage lendings and also to implement a standard guideline for Loan-to-value (LTV) ratios applicable to land and commercial real estate based loans.
Q: South Korea has begun to position itself as one of the key centres of the tech world. What is the government’s role in this initiative?
A: The Korean government established a three-year plan for economic innovation last year, identifying the limits of the existing manufacturing sector. The plan aims to ‘smartify’ its manufacturing industry and to develop the high-technology sector. As an example, in order to create a new economic growth engine, the government is trying to promote the convergence and integration of ICT and biotechnology in such areas as the food and seed industry. It also plans to focus on fostering promising service industries such as tourism and medical service sector.
Q: South Korea has been for many years one of the best export oriented economies. The growth formula for a long time focused on export-led manufacturing. However, South Korean exports over the last few years have been declining. In fact last year alone, it declined 3.4% from a year earlier to $ 41.46 billion. Your comments?
A: In 2014, Korea’s trade volume amounted to approximately a little over $ 1 trillion, which is a year-on-year increase of 2.2%. Korea’s trade balance for the same period recorded a surplus of $ 47.4 billion. Korea has achieved $ 1 trillion trade volume for four consecutive years and recorded the highest trade volume for two years in a row. Yet, in the last month, exports have reduced by 0.4% on a year-on-year basis to $ 45.4 billion. One of the reasons for the recent decline in Korea’s exports was the lowered price of petroleum products caused by the depreciated crude oil.
However, this is a temporary phenomenon, until the global markets witness a holistic increase of the world trade volume encouraged by the reduced oil prices. For the time being, products directly affected by the oil price would experience an export slump. The Korean government has kept a close eye on the major export markets, and, when it deems necessary, the government will consider various ways of diversifying export markets and strengthening marketing strategies.
Q: What can Sri Lanka learn from the Korean education and research sectors?
A: There are two aspects I would like to point out. First and foremost, Korea, as a resource poor country, could achieve long-term high economic growth by investing heavily in human resources from the initial stage of economic development. The Government of Sri Lanka has also acknowledged this importance and strives to develop its human resources. The Korean government has also assisted and will assist Sri Lanka’s human resources development activities in many fields.
Secondly, Korea had successfully converted its economy from light industry to heavy and high-tech industry as it accumulated capital. Redirecting its investment from the manpower-based light industry, such as clothing and footwear, to heavy and high-tech industry worked as a spring board for the take off of Korea’s economy. Sri Lanka should also restructure its economy by adequately redirecting its accumulated wealth from primary industry to secondary and tertiary industries.
Q: Given that Sri Lanka is looking to usher in a new political system and culture, any lessons from the political and presidential system in South Korea that could benefit Sri Lanka?
A: Korea has experienced various forms of government ever since its independence in 1948 before adopting the current five-year, single-term presidential system. Korea’s presidential system has been very helpful in providing strong leadership and political stability which are very important ingredients for the national development. However, I do not think that Korea’s experience is fully applicable to Sri Lanka, as each country is faced with its own circumstances. I believe that the Sri Lankan leadership and its people will be able to find the most appropriate political system for Sri Lanka.
Nevertheless, among Korea’s political systems, the electoral system may have some positive aspects that could benefit Sri Lanka. Korea had experienced numerous problems such as election malpractices, but it overcame such problems by learning from trial and error. Now Korea’s public election system is considered by many countries as one of the best practice models.
Q: Finally, any lessons we can draw from the South Korean private sector?
A: Korean economic growth was possible because Korean enterprises actively engaged with the highly competitive international market. They did not rely on the small domestic market. Competing with leading global companies, Korean companies attached top priority to R&D and technological development, and these efforts led to the strengthened competitiveness of Korean companies and made them rank with global enterprises today.
Apart from the private sector’s role, investment in infrastructure, such as roads, high-speed railways, dams, airports and harbours, formed the backbone of Korea’s rapid growth. A typical example would be the construction of Korea’s first expressway, Gyeongbu Expressway, in 1970. In those days, Korea’s GNI per capita was only around $ 250, and implementing such a huge project of $ 113 million invited great opposition. However, building this expressway proved to be the right decision for Korea’s economy in the long run.
(The writer is a graduate in financial management and a CIMA passed finalist)
