June 3, 2008
During the first 100 days of the Lee Myung-bak Administration, the Government has administered state affairs predicated on the idea of creative pragmatism, placing top priority on expanding the growth potential, advancing public sectors, streamlining rules and regulations, establishing respect for law and order and instituting pragmatic diplomacy.
Many policies have been unveiled in the first months of the new Administration, but it is expected that more time will be needed until they are institutionalized and fully put into practice.
The policy achievements of the new Administration have not been appropriately evaluated by the public. This is partly due to the fact that the projected economic growth rate has been adjusted downward owing to a deterioration in external economic conditions, including skyrocketing oil prices. In addition, ordinary citizens have suffered difficulties stemming from rising prices of daily necessities, and the resumption of U.S. beef imports has escalated into a contentious social issue.
All these adversities notwithstanding, the Government is committed to making continuous efforts to help Korea join the ranks of advanced countries on all fronts, including the economy, society and culture, by overcoming the worsening economic conditions at home and abroad and pursuing a caring market economy.
Major Accomplishments of Policy Goals
1. A Government Serving the People: Reforms in the Public Sectors
This policy goal is intended to reduce budgets, innovate public institutions, provide one-stop services for the convenience of the public, implement substantive decentralization and establish respect for law and order.
With the aim of realizing the goal of a frugal, hard-working and pragmatic Administration, the Government has put more emphasis on ways to achieve efficient management in the public sector, including 10 percent budget reduction, Government reorganization, innovation of public organizations and substantive decentralization.
Action plans to curtail the budget by 10 percent were unveiled during the cabinet meeting on March 11. Through these measures, the Government is expected to save about 2.5 trillion won, which will be used to create more jobs and stabilize the lives of ordinary citizens.
The Government reorganization plan and measures to fine-tune administrative functions were unveiled on February 29. Principal follow-up measures to reform the many government ministries into fewer, bigger and more efficient organizations were announced on March 31. As a result, the total number of government organizations was reduced from 56 to 45 by eliminating three ministries, two agencies and five committees. Public servants were also downsized by 3,427. The civil servants who lost their jobs in the wake of the reshuffle have been reassigned to other necessary posts or put into training programs beginning on April 1.
The Government is also scheduled to unveil a basic plan to advance public institutions in late June. According to this plan, 305 public organizations will be put under scrutiny to determine whether they should be privatized, closed, merged or streamlined for efficient management.
At the policy consultation meeting that the President held with mayors and governors on May 2, it was decided that a system of cooperation linking the central and local governments be established. Previously, it was also agreed on March 31 that agencies under the central Government located in the provinces should be reorganized.
The welfare delivery system will be overhauled in an effort to meet public demands. The Government will also step up effort to provide better one-stop services tailored to clients’ needs for improvement in the business environment.
To this end, the Government announced a plan on April 18 to establish the Hope and Welfare 129 Center, which will offer timely welfare services to residents in need. The Government has also devised a master plan to establish a consolidated social welfare management network, which will encompass the public as well as private sector to feed real-time information about welfare recipients, including their income, property, financial data, and the breakdown of what benefits they have received.
The Government unveiled its decision to set up a SME start-up support center on April 1 and ways to streamline procedures for setting up new businesses on April 30. When these measures take effect, the time needed to process an application for a business license will be shortened from five to three days and the total number of days needed to set up a new business will be reduced from 167 to 68. The initial expense to start a business is also expected to be reduced accordingly from 44 million won to 19 million won.
Honest taxpayers who run small-scale businesses will be exempt from tax audits for a three-year grace period. In addition, an electronic tax invoice system will be introduced in earnest. By adopting both measures, the number of tax audits will be reduced by 1,000 from the number in 2007, relieving businesses of an onerous burden. The electronic tax invoice system will also help curtail business expenses amounting to as much as 300 billion won annually.
The Government has continued to make efforts to establish respect for law and order and restore governmental authority by applying fair and stringent law enforcement on illegal, violent protests and obstruction of justice.
