Lee’s economic thinkers advocate deregulation

The economic brains President-elect Lee Myung-bak chose to surround himself with during his run for office belong to lawmakers, professors, chief executive officers and former bureaucrats, including some from the current administration. They were the ones behind Lee’s campaign promises to deregulate, cut taxes and privatize state-owned companies and banks.
Former Finance Vice Minister Kang Man-soo has been Lee’s chief policy coordinator. He worked as a member of the Grand National Party’s national innovation committee when Lee was the committee chairman in 2001.
When Lee became Seoul mayor, Kang became head of the Seoul Development Institute, a city think tank. It was Kang’s idea for banks to take on the high interest loans made by private lenders to 7 million debtors and eliminate their bad credit records.
Kang is also one of the biggest contributors to the campaign’s economic policies. He dealt with international finance and tax policies when he was vice minister.
Yoon Jin-sik, the current administration’s first commerce minister, also worked for Lee. He was a Blue House secretary when Kim Young-sam was president. He is famous for personally warning President Kim of the possibility of the Asian financial crisis, ignoring the chain of command.
GNP Congressman Lee Jong-koo criticized the current administration’s real estate policies, calling the comprehensive real estate tax a punitive measure to hurt the rich. President-elect Lee promised to ease real estate taxes, especially for those who own a single home. GNP lawmakers Yim Tae-hee and Lee Hahn-koo are also credited with crafting economic policies for the campaign. Both Lee and Yim used to work for the finance ministry.
Chang Soo-man, the former head of the Busan-Jinhae Free Economic Zone Authority, is the deputy chief policy coordinator and oversaw economic policy development along with Korea University professors Kwak Seung-jun and Kim Yun-hwan. Kwak’s father held a senior position at Hyundai Engineering and Construction when Lee was the company’s CEO. As a specialist in environmental economics, Kwak was responsible for reviewing the viability of building a canal connecting Seoul and Busan.
Chang said the current government’s policies regarding free economic zones have not been successful. President-elect Lee also said he would designate the Saemangeum reclaimed area as a free economic zone and make the Incheon free economic zone an economic hub.
“The two most important conditions have not been met: deregulation and infrastructure,” Chang said. “Regulations are in place and provincial governments just don’t have enough money to build infrastructure. The central government should take over and pay for infrastructure, and free economic zones should be given autonomy.”
Chang also said the next administration should decide whether to create more zones or make the entire country a free economic zone.
Dankook University Professor Kang Myung-hun and Dongduk Women’s University Professor Kim Tae-joon were involved in putting together the Lee campaign’s deregulation policies. Lee promised that he would abolish regulations banning conglomerates from investing in non-financial companies and banks. The law is especially controversial.
“The issue is closely linked to the privatization of banks,” Kim said.
Industrial Bank of Korea, Woori Bank and Korea Development Bank’s investment banking businesses are likely targets of privatization, Kim said.
“Our position is to speed up the privatization of Korea Development Bank. The Industrial Bank of Korea now performs almost identical services to commercial banks and might as well be privatized,” Kim said. The Industrial Bank of Korea originally specialized in loans to small and midsize companies.

By Limb Jae-un Staff Reporter [jbiz91@joongang.co.kr]