Grappling with weak growth momentum, the South Korean government vowed Wednesday to prop up corporate value-up efforts through tax cuts and other incentives, and expand global networks by clinching more free trade deals. They are part of comprehensive policy goals announced by the Ministry of Economy and Finance to achieve a vibrant economy, which also call for improving movement of people between social strata and better supporting the vulnerable. "South Korea accomplished unrivaled economic growth with the 'Miracle on the Han River.' But it is witnessing a sharp fall in the potential growth rate, while income and asset gaps have widened," First Vice Finance Minister Kim Byoung-hwan said. "Massive structural reform now becomes an urgent task to ensure a virtuous circle of economic growth and social mobility, which will help improve the quality of life and ensure economic sustainability," Kim said, vowing policy focus on how to facilitate innovation, ensure equal opportunities and improve social mobility. The country's potential growth rate, which means the maximum economic growth that can be achieved without triggering inflationary pressure, has fallen at a faster clip than other major countries since the 1990s to come to around 2 percent. It is forecast to fall further below 1 percent after 2035, according to the ministry. According to the plan, the government decided to push for reducing corporate taxes by 5 percent of increased shareholder returns compared with the average amount of the previous three years. How to induce companies to distribute larger dividends was key to the government's corporate value-up program, which aims to help improve corporate valuations and boost the local stock market. The government also vowed to scrap extra taxation for the largest shareholders of big firms bequeathing stocks to their family members. Under a five-stage system, South Korea has a tax rate ranging from 10 percent to 50 percent. An extra 20 percent is levied on those largest shareholders, which brings the ma ximum tax rate to 60 percent. The tax rate is the world's second-highest level after Japan, and some have called for a revision to align with the global standard, as it could also affect business continuity and entrepreneurship. To achieve an economy with high productivity, the government plans to nurture new service industries and invest big in artificial intelligence, quantum and bio sectors to lead the era of digital transition. It also set a goal of having the largest number of free trade agreements (FTAs) in the world by 2027, which is expected to help ensure stable supply chains, secure new markets and draw foreign investment. Currently, South Korea has clinched the second-largest number of FTAs. "We will strengthen strategic economic cooperation with developing nations by launching the so-called K-finance package based on the Economic Development Cooperation Fund," senior ministry official Kim Jae-hoon said. Global partnership is crucial for South Korea, in particular, as it has an export-driven economy and is heavily dependent on foreign natural resources. "We will also come up with tailored measures to attract Asian headquarters of global companies here to become the top three business hubs along with Singapore and Hong Kong," he added. Policy focus will also be on ensuring equal opportunities and the establishment of a fair compensation system, which will serve as a basis for sustainable innovation and social mobility. For the goal, the government pledged to relax regulations that hamper market competition and to extend support for victims of unfair market practices. The country plans to increase substitute holidays as part of efforts to help people better balance their work and personal life, and to address issues stemming from the dual labor market. Currently, New Year's Day on Jan. 1 and Memorial Day on June 6 are not given alternative holidays in the case where the public holidays fall on weekends, leading to the difference in the number of holidays each year. The government is also revi ewing designating specific days as holidays, instead of the current date-based system, which will create long weekends. Various supportive measures will be drawn up to help more women and young people land jobs, and to reform the education system, according to the ministry. Source: Yonhap News Agency