To this end, the National Police Agency announced a plan on April 4 to establish regional public safety consultation bodies in 16 autonomous cities and provinces as well as 221 cities, counties and townships across the nation. The Ministry of Labor also came up with measures on March 31 to prevent labor disputes and cope with them by type, if they occur. As a result of these measures, the number of unlawful, violent protests has been reduced 34.5 percent to three cases even though the number of rallies has increased 4.3 percent to 97 cases.
In a bid to proactively promote a corruption-free civil service, a government-level crackdown has been instituted on major crimes in four areas, including irregularities and corruption perpetrated by senior government officials, executives in public corporations, influential persons in local agencies and administrations and those in the legal profession. Under the Act on the Regulation and Punishment of Concealment of Gains from Crimes, as much as 13.6 billion won in illegal proceeds was confiscated in 127 cases as of last March.
2. A Lively Market Economy: Further Expansion of Growth Potential
This policy goal is intended to enhance the environment for investments and infrastructure, review all regulations from scratch with a goal of deregulation, secure new growth engines, help the service industry further advance and create additional jobs.
The Government has focused on policies governing ways to boost foreign direct investment as well as carry out regulatory reforms and overhaul of the institutional system to expand the growth potential.
To put this broad blueprint into practice, the National Competitive Council has pushed ahead with various tasks to upgrade the business environment and streamline cumbersome regulations. It unveiled a series of measures to remove unnecessary red tape in regulations on industrial complexes, attract high-caliber specialists from across the globe and help revitalize the free economic zones.
After sounding out a wide range of opinions from various sectors, including major economic associations, on April 24, the Government identified 815 rules and regulations subject to deregulation.
It also unveiled a plan to revise the Monopoly Regulation and Fair Trade Act to simplify procedures for starting a business, abolish equity investment restrictions and ease regulations on financial holding companies. The revision was still undergoing review by the Ministry of Government Legislation as of March 28.
The Government has also announced a couple of measures to entice more foreign investment, including a policy to galvanize foreign investment on March 31 and a three-year master plan to improve the business environment for foreign investors on May 16. Notably, President Lee Myung-bak himself attended the Korea Investment Forum 2008 during his working visit to the United States. Thanks to these efforts, foreign direct investment, which had been on the downturn since 2005, turned into an upsurge in the first quarter of 2008, registering a 69.9 percent increase from the previous year.
In an effort to lay a firm foundation to help expand the potential growth rate, the Government has worked toward a proactive tax cut policy. It announced a variety of plans on March 10 to promote more corporate investment. They include measures to reduce corporate taxes, increase tax deductions for R&D capital investments from seven percent to 10 percent and extend for another year temporary tax credits on investments.
The Government has also striven to discover new growth engines and to sharpen the competitive edge of the service industry. Aimed at accomplishing these goals, a task force for planning for new growth engines was formed in March under the Ministry of Knowledge Economy. The candidates for new growth engines in specific categories will be decided on and announced in June. In addition, measures for developing an advanced service industry were unveiled at the government-private committee to revitalize the economy on April 28.
The Government has ratcheted up its efforts to stabilize the daily lives of ordinary citizens based on price stability. To achieve this goal, the Government has frozen bank interest rates on housing loans as well as utility and transportation prices. It has also released reserved stocks to keep a balance in supply and demand, lowered the tax on oil by 10 percent and implemented an extensive emergency tariff quota to curb commodity prices from further rising.
To bring real estate prices under control, on April 11, the Government announced measures to stabilize the real estate market and in May, made public a policy to expand the housing supply in the Seoul metropolitan area. Buoyed by these efforts, the housing supply rate in the area has risen to 60 percent from 55 percent, while the increase in the prices of houses in the northern part of Seoul has slowed down.
