The Korean Scene PREPARING TO DO WITHOUT THE AID OF THE U.S.A.

Press, Volume CV, Issue 30982, 11 February 1966, Page 10

The Korean Scene PREPARING TO DO WITHOUT THE AID OF THE U.S.A.

[By the Seoul Correspondent of the "Financial Times J (Reprinted by arrangement I

Now that the Americans are more firmly committed to South Vietnam than ever, with a commitment in terms of money and men that is likely to continue for many years, people are again beginning to talk of Vietnam as “another Korea.” Ironically, just as Vietnam is becoming another Korea, the Americans are reducing their aid to Korea and the Koreans and ptepating to do without Uncle Sam altogether within a few years.

tn direct economic aid alone, the United States has poured more than 3000 m dollars into Korea, and some economic experts do not believe that Korea will he able to. stand on her own feet so soon. Their view is not shared by the Korean President, Park Chung Hee. Only a week ago, in the State of the Nation address to the National Assembly, he said: “I am convinced that our long-cherished goal of will be attained before many years are past" This would lead to an “affluent society” by the late 1970’5, he added.

To accomplish the goal, Mr Park proposes three stages: first to lay the foundation for “economic take-off" by the end of this year, second to industrialise the country by 1971, and third to “modernise" it | and realise the affluent society 'by 1976. Each stage is repre- | sented by a five-year development programme. 1962 Plan The first plan which began in 1962, a year after this soldier - turned - politician seized power in a coup d'etat, will end this year. According to Mr Park, the country achieved an average annual growth rate of 7.6 per cent during the last four years, much higher than the planned goal of 6.8 per cent. He specifically cited as examples of success increased food production, higher exports (£64.3m last year, compared with £11.4m in 1960), marked development in manufacturing industries (17.5 per cent growth last year) such as cement, textiles, fertiliser, and doubled electric generation facilities (770,000 kilowatts). Now the Government is formulating the second fiveyear plan to start next year. The general outlines that have been prepared call for an annual growth rate of 7 per cent., self-sufficiency in food, exports of goods and services totalling £2som in 1971, reduction of the unemployment rate from the present 13.8 per cent to 10 per cent., holding down the annual population growth rate from 2.9 per cent, to 2 per cent, and a 50 per cent increase per capita national income to 150 dollars. Heavy Industry Stress will be placed on development of machinery, steel and petrochemical industries. A survey report by six leading Japanese steel manufacturers is under study for construction of an intergrated iron and steel mill capable of producing Im

tons a year. For the petrochemical industry, the capacity of the State-owned oil refinery at Ulsan is to be expanded from the present 35,000 barrels of crude a day to 120,000 barrels, and eight plants processing its byproducts are to be built. The question is where to find the money. It is estimated that a total of £l2lom would be needed to finance the new five-year plan. The Government hopes to raise £6Blm domestically but the rest will have to come from foreign countries. The planners reckon that Japan will provide £l92m in grants and Government loans under the terms of settlement last vear for “normalisation” of relations with Korea. They expect to get £l46m from the United States in aid grants and long-term, low-interest loans and the remaining £l9lm in commercial credits from various countries. More difficult is the question of how to mobilise domestic capital. Shortage of local funds is responsible for failure to complete many industrial projects launched under the first five-year programme. Altogether 153 factories of various kinds were

planned under the programme: only a little more than 30 have been finished. 30 P.C. Interest In a move to induce privately held money into bank coffers and use it for develop ment projects, the Govern ment late last year raised the interest rate to 30 per cent a year. Although there was an initial increase in bank sat ings, it soon fell off again The Government plans to boast the national savings rate to 14 per cent of gross national income by 1971 from 7.7 per cent last year. But the sadly low income level <■( most Koreans weakens the prospect for success. Economic progress hinges on continuing political stability, and this is a big “if." Political crises can always flare quickly in a backward country. Corruption and nepotism still plague the Government, and next year South Koreans will elect a new president and also a new legislature. At the moment it looks as if Mr Park will certainly be re-elected, and the confidence he displays permeates to the farmer on the rice paddies.