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Market-driven economy to gain momentum under Yoon

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By Yi Whan-woo

President-elect Yoon Suk-yeol has been underlining growth driven by the private sector to revitalize the economy, contrasting President Moon Jae-in's income-led growth initiative premised on the government's active intervention in distribution of wealth.

Yoon's policy direction is clear in his pledges concerning housing, labor, working hours, welfare and other sensitive economic issues, according to analysts, Thursday, noting the promises are aimed at lowering business barriers as much as possible.

"It is desirable for the market to make decisions on its own on the country's path to economic recovery," said Joo Won, deputy director of the Hyundai Research Institute.

Yoon's promises include a shift to what some describe as a "negative regulatory system," which Korea has been urged to embrace for years as part of efforts to remove obstacles to running businesses.

Adopted by countries like the United States and China, this kind of system considers businesses and services legal unless they are expressly banned.

Korea on the other hand has been implementing a "positive regulation system," under which businesses and services are asked to go by lists of what's permitted and that anything not covered is deemed banned.

"There has been much talk about the need for a negative regulatory system, and I think of it as a good policy for companies," Joo said.

Apartment complexes are seen from Lotte World Tower skyscraper in Songpa District, southeastern Seoul, Thursday. Yonhap
Apartment complexes are seen from Lotte World Tower skyscraper in Songpa District, southeastern Seoul, Thursday. Yonhap

Yoon's pursuit of minimizing government intervention and easing regulations is witnessed in the real estate sector, possibly the most volatile topic in the presidential election in light of Moon's devastating failure to control housing prices.

"It's true both Yoon and his rival Lee Jae-myung promised to increase the housing supply, but their approaches to reach the goal are quite different," said Kim Je-kyung, a chief consultant of real state agency Tumi.

Yoon promised to supply 250,000 new homes for next five years, with 200,000 to be offered by private companies, whereas Lee pledged 311,000 new homes through a government-led project.

"The swift supply of 200,000 homes will not be possible unless construction safety regulations are eased, and you can see the roles of the private sector and eased regulations are interrelated," Tumi agent said.

The President-elect also has sights set on lowering of the capital gains tax and acquisition tax, as well as scrapping the comprehensive real estate holding tax, all of which are seen as behind the soaring housing prices.

Yoon has been on the same page as Moon concerning job creation and increasing welfare, noting a cycle of growth, welfare and employment is critical for improving the country's potential growth rate to 4 percent from the 2 percent projected currently.

Yoon, however, has been calling for flexibility in the 52-hour workweek adopted under Moon, arguing that smaller companies should be able to adjust their operating hours depending on the amount of work and available workforce.

With a lack of workers, multiple small and medium-sized enterprises (SMEs) have found it tough to complete production on time while strictly observing the 52-hour workweek rule.

Yoon has been skeptical about the workplace disaster law that took effect in January, as the law meant to better protect workers from fatal industrial accidents has put the burden on business owners over fear of punishment.

"The law is possibly what the President-elect has been most critical of when it comes to Moon's economic policy, and accordingly, it may undergo revision," a corporate insider said.

To help small businesses hit by economic fallout from the pandemic, Yoon plans to spend 50 trillion won ($40.6 billion), in addition to the 16.9 trillion won approved by the National Assembly last month in accordance with the Moon government's proposal.


Yi Whan-woo yistory@koreatimes.co.kr


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