3. Active Welfare: Customized Welfare Services and Enhancement of Public Safety
This policy goal is aimed at laying the groundwork for life-long welfare, providing tailor-made, preventive and inclusive welfare, stabilizing the everyday lives of ordinary citizens and enhancing safety to protect citizens from social risks.
Under this policy goal, the pension scheme will undergo reform and the provision of welfare services will be tailor-made to meet different needs of recipients. As such, the safety net for life-long welfare will be further complemented and investments in integrated welfare services will also be increased.
A committee for reform of the national pension, established in April this year, a council for the improvement of the private school teachers pension system, a committee for the development of the military pension, founded in May, will all engage in consultations to work out ways to integrate the national pension with the basic old-age pension and to link it with occupational pension schemes. The enactment of the National Pension Reform Bill was announced on May 19 to improve the pension management system.
The Government announced support measures on April 22 for the increased hiring of people from low-income families for public careers, and on May 9 made public implementation plans for the Dream Start project to support children from low-income families. In addition, in April, it devised plans to provide childcare subsidies to help families unable to use childcare facilities.
The Government has further increased support for the stabilization of the everyday lives of ordinary citizens by capitalizing on the function of the market. The New Start 2008 project was unveiled on March 25 as a comprehensive assistance system for those who have difficulties in gaining access to financial institutions. Under the project, a total of 290,000 credit delinquents among National Pension insurants are likely to have a chance for immediate credit recovery. The self-employed running small businesses will have access to a special government guarantee fund worth 1 trillion won starting April 10. Under the new government housing policy, newly-weds are likely to be provided with affordable housing with the implementation of pilot projects in the second half of this year. In a bid to reinvigorate traditional markets, the Government has selected several market support projects, including construction of 57 parking lots, installation of arcades in 71 marketplaces, opening continuing education courses in management for merchants in 67 markets and joint marketing for 241 markets.
On top of this, the Government has implemented measures to realize a safe society by preventing traffic accidents, guaranteeing food safety and protecting marginalized groups in society. On April 29, a comprehensive implementation plan was mapped out as part of a new project aimed at reducing the number of casualties of traffic accidents by half. A legal basis was laid on May 22 for the establishment of a food safety policy committee to be headed by the Prime Minister. In addition, on April 30, the Government revealed comprehensive measures to protect children and women and on March 21, introduced safety guidelines to control hazardous substance that could be found in children’s paraphernalia or facilities. On April 2, a Task Force team was established to improve and revise laws and ordinances with regard to emergency management.
4. For a Country Rich in Talent: Establishment of an Autonomous and Diversified Education System
Under this policy goal, the Government has pushed ahead with the promotion of school autonomy, strengthening educational competitiveness with the focus placed on students, fostering human resources based on a forward-looking vision and establishing Korea as a scientific powerhouse.
Autonomy in primary and secondary schools is likely to be expanded. Together with the announcement of the implementation of plans for school liberalization on April 15, a total of 29 restrictive guidelines were abolished, including the standard operation procedures for after-school classes. While enhancing the accountability of schools, the Government is currently examining various schemes to diversify the scope of people who can be appointed school principals, to evaluate programs aimed at upgrading teachers’ capabilities and to introduce a school information disclosure system.
In the meantime, the liberalization of the college entrance system and university administration will be carried out by stages. As part of the first stage measures, it was announced on March 10 that the grade system for the College Scholastic Ability Test would be abolished. In April, the Government revealed that relevant laws would be revised to provide for the transfer of the administration of the college entrance requirements to the Korean Council for University Education and Korean Council for College Education. On April 5, a total of 12 tasks for the first stage liberalization were announced, including the abolition of the current admissions system, thus leaving the decision of student recruitment to the discretion of each university and creating the basis for establishing joint bachelor and master courses. Some national universities will be incorporated if their conditions allow, and the feasibility of introducing a new college accounting system by integrating government grants and funds raised by the colleges has been studied since May.
