President Lee to focus on less-privileged in second half of term

By Na Jeong-ju

Staff reporter

Entering the second-half of his five-year term, President Lee Myung-bak appears to be shifting his policy focus from chaebol-backed economic growth to addressing the needs of less-privileged people and smaller corporations to secure broader support for his government.

By the nature of serving a single term, the second half of the five-year Korean presidency is a critical time when a President must be wary of becoming a “lame-duck” early on. President Lee took office in February 2008, largely on a pro-business ticket.

One indication of the major policy reorientation came earlier this month when he received a briefing on the future of the country’s “green growth” policies at Cheong Wa Dae.

Expressing deep disappointment in conglomerates that “are not active in investing and creating jobs,” he called for more attention to small and mid-sized enterprises (SMEs), according to his aides.

When he visited a traditional marketplace in Hwagok-dong, Seoul, Sunday, Lee criticized consumer financing firms affiliated with chaebol and big banks for demanding “abnormally high” interest from borrowers.

“I don’t understand why they do business like some hardhearted moneylenders. It is a matter of corporate responsibility,” he lamented.

The next day, the Financial Supervisory Commission launched an investigation into interest rate policies at consumer financiers, saying it will recommend they lower their rates, if necessary.

The episodes suggest a significant change in Lee’s perception of conglomerates.

When the country was hit by the global economic crisis in 2008, the government eased regulations on chaebol and encouraged the expansion of their business efforts by cutting taxes to prevent the economy from falling into a recession.

On numerous occasions, Lee called on firms to increase investment and create more jobs. The economy has rebounded quickly, but sluggish corporate investment and the high youth unemployment rate continue to remain unsolved problems here.

The policy shift also reflects a sense of crisis in the ruling camp following the governing Grand National Party’s unexpected defeat in the June 2 local elections, which had been considered a mid-term referendum on Lee’s presidency.

Presidential aides said the conservative leader would not give up his “centrist pragmatism” aimed at embracing different ideological and social groups and focusing on middle-income earners and less-privileged people.

Lee has reshuffled the presidential secretariat, and is widely expected to announce a new Cabinet lineup early next month to chart a fresh policy roadmap.

The biggest question is whether Prime Minister Chung Un-chan will survive.

The fate of the 61-year-old former Seoul National University president has become increasingly uncertain since the National Assembly voted down the government-proposed bills on the revision of the Sejong City project last month.

“The President will readjust policy priorities in a way to strengthen his vision of centrist pragmatism and enhance services for low-income families and smaller firms,” said a presidential spokesman. “Such efforts will be based on closer communication with the public and the ruling party’s leadership.”