The Course of the New Administration in the ROK

|Korean Peninsula

The new government of the ROK will make a new departure, beginning with the inauguration ceremony of the new president on the twenty-fifth of this month. Domestically, it is planning a paradigm shift from an emphasis on, if anything, redistribution and welfare over the past decade, to an emphasis on growth and employment. In foreign affairs, more than displaying the independent diplomacy and the designating of itself as a balancer between the surrounding Big Four in Northeast Asia to date, it will try to restore relations with the United States which had weakened up to this point, and upon that foundation improve relations with other countries. It is thought that it will continue to give further definition to the so-called pragmatic course.

Unfortunately, the instability of the global financial economy, having its origin in the recent problem of subprime loans in the United States, the international high fuel and crude-oil prices, together with the unease on the domestic stock market and concerns about inflation, will probably become major obstacles to cleaning up the various negative legacies from past administrations, including polarization, and to realizing the “747” public pledge—within ten years average growth of 7% (with per capita GDP of US$40,000) and the seventh largest economy in the world. Early in the New Year they showed a position of backing away from a target of 7% doggedly being a potential rate of growth. Nevertheless, the senior official at the committee for the handover of the presidency, who participated at the most recent Davos meeting, did not budge from the obstinacy on a high growth rate. From the handover committee meeting on 5 February, it would appear that the policy issues of the new administration are things which come from a presupposition that they will be realized at the very least. The policy tools for these policy issues and the mutual antagonisms and contradictions, however, cannot be ignored.

First, looking at the blueprint for the management of affairs of state of the new administration, they raise policy issues broken down into 192 sectors, with five indicators of national politics (a market economy which is brimming with vitality, a human resource power, Global Korea, progressive welfare, and a government which looks to the people). A number of policy issues which I looked at by major sector are as below:

  1. Regarding the economic sector, the creation of three million new jobs via the adjustment of the standards for corporate taxation, small and medium-sized enterprises, the reducing of the lowest rate of tax, the expansion of tax breaks for investment in R & D, the abolition of limits to the total financial contributions of major industrial groups and the easing of regulations for holding companies, the easing of entry into the finance industry for business corporations, regulatory reform, presentation of a new-growth-engine vision, and the strengthening of the competitiveness of service industries, etc.
  2. Regarding the education sector, while aiming toward the independence of the university entrance exams interposed to date by the government, a project for the completion of English-language education in the elementary education curriculum, the establishment of autonomy in university management, and the introduction of a system of life-long learning courses, etc.
  3. Regarding the welfare sector, in order to construct a guarantee system for a sustainable society in an era of a dwindling birthrate and an aging population, the introduction of the reform of mutual aid pensions which have fallen into the red; the integration of the national pension plan and the basic old-age pension; the construction of a sustainable medical insurance system; support for the restoration of credit for the financially marginalized; the stability of the market via improvement of the taxation connected to real estate; and a home-ownership-oriented system of houses for sale, etc.
  4. Regarding the public sector, the construction of “5+2” extensive economic subregions, a 10% budget reduction, government-function and organizational restructuring, and the management reorganization of government institutions; and the distribution of the accompanying budget savings and surplus tax revenue to projects aimed at the stimulation of the economy and those on low incomes.
  5. In foreign affairs, by raising the solution of the DPRK’s nuclear programs to the highest priority, they will make their basis “Vision 3000: Denuclearization and Openness”, and the strategic alliance between the ROK and the United States. In this sense it will be a departure from the past “Sunshine” and peace policies.

In particular regarding the ROK–United States alliance, they will attempt to build a future-oriented and comprehensive alliance relationship, surpassing the level of a simple alliance, and sharing new values. Meanwhile, concerning the outstanding matter of the right to control operations in wartime, on which the ROK hasn’t seen eye to eye with the United States, in connection with the north’s nuclearization and the security situation in Northeast Asia they will ask about the possibility of renegotiation, moving up the year initially negotiated (2012). Then after early ratification of the ROK–United States FTA, and completion of FTA negotiations with the EU, Canada, Mexico and India which are under negotiation, they have their sights also on FTAs with Mercosur, China, Russia, the Gulf Cooperation Council, Peru, Australia and New Zealand. Regarding the key ROK–Japan FTA, the conditions and time for renegotiation have been continuously sought. Above everything else in the case of FTAs with advanced countries, they have raised the attraction of investment and the development of an environment to that end as top priorities and they will continue to concentrate on the competence of policies in the promotion of the Design Korea project.

In implementing the above policies of the new administration, however, the following several causes of concern also come to mind: the cooperation of the opposition on the amendment of 49 related laws accompanying the sweeping restructuring of government organizations; a national consensus on the Pan Korea Grand Waterway project; and overcoming adeptly the difficult problems on the supply side—such as the ordering, integration and rationalization of all manner of regional development projects accompanying the regulations for the capital region and the preferential treatment for the regions by the preceding administration, the reform of pensions and the privatization of public firms, the lowering of value-added tax on real estate, and a strict distinguishing of the disadvantaged.

With the legislative election on 9 April, a crucial test has come for the political competence of the ROK’s first CEO President—the central character in the salaried-employee myth—to be examined, and an assiduous frame of mind is imperative via a new partnership among the three countries of the ROK, China and Japan, facing up to China which has suddenly surfaced, along with the leaders of Japan with their diplomacy which emphasizes Asia, by taking advantage of the Beijing Olympics, the Sapporo environmental summit, and ROK–Japan shuttle diplomacy.

[Translated by ERINA]