Due to my abah and mum health condition m decided to spent my year end vacation with them instead of going somewhere else.
Being in Johor, myself and beloved sister decided to go to new shopping attraction not really for shopping but just to find out how the place... Here we came ... Johor Premium Outlet.
the Q was so looooooooooog at Coach
~Akim & Fahim enjoying themselves while mummy and makandak window shopping~
~COACH~
~MICHAEL KORS , i happen to know this designer while following American next top model ~
~the building was sooooooo Johor ok, i like :))~
~macam kat padang pasir pun ada~
~ARMANI outlet & many more~
My conclusion: not bad, there are variety of choices with reasonable prices, 'rambang mata' di buatnya... Make sure you plan yourself as I was informed this place were over crowded during weekend and public holiday especially with Singaporean. but in term of tempat makan, much room for improvement.....
The Republic of Korea also known as South Korea was founded on August
15,1948 the young independence country
was invaded by the North Korea in 1950, the Korean war ended in 1953 without a
peace agreement, leaving South Korea technically at war for more than fifty
year with it northern neighboring country.
Major Cities: The largest cities are Seoul which
also the Capital city of South Korea (11 million), Pusan (3.9 million), Taegu
(2.5 million), Inch’n (2.4 million), Kwangju (1.4 million), and Taejn (1.3
million).
Population: As at 2010 South Korea’s population was estimated to be 48,875,000.
Demography 20.4
percent of the population is less than 15 years of age, 71.4 percent is 15–64,
and 8.2 percent of the population is aged 65 or older. By 2030 it is expected
that more than 20 percent of the population will be 65 or older.The overall
life expectancy was: 71.9 years for men and 79.5 years for women.
Education and
Literacy: Korean society historically has prized learning and the well
educated, yet education was not widely available to all until after the Korean
War. As late as 1945, less than 20 percent of Koreans had received formal
education of any kind. South Korea has compulsory education through the ninth
grade, with 95 percent of school-age children attending high school. The
literacy rate is 98 percent.
Health: Although life expectancy has increased significantly since 1950,
South Korea faces a number of important health-care issues. Foremost is the
impact of environmental pollution and poor sanitation on an increasingly
urbanized population. According to the Ministry of Health and Welfare, chronic
diseases account for the majority of diseases in South Korea, a condition
exacerbated by the health care system’s focus on treatment rather than
prevention. The incidence of chronic disease in South Korea hovers around 24
percent. Approximately 33 percent of all adults smoke. In 2001 central
government expenditures on health care accounted for about 6 percent of gross
domestic product (GDP).
Government & Politics: South Korea is a republic
governed by directly elected president with powers shared between Executive –
President (chief of state) and Prime Minister (head of government), Legislative
– unicameral National Assembly and Judicial – Supreme courts appellate courts
and constitutional courts. South Korea current president Lee Myung-bak took up
office in February 2008.
Foreign Relations&
International trade: In
addition to its extensive network of trading partners, South Korea has diplomatic
relations with more than 180 nations. Since the 1980s, relations with China
have played an increasingly important role in South Korean politics and
economics, particularly in relation to North Korea. South Korea maintains close
military, economic, and diplomatic relations with the United States, although
at times those relations are strained by domestic opposition to the U.S.
military presence on the peninsula. In spite of long-standing animosity to
Japan during the 36-year occupation of the Korean Peninsula, economic and
diplomatic relations between the two nations are increasingly close. South Korea
has became member of United Nation since August 1991, Economic consideration
have a major role in South Korea foreign policy, it is one of founding member
of Asia-Pacific Economic Cooperation (APEC), ASEAN plus three as well as East
Asia Summit (EAS).
Economy: South Korea had one of
the world's fastest growing economies from the early 1960s to the late 1990s,
and South Korea is still one of the fastest growing developed countries in the
2000s, along with Hong Kong, Singapore, and Taiwan, the other three members of
Asian Tigers. The South Korean economy is heavily dependent on international
trade, and in 2010, South Korea was the sixth largest exporter and tenth
largest importer in the world. Current major
contributor by industry to South Korean economy are Services 57.6%, followed by electronic, telecommunication and
automotive industry 39.4% , whilst
agriculture contribute the least or 3% only. Largest companies are Samsung Electronics,
Hyundai motor, Hyundai heavy industries, LG Corp and Shinan Financial Group.
However, during the
Asian financial crisis of the late 1990s exposed a variety of structural
weaknesses in the South Korean economy. Foreign reserves were insufficient,
foreign borrowing was extensive (and by the end of 1996, 58 percent of external
debt was short- term), and corporate debt/equity ratios were extremely high.
