By Seo Jee-yeon
Staff Reporter

Both the ruling and opposition parties on Monday concurred on the need to stimulate the economy but they differed on the best policy tools for the job.

The governing Uri Party on Monday suggested an expansionary fiscal policy to stimulate the economy next year but the major opposition Grand National Party (GNP) proposed a tax cut to boost the economy.

Rep. Chun Jung-bae, floor leader of the Uri Party, told reporters on Monday that the government must draft an aggressive fiscal policy to pep up the economy next year, even at the risk of maintaining the budget deficit even longer. The government needs to spend more on investing in public infrastructure projects, research and development, education and small-and medium-sized companies, he said.

An Uri Party policymaker said, ``We have recommended the government set the budget deficit at no more than 10 trillion won, about 8-9 percent of next year’s total budget.’’

He also urged the opposition GNP to join in the launch of the three special parliamentary committees aimed at creating more jobs, removing regulations and charting future economic strategies.

On the other hand, the GNP said the expansionary fiscal policy, which started under the Kim Dae-jung administration seven years ago, failed in boosting the economy, Rep. Lee Han-koo of the GNP said.

GNP lawmakers called on the government to opt for bold tax reductions for individuals and companies, an option they contend would boost business investment and consumption.

The GNP also warned of financial collapse for the government if it continues to increase spending, as the deficit is expected to reach 3 trillion won next year.

As part of steps to pull the economy out of current trouble, the Uri Party is seeking ways of reviving corporate investment, a key to boosting the economy. Key regulations under debate reportedly include a plan to ban outside staff during strikes and to prohibit building plants in crowded regions like Seoul and adjacent areas.

However, the Uri Party made it clear that it has no immediate plans to scrap or ease limits on equity investment by the country’s large business groups.

``The ceiling on capital investment remains the centerpiece of the administration’s corporate policy,’’ Uri Party floor leader Chun Jung-bae, said Monday on a radio talk show.

Under the rule, the nation’s top 30 conglomerates are banned from making equity investments in subsidiaries or new companies in excess of 25 percent of their net assets.

The ceiling has drawn consistent complaints from conglomerates, or chaebol, but policymakers say this ensures that chaebol concentrate on their core business areas and that smaller companies are given the freedom to invest and expand their operations.

Officials within the Ministry of Finance and Economy are considering easing some rules on chaebol investment, but the Fair Trade Commission and reformers within the Uri Party oppose this.

jyseo@koreatimes.co.kr