2009.01.0610:30:00UTC+00South Korea plans green stimulus package

South Korea plans to invest 50 trillion won, about $37.87 billion, in eco-friendly projects over the next four years, in an attempt to kick-start the faltering economy, the Finance ministry said Tuesday. The plan was approved at a cabinet meeting held earlier and is expected to create one million new jobs in Asia's fourth largest economy.

In November, the number of new jobs created in South Korea slipped to a five year low, while the economy posted a sequential 0.5% growth in the third quarter, the slowest rate of growth in the last four years.

The government's stimulus plan calls for investing 39 trillion won in nine major businesses, while 11 trillion won would go to 27 related businesses, the Ministry of Strategy and Finance said. In the nine major businesses, 18 trillion would be spent on improving the use of the nation's four major rivers and in construction of dams, reservoirs and other water management facilities over the next four years. This was expected to create 280,000 new jobs. Further, 2 trillion won would be invested in small and medium dams both to tap new water resources as well as to help control flooding. This was expected to add 30,000 new jobs. "South Korea suffers an average of 2.7 trillion won in damages from flooding every year. Dam construction and overall river-streamlining efforts will significantly reduce the damage while at the same time generate leisure and tourism demand in provincial areas," the Finance ministry said.

Other moves include a push for building "green" transportation networks like low-carbon emitting railways, bicycle roads and other public transport systems. This is projected to cost 11 trillion won, while creating 160,000 new jobs. The government would also spend 3 trillion won to expand existing forest areas. The public sector would help conserve energy and electricity by constructing 2 million "green" homes and offices.

"Under the Green New Deal project, we will be able to obtain a potential growth engine, while at the same time generating jobs without hurting the environment," the Finance ministry observed. In addition, the government would launch a presidential commission to quicken the process of creating 960,000 new green jobs, Prime Minster Han Seung-soo said. To this end, the government would develop diverse financial, tax and regulatory benefits for businesses. The government would create a consultation body to push private sector companies to participate in the effort a big way.

"The government's top priority is to create more job opportunities in the face of the global economic crisis. At the same time, the government will actively implement green growth strategies to enhance its economic growth potential," Prime Minister Han said.

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