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The Korea Herald
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THE INVESTOR
March 29, 2024

Economy

Daunting tasks await new president

  • PUBLISHED :May 10, 2017 - 00:11
  • UPDATED :May 10, 2017 - 00:11
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[THE INVESTOR] From the controversial deployment of a US anti-missile system to inter-Korean relations and a constitutional revision, Moon Jae-in’s presidency is laden with many urgent tasks.

However, he is likely to face an uphill battle in dealing with many of the issues, as potential foes outnumber friends in the National Assembly. 




Moon is backed by the liberal Democratic Party of Korea that holds 119 of the 300 National Assembly seats. While the party currently holds the largest number of parliamentary seats, it lacks the majority needed to help him push through his plans unchallenged.

Most of the remaining seats are held by parties with little affection for Moon and his party.

The two conservative parties – the Liberty Korea Party and the Bareun Party – together hold 126 seats, and both stand worlds apart from the Democratic Party on key issues including North Korea, THAAD and labor reforms. 

This is why Moon has pledged unity and bipartisanship in state management.

“To form a government of unity and harmony, I will work together with anyone -- from rational progressives to reform-minded conservatives -- regardless of their party affiliation,” he said. 

A revision of the Constitution, last amended in 1987, up to the changing times has emerged as a major post-election task for the incoming president, as well as the National Assembly.

A parliamentary special committee is to begin work in June, setting out to review flaws in the current five-year, single-term presidential system, as evidenced partly in the impeachment of former President Park Geun-hye, and to try to come up with an alternative. 

While building coalitions across the aisle on key issues, the Moon administration must also strive to heal the deep rift among the public over former President Park, who is now standing trial on corruption charges.

On the economic and business front, the president also faces the difficult task of preparing the Korean economy for the next era of growth amid low birthrates and a rapidly aging population. He will also have to take a new approach to chaebol, the large family-owned conglomerates that have driven the local economy for decades through comfortable ties with politics. 

On his campaign, Moon said he would push to reform the top 10 conglomerates, in particular, including Samsung, Hyundai Motor, SK and LG.

The four take up about half of the local stock market’s value, according to the Korea Exchange.

As Samsung Electronics Vice Chairman Lee Jae-yong stands trial for bribery in relation to the scandal involving former President Park, the key point for the new president will be whether they will push conglomerates to establish a transparent management structure and tackle complex cross-shareholdings.

“The environment is building up for a new president to actually push for chaebol reform. If an opposition party takes power and fails to do so, it is very likely that Korea will face an economic crisis,” said Park Sang-in, professor at Seoul National University, in his book, “Chaebol Reform, Why Now,” published in March.

For the past five years, the economy has slowed with annual growth failing to reach 3 percent since 2012, except for a rise of 3.3 percent in 2014. The low birthrate and aging population are likely to hurt domestic demand and raise welfare costs, pulling down overall growth.

Moon will take office in the face of a tricky diplomatic and security environment.

Having carried out a fifth atomic bomb test last year, North Korea claims to be on the verge of mastering the technology for an intercontinental ballistic missile capable of striking the US mainland. Tension on the peninsula has soared to a fresh high in recent months as Washington staged a series of show of force and warned of military action. China, a top partner of trade, tourism and investment and a core stakeholder in multilateral talks aimed at denuclearizing the North, has been taking crippling economic retaliation over Seoul’s decision to house the US’ Terminal High Altitude Area Defense system. Following a brief respite, relations with Tokyo have been frayed yet again by a girl statue that represents Korean women who were forced into sex slavery during World War II.

These factors will come together to examine the new South Korean leader’s credentials as the negotiator-in-chief. And yet, there is another twist to the test: he is encircled by a league of leaders who assert their respective agenda like no other -- take Kim Jong-un of North Korea, Donald Trump of the US, Xi Jinping of China, and Shinzo Abe of Japan.

Given the alliance with the US being the mainstay of security, the new president’s first and foremost task is likely to build a rapport with Trump, making up for the missing initial chances due to the impeachment of former President Park that caused a monthslong leadership vacuum.

Concerns have been growing that Seoul may be passed over as Trump and Xi have been discussing the fate of the peninsula since their summit last month. Then the erratic US leader fanned the flames by demanding Seoul pay US$1 billion for the THAAD battery even though terms had already been agreed.

The incoming president is also tasked with balancing territorial and historical disputes and an increasingly important security partnership with Japan, as well as renegotiating the December 2015 settlement on the sex slavery issue that drew fierce criticism from the victims and the public. More recently the two countries were engaged in another string of spats over a new sex slave memorial set up in front of the Japanese consulate-general in Busan, as well as Tokyo’s renewed claims to the Korean islets of Dokdo.

On inter-Korean relations, the most daunting challenge for the incoming president may be to chart a path to deliver on his own promises to rebuild trust and economic ties with a counterpart who refuses to bend to growing international pressure over his nuclear ambitions.

As part of his election pledge, Moon laid out a vision to craft what was dubbed the “New Korean Peninsula Economic Map.” It calls for “economic belts” and traffic networks along the eastern and western coastal areas by connecting the now closed Kaesong factory park, Mount Kumkang and Rason, a special economic zone near the Chinese border, through China and Russia.

But the ambitious plan will be highly difficult to move forward without substantial headway on the denuclearization front.

The Kaesong complex and Mount Kumkang tours have been a perennial source of contention over whether Seoul’s funding would constitute a breach of international sanctions banning the transfer of “bulk cash.” Declaring the park’s shutdown in February 2016, the Park Geun-hye government itself said Pyongyang has siphoned off the funds from the South for military purposes. 

Another potential flashpoint is North Korean human rights. The issue has gained global traction in recent years, going from the UN Human Rights Council to the General Assembly then even to the Security Council, while drawing rebukes from Pyongyang, which called the discussions an attempt to topple its regime.

Meanwhile, it also put the president on the hot seat on the campaign trail after former Foreign Minister Song Min-soon argued in his memoir that Moon, then the presidential chief of staff, instructed intelligence officials to seek Pyongyang’s opinion before abstaining from a 2007 UNHRC vote on a resolution on North Korean human rights. Controversy persisted despite his denial, with rivals and critics accusing him of having forged “backdoor ties” with the communist regime.

By Choi He-suk, Kim Yoon-mi & Shin Hyon-hee/The Korea Herald
(cheesuk@heraldcorp.com)(yoonmi@heraldcorp.com) (heeshin@heraldcorp.com)











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