The structure of support for college research will be reorganized and research capabilities will be further enhanced. In the case of graduate schools, financial support for research by professors will be a direct payment while the support for undergraduate schools will be determined by government statistics on the quality of the education they provide. On April 4, it was announced that the percentage of indirect expenses in research funds provided by the Government would rise to about 20 percent or a maximum 23 percent for a project from the current 15 percent.
The Government will increase investment in science and technology and establish a system for nurturing human resources in preparation for the future. On April 28, it was decided at a meeting to determine the distribution of financial resources to raise the Government R&D budget by 1.1 trillion won for the year 2009. In addition, the National Science and Technology Council formulated the National R&D Investment Strategy of the New Administration on May 6. On May 20, the national R&D project management system was reorganized to be more researcher-friendly while some similar and overlapping R&D projects were integrated. In addition, the classification system for such projects was revamped. As a result, the number of project fields was reduced from six to three, programs from 21 to 12 and unit project from 56 to 36. On May 5, 2008, a basic plan was announced to designate Seoul Science High School as the school for gifted students in science and to convert the Korea Science Academy, a state-run science high school located in the southeastern port city of Busan, to an affiliate of the Korea Advanced Institute of Science and Technology (KAIST).
5. For a Global Korea: Creative Pragmatism
This policy goal pursues the creation of a new peace structure, pragmatic trade diplomacy, advanced security and an environment-friendly economic and energy structure.
By pushing ahead with foreign policies based on creative pragmatism, the Government will lay the groundwork for the development of the Korea-U.S. alliance in a creative manner and the establishment of a new cooperative regime in Northeast Asia.
Through the Korea-U.S. summit held on April 19, Presidents Lee Myung-bak and George W. Bush have set a new course for the development of the ROK-US alliance: to promote the mutual interests of both countries and build a strategic alliance for the 21st century.
The Government is making efforts to establish future-oriented relations with countries neighboring the Korean Peninsula by agreeing to restore shuttle diplomacy with the Prime Minister of Japan and strengthening strategic cooperation with China. The leaders of Korea and Japan held a summit on February 25 and April 21 this year. Subsequently, a Korea-China summit was held from May 27 to 30.
When it comes to inter-Korean relations, the Government has secured a foundation for the implementation of its North Korea policy by establishing principles for pragmatic inter-Korean relations and making endeavors to muster increasing support for the new policy from the global community. For inter-Korean economic cooperation, the Government has put forward four principles: there must be progress in denuclearization, cooperation must be economically feasible, the people must be able to bear the fiscal burden and there must be a national consensus.
With the disablement of North Korea’s nuclear facilities and the declaration of its nuclear program, the second stage of denuclearization is in the final phase and conditions for the initiation of the third stage, dismantlement, have been secured. Corresponding to progress in denuclearization, the United States and South Korea will provide the North with a total of 332,000 and 111,000 tons of heavy oil, respectively.
Under the incumbent Government, resource diplomacy will be further strengthened by implementing package projects, which will link resources development, construction of infrastructure and economic and industrial cooperation. Prime Minister Han Seung-soo visited several Central Asian countries to secure overseas energy resources. On his trip, the Prime Minister secured a mining lot capable of producing 400 million barrel of petroleum and gas and 5,700 tons of uranium, equivalent to 20 percent of the nation’s annual consumption, and signed contracts for 11 construction projects worth US$3.1 billion. In March, a new council intended to map out a strategy for energy diplomacy was set up, and the council has met twice to date. In addition, the number of legations serving as energy diplomacy hubs will rise to 72 from current 32.
By increasing Official Development Assistance (ODA) and dispatching about 5000 overseas volunteers, the Government will put into practice plans to connect diplomacy that contributes to the global community with the plan to nurture young global leaders. With the goal of increasing the percentage of ODA in the gross national income to 0.25 percent by 2015, it was decided on April 28 at a meeting for the distribution of financial resources that the amount of ODA would be gradually increased. On April 2, representatives from industry, government and academia signed an MOU to foster 100,000 young global leaders.