Protesters urge political parties to pass the impeachment motion against President Yoon Suk Yeol in front of the National Assembly in Seoul, Saturday. Korea Times photo by Shim Hyun-chul

Various economic policies pushed by the Yoon Suk Yeol government are losing momentum as the country is suffering a leadership vacuum amid intense controversy over Yoon's surprise declaration and subsequent lifting of martial law last week, which left the country in political turmoil.

The failure to pass the impeachment motion against Yoon on Saturday has further heightened political and economic uncertainties. The main opposition Democratic Party of Korea vowed to continue pushing for Yoon's impeachment every week. In response, ruling People Power Party Chairman Han Dong-hoon vowed to pursue an "orderly retreat" of Yoon, indicating that he may call for the president's resignation instead of impeachment.

With confrontations between rival parties expected to continue, key economic legislation, including a special law to support the semiconductor industry, is likely to be derailed. The Yoon administration's flagship initiatives, such as the Corporate Value-up Program, are at risk of being abandoned as well.

As the sense of crisis intensifies, the Ministry of Economy and Finance held an emergency meeting with other government agencies related to the economy on Sunday afternoon and issued a statement pledging their utmost efforts to manage the economy as stably as possible.

“We will mobilize all available tools and take bold and swift measures in accordance with situation-specific response plans,” Finance Minister Choi Sang-mok said in the statement.

The ministries also urged the National Assembly to prioritize economic issues regardless of political divisions in a bid to enable businesses to find opportunities amid the global industrial war.

“We request that the 2025 budget be finalized promptly to ensure it can be executed normally from the beginning of next year. The special act for the semiconductor industry, crucial for our companies to survive in the global semiconductor war, must also be discussed without further delay,” Choi said.

Finance Minister Choi Sang-mok, front, along with other ministers related to the economy, including Trade, Industry and Energy Minister Ahn Duk-geun, second row second from right, announces a joint statement at the Government Complex Seoul, Sunday, pledging to manage the economy as stably as possible amid growing concerns over political and economic uncertainties in the aftermath of President Yoon Suk Yeol's emergency martial law declaration last week. Yonhap

According to relevant ministries, the semiconductor industry support policies and related legislation promoted by the government and the ruling party are at risk of being delayed indefinitely amid the ongoing crisis.

The special act aimed at promoting the industry's growth, which proposes exceptions to the 52-hour workweek and subsidies exclusively for semiconductor companies, is unlikely to gain bipartisan agreement.

Additionally, government measures to increase the integrated investment tax credit rate for semiconductor firms by 5 percentage points and to include R&D facility investments as part of the tax credit for national strategic technologies are also likely to be put on the back burner.

Other legislative initiatives, such as the inheritance tax reform plan, which includes lowering the top tax rate, and major projects, including a plan to uncover potential gas and oil reserves in the East Sea, are facing significant hurdles.

Policies related to the Corporate Value-up Program, such as a 5 percent tax credit on corporate taxes for increased shareholder returns, also appear to be on the verge of collapse.

However, certain bills that have already secured bipartisan agreement, such as the repealing of the financial investment income tax and the postponement of virtual asset taxation, are expected to be processed within the year despite the ongoing impeachment standoff.

Still, next year's budget is expected to face a rocky road until the final stages amid the political strife.

On Nov. 29, the opposition party railroaded a reduced budget proposal in the Assembly's special committee on budget and accounts, cutting 4.1 trillion won ($2.9 billion) from the initial plan proposed by the government.

Assembly Speaker Woo Won-shik requested that a bipartisan agreement on the budget be reached by Tuesday before the proposal is put to a vote in the plenary session. But the possibility of a smooth agreement has been narrowed significantly, given that Yoon cited the opposition's “budget violence” as one of the primary reasons for the martial law declaration.

In addition, the absence of presidential leadership and the emergence of potential variables in a future change of government are making the development of a medium- to long-term policy roadmap almost impossible.

Experts claim that even amid the impeachment standoff, the opposition party must actively collaborate with the government and the ruling party to address urgent issues to minimize economic side effects.

“The key to the solution lies with the opposition side. A message must be sent that there are no political divides when it comes to the economy,” said Ahn Dong-hyun, a professor of Seoul National University.