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KOREA REPORT - NOVEMBER, 2018.
South and North Korean
militaries began destroying 20 front-line guard posts on 11th
after withdrawing troops and firearms as they implemented a comprehensive
agreement on reducing tensions on the tense border. Seoul and Pyongyang signed
the military agreement on Sept 19, including measures to prevent armed
confrontation along the Military Demarcation Line and on the Northern Limit
Line, a de facto sea border in the Yellow Sea. As part of the agreement, Seoul
and Pyongyang completed withdrawing troops and firearms from 22 guard posts in
the DMZ. Seoul and Pyongyang agreed to preserve two demilitarized guard posts,
one on the southern side of the DMZ and the other on the northern side. Seoul
and Pyongyang will start work to verify the outcome of destroying the guard
posts in Dec. SKorea currently has some 60 guard posts in the DMZ, while the
North has about 160 such posts there. Many people criticized the action, as
voluntary disarmament in front of NK readily to invade.
Uncertainty over the
denuclearization of NK is increasing as the deadlock continues in talks with
the US. A red light appeared when the US and NK canceled a meeting in
New York between US Secretary of State Mike Pompeo and his NKorean counterpart.
Moreover, President Trump has reaffirmed that his administration would not rush
to negotiate with the North and would maintain the harshest-ever sanctions
against the Pyongyang government. Vice President Mike Pence emphasized the US
would continue to exert unprecedented diplomatic and economic pressure on NK.
As if to reciprocate the hard-line US position, NK¡¯s state media made it clear
that it wouldn¡¯t budge an inch. A pro-NKorean newspaper in Japan said on 10th
that talks between NK and the US would not be necessary if Washington did not
intend to implement the June summit agreement between Trump and NKorean leader
Kim Jong-un.
The slowing Korean
economy has been shadowed by the possibility of a steep asset devaluation, which
could push it deep into a long-term recession. With investment declining and
employment worsening, a simultaneous fall in stock and real estate prices could
see the country go through something similar to Japan¡¯s ¡°two lost decades¡±
spanning the 1990s and 2000s, economists here warn. In provincial cities, house
prices fell more than 3% in the first 10 months of this year. The decrease was
close to 10% in industrial cities along the southeastern coast, where
shipbuilders laid off massive numbers of workers to cope with worsening
managerial conditions. The number of home transactions around the country
decreased 12.7% on-year earlier to 643,168 in the first nine months of the
year. The downward trend in house prices should be watched closely as signaling
a considerable loss of household assets. Real estate accounts for nearly 75% of
net assets held by all households in the country.
Government policymakers
and lawmakers from the Democratic Party of Korea agreed to work together to
introduce what is called the cooperative profit-sharing system. President
Moon called on the National Assembly to pass the proposed law before its
ongoing regular session ends in Dec. He said the envisioned scheme would serve
as a ¡°way for small and medium-sized enterprises and large companies to grow
together.¡± Critics indicate the idea of sharing profits earned by large
corporations with smaller firms goes against market economy principles and
would cause unintended conflicts and confusion in the course of turning it into
reality. Large companies agreeing to participate in the program would be
required to pay a preset share of profits with their subcontractors and
suppliers if they achieve a target for profits. In return, they would be
rewarded with various incentives including corporate tax breaks.
Korean government and
private companies are planning to order 140 ships powered by LNG to support
small and medium-sized domestic yards. The vessels will be
ordered by 2025, including two next year. The deals will create a market worth
around KW1 tril ($890 mil) for the yards. The government and the private sector
will also invest KW2.8 tril by 2025 to build infrastructure for the ships. In
addition, the state announced new financing of KW700 bil and a one-year
roll-over of KW1 tril of existing debt guarantees. In April, the government
announced a plan to order 200 new vessels by 2020 as it seeks to boost domestic
yards and owners following years of depression. Deals for 140 bulkers and 60
boxships were on the cards.
President
Moon digested hectic schedule in Singapore and Papua New Guinea during 13-18th
[p.2]
SKorea
was granted waiver to temporarily continue importing Iranian oil [p.2]
Korea¡¯s
major labor umbrella union, KCTU, staged a walkout on 21st [p.4]
Employment
elasticity is estimated to fall to a nine-year low of 0.11 this year [p.4]
The US
reaffirmed that inter-K relations and denuclearization of NK should progress in
tandem [p.7]
Uncertainty
over the denuclearization of NK is increasing as the deadlock continues in
talks [p.8]
EU
companies called on Korean government to bring regulations to international standards
[p.10]
SKorea's consumer sentiment slid to a 21-month low in Nov
[p.11]
OECD set
SKorea¡¯s growth rate at 2.7% for this year, 2.8% for 2019 [p.11]
Government to
introduce the cooperative profit-sharing system [p.13]
SEC
ranked No 2 in this year's reputation ranking among global IT firms [p.14]
Coupang
has secured a $2 bil investment from SoftBank¡¯s Vision Fund [p.17]
Sales of HMC's premium Genesis marque have surpassed
cumulative 200,000 units [p.17]
Korea¡¯s
equity market experienced volatility since US-China trade conflict heightened [p.17]
Bank of
Korea raised its key interest rate by 25 basis points to 1.75% [p.17]
Korean
gov¡¯t and private companies plans to order 140 LNG powered ships [p.19]
HHI Group has won 22
LNGC orders this year, among 45 LNGC orders contracted worldwide [p.21]
Samkang
S&C keeps raking in major turnkey retrofit contracts [p.23]
Korean
operators are said to have been competing in Vale's project [p.23]
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