Updated July. 30, 2014 07:26
Big smile is back on the face of public officials in the Ministry of Strategy and Finance. In the nomination announcement of 13 ministers and vice ministers on July 25, many high ranking officials of the ministry were nominated and it is expected to relieve a long queue for promotion inside the ministry. Six nominees are officials from the ministry including Chu Kyung-ho, nominated as the head of Office of Government Policy Coordination, the Minister-level position, the ministrys first vice minister nominee Joo Hyeong-hwan, second vice minister nominee Bang Moon-kyu, first vice minister nominee the Ministry of Science, ICT and Future Planning Lee Seok-joon, Korea Customs Service Commissioner nominee Kim Nak-hoe and Public Procurement Service Administrator nominee Kim Sang-kyu. The nomination announcement gives a glimpse of President Park Geun-hyes strong trust on new finance minister Choi Kyung-hwan, who was inaugurated on July 16.
Stock market shows positive response to the nomination of an influential figure, Choi, to deputy prime minister. Thanks to expectations on economic stimulus plans and policies to push companies to provide bigger portion of dividend, Koreas benchmark KOSPI surpassed 2,060 point threshold in 3 years while having renewed an annual record high for 3 consecutive trading days as of Tuesday. Upward movement in stock and real estate prices may be risky in the overheated market. However, positive effect of such market movements far outweighs the negative one especially in these days when it is urgent to escape from long-term depression.
Choi got off to a good start. Still, it is hard to predict the future of Korean economy. The 2ndquarter results from big companies such as Samsung Electronics, Hyundai Motor Group, LG Chemical and SK Innovations fell drastically to a level of earning shock. Koreas largest current account surplus in the 1st half of this year should be credited to the import decrease. The government introduced a new tax system under complicated title of corporate income recirculation taxation to charge tax on the corporate retention money. I believe this is a wrong decision as it is highly likely to dampen the investment of corporates and to harm the corporate governance autonomy of shareholders.
Deputy Prime Minister Choi had held various positions in his career economic public official, editorial writer of a new paper publisher, 3-term lawmaker and MOSF Minster. His strength lies in integrated understanding of economic theory, political theory and integrated understanding of economic logics, political reasoning and media characteristics based on the various experiences. However, his lawmaker experiences accumulated over the past 10 years spurns concerns that he might be swayed by political populism, rather than making frontal breakthroughs in fundamental issues such as unnecessary regulations on companies and labor market rigidity.
Whether he will be remembered as a great Deputy Prime Minister such as Jang Ki-young, Kim Hak-ryeol or Nam Duck-woo, who greatly contributed to the Miracle of Han river, or he will follow the suit of failed predecessors including Kim Jin-pyo and Hyun Oh-seok, depends on how much Choi can exercise his expertise to revive economy while minimizing negative effects.