The surge in debt, a result in part of government policies that failed to rein
in a corporate culture that favored expansion over profits, became a
significant vulnerability. Several major bankruptcies spurred banks to tighten
their lending policies, and the subsequent capital shortage further aggravated
an already weakened private sector. More bankruptcies followed. Add to these
factors the perception that the Ministry of Finance and Economy was bungling
matters, and a crisis of confidence led foreign investors to pull out of South
Korea, exacerbating the foreign reserve shortage. By the end of 1997, South
Korea was in the midst of a full-fledged foreign exchange crisis, and in order
to prevent a total economic collapse, it was forced to secure an emergency loan
from the International Monetary Fund (IMF). South Korea’s recovery from the
crisis, at least in terms of gross domestic product (GDP) growth, was
remarkable and to an extent helped hide still present, difficult microeconomic
conditions. GDP, which shrank by 6.7 percent in 1998, grew by 10.9 percent in
1999. In August 2000, the IMF “graduated” South Korea from its restructuring
program.
South Korea Macroeconomic
Analysis (2000 – 2010)
Overview: South Korea Economic indicator
Year
Real GDP growth (%)
GDP
percapita
(USD)
Inflation rate
(%)
Unemployment Rates (%)
2000
8.4
17,110
3.2
2.8
2001
4.3
18,110
3.1
3.1
2002
7.2
19,670
2.8
3.7
2003
3.6
20,200
3.3
3.1
2004
5.2
21,690
3.6
2.9
2005
4.7
22,760
2.5
2.8
2006
5
24,320
3.1
3.2
2007
5.1
26,240
2.5
3.4
2008
2.3
27,080
4.7
3.2
2009
0.2
27,250
2.8
3.3
2010
6.1
29,010
2.9
3.7
Source: World bank
South Korea: 2000-2007
After
a long post-crisis boom, the Korean economy has begun to sputter. However, the domestic
demand has stagnated for the past seven years (2000 to 2007), forcing the
economy to rely on exports. These boomed in 2003, but have slowed, reducing
growth to low levels.
What
has gone wrong? The answers are several.
1.Households
and SMEs have been unable to spend, as they are repairing their balance sheets
following a long credit boom. Meanwhile, corporations have become reluctant to
invest domestically, mainly because they are discouraged by the highly
regulated labor market.
2.Reviving
the economy will consequently require restarting the domestic engines of growth.
a)Providing a Macroeconomic Spark
The
authorities supplemented the budgeted spending with a“General Investment Plan
for Economic Revitalization” by the plan for additional fiscal stimulus. Regarding
the exchange rate, the authorities allowed the Won to appreciate, consistent with their flexible exchange rate
policy.
b)Reviving Household Spending
Household
spending was revived by:
·Personal
Debt Rehabilitation Program (PDRP), which allows
court-supervised debt restructuring go outside of bankruptcy.
·Efforts
to accelerate debt resolution, it would also be important to lay the groundwork
for households to regain access to credit.
c)Revitalizing the Small and
Medium Enterprises
The SME sector accounts for
half of manufacturing output. To a certain extent, the sector’s problems are
cyclical whereby many firms have been hit hard by the
slowdown in domestic demand, and as demand recovers, as well as on theirs’
financial position. The
government has recognized this problem, and in July 2004 formulated a plan to
deal with it that guarantees would be directed away from
well-established firms toward start-ups and new technology companies. In
addition, a government-run credit bureau for SMEs was established, to provide
banks with the information they need to undertake risk-based—rather than
guarantee-based—lending. Fundamentally,
a new framework, whereby the private sector plays a dominant role in allocating
capital and measured were taken to direct provided to SMEs, especially
start-ups. However, Korea’s were remaining
structural problems in the household and SME sectors expose it to a domestic
demand shock as well as SME triggered failure results to decline
in property prices, reducing consumption and investment, which would further
reduce SME profitability.
d)Unleashing Corporate Investment
As
with the other structural challenges, making South Korea an attractive place to
invest will require a further reduction in government regulation and
intervention. Most important would be a modernization of the labor market. But
the fundamental labor market problem, whereby the strict employment protection
for regular workers incurs. Seeking to narrow these gaps, the government has
proposed two bills to protect non regular workers by prohibiting “unreasonable
discrimination. For this reason, the team welcomed the Tripartite Commission’s
consideration of the example of Spain’s labor market reform strategy, among
others, to see if it can be applied to Korea.
