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Japan, South Korea explore free trade Political differences once in existence between Japan and South Korea once hindered the import and export industries of both companies. Now, with S. Koreas economic recession and Japans economy staggering, there has been much conversation over the possibility of a free trade zone consisting of the two countries. This meaning the free movement of good, capital and people as President Kim Dae-jung of South Korea conveyed his governments position to gradually lift its countrys ban on the Japanese culture.
In the past, Japans trade relationship with South Korea had been heavily restricted but with more meetings on the rise, South Korea promised that the previous discriminatory regulation on Japanese products would be eliminated in hopes to reduce South Koreas trade deficit with Japan. Prospects of the free investment agreement should be reached in two years. Largest Chaebols Pledge to Restructure Raises Doubts The five largest business groups of South Korea, known as chaebols have promised to downsize, selling off some of their assets in order to reduce the debt-to-equity ratio but this promises is raising skepticism. The top five chaebols all claimed that they would reduce their affiliates by 40 - 70 % and their debt-to-equity ratio to 2: 1. However, the trend within the companies is showing absorption of their smaller companies rather than the restructuring and elimination of some of the companies affiliates. In addition, rather than reforming and reducing, companies such as Hyundai has launched a 6 -year $ 900 million tourism project with North Korea.
Other chabot companies have also entered into various expansion expeditions, using the merger of their smaller companies to have a decreased number of affiliates but no real cuts of reform or restructuring have been made since their promise in early December. With its economy staggering, nation doubts itself There is a fear that if Japan does not recover from its economic crisis, Japan alone might trigger a worldwide recession. A world consensus shows that, given its overwhelming size and presence in the entire Asian economy, unless Japans economy recovers, Asian countries wouldnt be able to expect a recovery in their own economies. On top of which, Japan was urged to help other Asian economies ride out the crisis by providing financial and other support, promoting Japans government to announce a $ 30 billion program of assistance extended to countries such as Indonesia, Malaysia, Thailand and South Korea. The program came second to the already agreed upon $ 42 billion Japan provided the International Monetary Funds bailout package to Asian countries with a currency crisis. There is a possibility that the economy will not be able to return to growth in fiscal 1999 despite the governments prediction for a 0. 5 % growth.
Should this growth not occur, Japan would suffer from economic doldrums leading to its nation further into self-doubt and a loss of direction.
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