Finance Ministry Papers Over OECD’s Criticism of Korea’s Property Policy
By Lee Hyo-sik
Staff Reporter
The Ministry of Finance and Economy is coming under criticism for its cover-up of critical assessments and recommendations on the Roh Moo-hyun administration's real estate policies, made by the Organization for Economic Cooperation and Development (OECD).
Last Thursday, the Paris-based organization unveiled its 2007 and 2008 growth forecast for the South Korean economy, while making a number of suggestions on the country's fiscal, monetary and other policy issues.
But in the OECD report, translated in Korean and released by the ministry, there was no mention of the organization's proposals, that were critical of the current administration's real estate policies. Critics say the ministry tried to conceal the OECD suggestions that disapprove of its property policies.
In its economic outlook report, the organization said Korea's monetary policy should focus on the medium-term inflation target, while concerns about a possible bubble in the housing market need to be addressed through measures aimed at increasing supply. ``In this regard, price regulations on new houses, which were introduced to stabilize the real estate market, should be gradually phased out,'' it noted.
But the ministry's press release in Korean did not include the part about property regulations, such as the disclosure of the prime costs of housing construction and a cap on apartment sales prices.
A ministry official explained it did not intentionally drop the OECD's suggestions on government's real estate policies, saying it unknowingly left the part out while trying to summarize the original report.
But this was not the first time for the ministry to exclude contents that are negative about government real estate policies from OECD reports.
In June, it left out OECD proposals on the administration's property policies from its press release. At that time, the international organization dealt with Korea's real estate market and made a range of proposals on government policies, extending over 30 pages out of the total 177.
The OECD said the country's monetary policy should focus on the mid-term inflation target, saying a series of monetary tightening measures, which began in late 2005, are primarily aimed at curbing rises in housing prices. ``If Korea raises interest rates to mostly rein in property prices, it may add an upward pressure to the won against the dollar and other major currencies, weakening the price competitiveness of local products on overseas markets and dampen domestic consumption,'' it stressed.
But the ministry distorted such OECD recommendations by quoting the organization as saying ``government's recent real estate policies have worked in preventing property speculative demand and stabilizing housing prices over the short term.''