Other issues faced by South Korea:
i.Financial supervision
A unified and independent supervisor was elected for financial
supervision. An official investigation has concluded that the overlapping
responsibilities of the three agencies involved in financial supervision (the FSC,
the FSS, and MOFE) had indeed contributed to the credit card crisis.
ii.Population aging
Korea’s population is aging rapidly, a process which
could propel the National Pension System into sizeable deficit by 2030. In the longer-run, Korea
faces a rapid aging of its population, presenting a major risk to fiscal
sustainability. The National Pension System is projected
to swing into deficits of as much as 8 percent of GDP after 2030. In 2003 the
authorities proposed to phase in reforms over time, including lowering the
income replacement rate to 50 percent by 2008 from the current 60 percent, and
raising the contribution rate to 16 percent by 2030 from the current 9 percent.
iii.Trade :Korea’s trade barriers remain high by OECD standards,
especially in the agricultural sector. Out-of-quota tariffs for agricultural
products averaged 50 percent in 2003; agricultural support is almost double the
OECD average; and domestic rice price share more than three times the world
level.
iv.Data : Korea's provision of data is broadly satisfactory for
surveillance purposes. A vast array of high-quality statistics is published,
with short time lags, providing a strong base for policy assessment. The
authorities' also plans to build on this base by developing more comprehensive
data on the financial and fiscal sectors.
Korean growth has a high standard
deviation in the last 10 years at 4.8 percent, so a shocked of one standard
deviation would imply a 0.8 percent decline in real GDP in 2005. The scenario
is due to the exchange rate depreciates by 5 percent. The primary fiscal
balance would fall as revenues declined while primary. Spending is unchanged in real terms, but
the current account surplus would rise as imports declined.
Public debt remains below 50
percent of GDP even in the face of extreme shocks. In the baseline, public debt remains broadly stable
as a ratio to GDP, as the central government budget returned to balance
(excluding the accumulation of social security funds) in 2008 in line with the
government’s medium-term fiscal plan, and as GDP growth offsets the increase in
debt due to the planned rollover of guaranteed bonds into treasury bonds
amounting to 8 percent of GDP. The shock to real GDP has the greatest impact,
lifting public debt to 46 percent of GDP by 2009, but the shocked was extreme,
with a permanent GDP fall of 18 percent below its historical average, and the
primary deficit rising by 4 percentage points of GDP. Public debt rises to 34
percent of GDP with variables at their historical average, but this is due to
the social security surplus was small in the past and because of the impact of
the 1997–98 crisis on the fiscal balance. Under the above country specific scenario,
public debt rises modestly, to 25 percent of GDP.
External debt is most
sensitive to exchange rate shocks, but the shocked of the assumed magnitude appeared
very unlikely Korean external debt remained about 25
percent of GDP in the baseline, as the current account surplus declined toward balance
and as net non-debt creating inflows decline from the high levels after the
crisis. Most shocked relatively modest impact on the external debt path, but
the two exchange rate shocks have a substantial impact:
• 30
percent exchange rate depreciation lifted the external debt ratio to 42
percent;
• two standard deviation shocked lifts the external debt
ratio to 62 percent—the exchange rate falls by 55 percent given the 13.5
percent standard deviation of the exchanged rate due to the volatility in
1997–98. Such large permanent shocked to the real exchange rate seem highly unlikely
for a manufactured goods exporting country like Korea
South Korea: During
the recession years: 2008-2009
The recent global financial crisis,
which originated from the subprime segment of the U.S. mortgage market,
quickly spread through financial and real channels, and severely affected many
economies. Korea’s economy too was hit by the global financial crisis due to
the sudden drying up of liquidity and the collapse of global trade despite
having strong macroeconomic fundamentals before the outbreak of the crisis.
Given the characteristics of its financial system and economy, Korea was
vulnerable to the disruptive effects of an unanticipated external shock. Macroeconomic
performance in the years leading up to the global crisis was strong, and the
banking system was adequately capitalized and with little exposure to
securities at the heart of the crisis. However, balance sheet vulnerabilities
had been building up in other parts of the economy, making the Korean economy
susceptible to shocks. Short-term foreign currency debt of the banking system
and household and small- and medium-enterprise (SME) debt had risen sharply in
the years leading to the global crisis.
The impacts of the financial crisis to Korea were:
1. The country’s GDP was reduced by 4.58% in year
2009.
2.Triggered by a flight-to-safety, the country risk premium of Korea rose
sharply while its currency depreciated abruptly. Korea’s country
risk premium had been rising gradually during 2008 along with the depreciation
of its exchange rate, reflecting the rise in global risk aversion. Following
the bankruptcy of Lehman Brothers, Korea’s risk premium reached about 400 basis
points and the won lost around half of its value.
