Ryu Jin, chairman of the Federation of Korean Industries (FKI), warned that South Korea’s business environment is now more challenging than during the 1997 Asian financial crisis. Speaking at his inauguration ceremony after being reappointed as FKI chairman, Ryu said, “Key bills to support advanced industries are stalled in the National Assembly, and the golden time to revive our growth engine is running out. The Korean economy is not at a crossroads but on the edge of a cliff.”
His remarks came on the same day a high-level policy consultation between the government and ruling and opposition parties ended without progress on critical economic issues. Lawmakers failed to advance the Special Act for Strengthening Competitiveness and Promoting Innovation in the Semiconductor Industry, known as the “Semiconductor Special Act,” approve a supplementary budget, or develop a plan to rescue the National Pension from insolvency. Despite mounting concerns in the nation’s core industries—such as semiconductors and automobiles—political leaders remain mired in partisan disputes, squandering what Ryu called the economy’s “golden time” for action.
Global competition in future industries—such as artificial intelligence (AI), quantum computing, and autonomous driving—has only intensified following China’s launch of its DeepSeek AI model. In the United States, OpenAI unveiled its advanced Deep Research AI model, Tesla introduced the Grok-3 AI system, and Microsoft revealed its Majorana 1 Processor, a breakthrough in quantum computing performance.
Japan, engaged in a national effort to revitalize its semiconductor industry, has taken the lead in NAND memory stacking with Kioxia’s launch of the world’s first 332-layer chip. In the smartphone sector, China’s Huawei debuted the world’s first triple-foldable smartphone, surpassing Samsung Electronics for the first time. Meanwhile, China’s electric vehicle giant BYD, boasting world-class autonomous driving technology, has overtaken not only Hyundai Motor but also Tesla to become the world’s top EV exporter.
As Ryu warned, South Korea’s traditional strengths in semiconductors, smartphones, and automobiles are being eroded by global competitors. Yet the nation’s political leadership remains preoccupied with appeasing labor unions and tightening corporate regulations. Even a simple exemption from the 52-hour workweek rule for semiconductor R&D remains unresolved.
Without urgent reforms and bold action, South Korea risks facing an economic crisis even more severe than the 1997 meltdown.
