Yoon to slash some Moon economic policies, prune others
"Free democracy and a market economy," Yoon Suk-yeol promised in his first press conference as president-elect on Thursday.
"We face unprecedented challenges," he added, ticking off the headline issues weighing on the soon-to-be-inaugurated administration, including the pandemic, low growth and aging, and vowed to overcome them by upholding the values of an open society and economy and by fostering "integration and prosperity."
He stressed that his administration will guarantee opportunity for each and every person and create a dynamic country where individuals can be independent and freely express creativity and where the value of labor is respected.
Yoon said his administration will be focused on helping the private sector lead the economy rather than having the government at the helm.
The private sector will create jobs and strengthen the middle class, Yoon said, adding that a robust economy led by the private sector will also contribute to expanding welfare.
"Without growth, welfare, which is necessary, cannot continue," he said. Welfare "is only possible when there is a virtuous cycle of sustainable development and fair welfare."
Yoon promised major support to the development of innovative technologies, which will help Korea's economy enter a growth cycle.
The president-elect said while major changes will be inevitable for some of the projects that were being pushed under the Moon Jae-in government, those considered important will be continued.
Despite a swift rise in the ranks to become prosecutor general under Moon, Yoon started his campaign to reach the Blue House calling for the overturning of numerous economic policies considered to be the biggest failures of Moon's administration.
These includes income-led growth, real estate policies and the phasing out of nuclear energy, all of which were government rather than market driven.
The income-led growth policy pushed early in the Moon administration focused on increasing income by raising the minimum wage and upgrading contract workers to regular employees with full benefits.
Moon also championed a reduction of working hours.
The goal was to encourage people to increase consumption that would in turn boost the economy, lowering Korea's dependence on exports for growth.
The unprecedented economic policy hit business owners hard, especially those with small shops and other small companies. Smaller companies had to either reduce their business scale or increase hiring, which led to higher costs.
During his campaign, Yoon strongly criticized income-led growth and set a goal of raising the nation's potential growth from the current 2 percent to 4 percent by giving more freedom to the private sector.
This includes more flexibility in working hours, which could help small manufacturers operating around the clock. Other promises include extending tax benefits for small companies even after they become larger companies and easing up on regulations targeting so-called platform companies.
Real estate will be a big focus of the new administration and one area where Moon's policies will be most challenged.
The Moon government aggressively introduced policies aimed at cooling the property market. This included tightening the mortgage market, increasing taxes and controlling rent increases.
These measures backfired, with housing prices rising at an unprecedented pace as people rushed to get into the market before they were priced out of it. At the 11th hour, the Moon government changed course and pushed for an increase in supply.
Tenant protection legislation passed under the Moon administration drove up prices as landlords upped rents before the new law became effective.
Yoon is promising 2.5 million new housing units, 1 million of which will be in greater Seoul, and a lowering of property taxes. Homeowners have been hit hard by the higher taxes and resent being classed as real estate profiteers.
He wants to lower the comprehensive property tax, a national tax separate from local property taxes and levied on properties assessed at more than 1.1 billion won, and the acquisition and capital gains taxes on property.
To help first-time homebuyers, Yoon hopes to ease regulations on loans.
Currently for all apartments valued at more than 900 million won and located within areas designated as speculative — currently all of Seoul — the loan-to-value ratio is limited to 20 percent.
The Yoon government is expected to rollback Moon's phaseout of nuclear energy.
Upon taking office, Moon announced the end to nuclear energy in Korea even as it set ambitious targets for renewable energy.
There were concerns that the cutback on nuclear energy would raise energy prices, especially considering renewable energy is still unreliable.
Two nuclear plants were taken out of service, while reactors under construction were put on hold.
Yoon did not promise to build additional new power plants, but he promised to finish the construction of the Shin-Hanul No. 3 and No. 4, which have been suspended.
He also emphasized Korea's overseas nuclear efforts, which started with the building of a nuclear plant in the United Arab Emirates (UAE).
He plans to maintain nuclear energy at 30 percent of the total while pushing for the development of small modular reactors.
Possible choices for Finance Minister include Lee Seok-joon, chief of state affairs under the Park Geun-hye government, and Kim So-young, an economics professor at Seoul National University.
Lee, who was a career bureaucrat and also served as the vice finance minister, joined Yoon's campaign in its early stages. Although he later left the campaign, Lee was known to have set the basic outline of Yoon's economic policies.
Kim has been a strong voice against Moon's economic policies and is considered the architect of the candidate's policies prioritizing growth and allowing the private sector to operate more freely.
For Land Minister, former Vice Land Minister Kim Kyung-hwan, who served under President Park Geun-hye, is a good possibility.
He is currently working as an economics professor at Sogang University and has been participating in the formulation of real estate policies for Yoon.
He is known to have a keen understanding of the real estate market and its trends.
Kim may have played a role in developing the candidate's real estate policies of building affordable apartments to be sold near construction cost, easing regulations for property redevelopment and lowering property taxes.
Yun Hee-suk and Lee Hye-hoon, former Korea Development Institute researchers turned female politicians, are also possible choices for Yoon's economic team.
BY LEE HO-JEONG [firstname.lastname@example.org]