3.The crisis also worsened household and firm balance sheets, and led to an
increase in their borrowing costs. The deterioration on the firms' side
was much larger, since these companies were exposed both financially and
economically through their dependence on exports. The worsening of the
nonfinancial sector's balance sheet was reflected in its cost of borrowing, and
the external financing premium rose by about 200 basis points during the
crisis. Higher funding costs worsened the nonfinancial sector’s balance.
4.The
developments in the financial indicators affected the real aggregate variables
with a lag, and the rise in borrowing costs of the nonfinancial sector and the
fall in overall exports contributed to the contraction in investment and output
during 2008–2009.
5. The impact of the global financial crisis on
the Korean economy and the accumulated and lagged effects of financial
instability on macroeconomic variables suggest that an IT framework
incorporating financial stability indicators could be more preemptive and
better insulate the Korean economy from such external shocks.
However,
even renowned financial organizations, such as the International Monetary Fund
complimented the resilience of the South Korean economy against various
economic crises, citing low state debt, and high fiscal reserves that can
quickly be mobilized to address any expected financial emergencies.
South
Korea was one of the few developed countries that were able to avoid a
recession during the global financial crisis, and its economic growth rate
reached 6.1 percent in 2010, a sharp recovery from economic growth rates of
2.3% in 2008 and 0.2% in 2009 when the global financial crisis hit. The
unemployment rate in South Korea also remained low in 2009 at 3.6%.
Further
to that, South Korean automakers have been generally much more profitable than
their US and Japanese counterparts, recording strong growth even in depressed
markets such as the United States. Hyundai-Kia took significant advantage of
the prolonged automotive crisis by producing affordable yet high quality and
well designed vehicles. Rapid globalization has seen state of the art factories
being built in several countries including Slovakia, the United States and
China. In addition to that, Hyundai offered customers who have lost their jobs
to return a new-car purchase for a refund. South Korean automakers therefore
had a competitive advantage against expensive luxury vehicles and SUVs from US,
Japanese and German automakers.
During
the fourth quarter of 2008 to the first quarter of 2009, which was the height
of this automotive crisis, the extremely weak South Korean WON, especially against the US dollar and Japanese yen,
significantly boosted the price competitiveness of South Korean exports in key
markets.
South
Korean’s government and Central Bank have taken the measures below in averting
recession in the country’s economy:
1.Interest-rate
cuts and government spending. The central bank kept its benchmark interest rate
unchanged at an all-time low of 2%. The BOK had slashed its base rate by 3.25
percentage points to prop up the $1 trillion economy.
2.The
government has unveiled a series of measures to boost the economy, including a
28.9 trillion won ($21.3 billion) stimulus package.
South Korea 2010 –
Economic recovery
Further
to economic downturn facing by the country in 2008, two macroeconomic measurements
to mitigate the effect of recession both monetary and fiscal policy has been
introduced simultaneously by Central Bank and government of South Korea.
For
instance, when a central bank cut and kept interest rate unchanged at an
all-time low of 2%, its reduces the cost of external financing for nonfinancial
sector and increases the demand for such financing. The non financial sector
comprises homeowners, construction companies, entrepreneurs, wholesale
producer, capital producer and retailers. A greater volume of external funds
does not just increases aggregate investment and consumption but also raises
the leverage of firm and household balance sheet. This may lead to buildup of
systemic vulnerabilities in the economy if, for example, monetary loosening is
in the context of an already highly indebted nonfinancial sector. Since the
impact of many types of shocks on real activity depends on the degree of
leverage in balance sheets, monetary policy could potentially play a role in
limiting the system-wide buildup of leverage, and the subsequent evolution of
prices and output when shocks hit an economy.
As
we may aware interest rates and inflation rates tend to be inversely related, therefore
its vital for Central Bank to monitor closely fluctuation of both inflation and
interest rates to ensure lower interest rate not trigger increase in inflation
rate, in South Korean case, reduce in interest rate has effectively
accelerating the economy recovery due to their ability in maintain inflation
rate at relatively lower 2.8% in 2009 and 3.0% in 2010.
The
economic recovery process has been further enhanced with increase in government
spending; the South Korean government has unveiled a series of measures to
boost the economy, including a 28.9 trillion won ($ 21.3 billion) stimulus
package, that include pursuing policies aimed at adding steady structural
adjustment of the economy such as channeling funds into renewable energy
resources and negotiating free-trade agreements and business friendly policies to attract FDI (foreign direct
investment) as well as local private investments
South Korea Economic
outlook overview 2011 and beyond
According
to The Economist Intelligence Unit of South Korea (EIU), the country economic
outlook will remain positive and relatively stable for year 2011 till 2015, the
research anticipate GDP will rise an estimated 3.8 to 4.1 percent annually
throughout the five years forecasting period, the projected growth will be
driven by fiscal spending, recovering private consumption, and corporate
investment with both International and domestic economic condition being a
major factor
International condition
World
economic recovery is still on track but there seems little sign of any
narrowing gap between developed nation/ advanced countries and newly emerging
countries in what has been termed as the two-speed global recovery. In that
sense newly emerging countries such as China has maintained its strong growth
trend on the basis of domestic demand in line with the large scale of rise in
income and consequently rise in domestic consumption compare to USA which show
mild economic recovery with both labor and housing market is yet to show any
good recovery momentum whilst Euro debt problem facing by certain EU member
state are likely to act as a factor for market unrest for considerable time to
come. With that kind of two-speed global recovery, world economies are
forecasted to growth around 4% in 2011 to 4.5% in 2012.
Domestic Condition
Fiscal
spending still remain major economic stimulus to the South Korean Economy,
budgetary expenditure for this year has been increased 6% percent compared to
2010, while for year 2012 there will be
a 4% increase to 287 trillion Won.
The extend of budgetary surplus during recession and continued during first
half of 2011 will be gradually scale back, as government intends to achieved
balance budget by 2013 or 2014.
Private Consumption
and Corporate Investment
Household
purchasing power is forecast to expand due to higher incomes resulting from
continued economic upswing. Households are also expected to become more
consumption-minded, whilst corporate investments are expected on upward as
growth trend are maintained. World and domestic demand for IT products and
automotive are expected to increase.
Exports
are forecast to continue on their strongly upwards track, boosted by the
advanced countries sustained recovery mode and strong growth being registered
in newly emerging countries. Others economic indicators in percentage are
listed below.
Economic indicator
outlook in percentage (2010 – 2012)
Year
2010
2011
2012
GDP
6.1
4.5
4.7
Private Consumption
4.2
4.1
4.3
Corporate investment
22.8
7.9
7.6
Exports
16.1
9.6
12.5
Imports
20.3
10.1
11.1
Unemployment rates
3.7
3.5
3.4
Consumer price inflation
2.9
3.5
3.2
Core inflation
1.8
3.1
3.1
Source: Central Bank
of Korea
Challenge
1.Political
Stability
Despite above positive economic outlook
indicator, any political instability within may affect forecasted economy.
Since independence relations with its northern neighbor remain a major concern,
North Korea will always a major treat to South Korea security and stability,
particularly over North’s fragile economy and its nuclear ambition. Latest incident
happen in November 2010 that involved geopolitical risk following the North
Korean attack on Yeonpyeongdo. An uncertainty on whom will be a successor of
current President Lee Myung-bak has raise concern on how future direction of
South Korea economic policies will be. President Lee who successfully leading
the nation economic recovery with his robust and innovative economic policy is set
to end his 5 years presidential terms in February 2013.
2.Uncertainty
in export demand
Being dependent on
export, the prospect of South Korean economy is depend largely on how world
economic condition, the loss of relative
wealth among resident in developed markets around the world which could prevent
a strong rebound of export prospects in those market. If demands for South
Korea products abroad remain subdued, this could exert downward pressure on
relative wealth within the country and consequently dampen domestic demand and
economic recovery. According to EIU such scenario could mean South Korea
economic trajectory will be less smooth than anticipated.
Conclusion
During
the years 2000 to 2007, South Korea has facing household and SMEs deficits due to high of credit issue. Most of the corporations have reluctant
to invest domestically, mainly because they are discouraged by the highly
regulated labor market. As such, restarting the domestic engines of growth is
required through providing
a Macroeconomic Spark, Reviving Household Spending, Revitalizing the Small and
Medium Enterprises and Unleashing Corporate Investment.
Consequently,
during recession (2008-2009), South Korea had experienced the drying up of liquidity and the collapse of global trade,
despite having strong macroeconomic fundamentals before the outbreak of the
crisis. To overcome the recession, South Korea has implemented the fiscal
and monetary policies successfully.
Over the
past several decades The Republic of Korea has achieved a remarkably high level
of economic growth which allows the country to bounce back from being force to
get assistance from International Monetary Fund (IMF) in1998 economic downturn
into the ranks of the Organization for Cooperation and Development (OECD).
Today South Korea is a 13th. Largest economy in the world.
This
analysis has helped us in knowing the economic background of South Korea and
how they have overcome the economic crisis. This indirectly shows us that different
measures or economic tools were taken by various countries to overcome
recession across the world according to suitability of policies and most
importantly, each countries’ economic fundamentals.
