Policies Split Uri Party, Government

The government recently has shown a business-friendly attitude on issues such as revisions on shareholding ceilings and real estate policies, while the ruling Uri Party has tried to fend off any changes in that direction.

Reform-minded lawmakers of the ruling Uri Party and the party leadership call the pro-business moves led by the Ministry of Finance and Economy “anti-reform” measures.

Some are concerned that resistance of party members may dampen investment sentiment of businesses expecting deregulation on shareholding ceilings, and may spur the real estate market once again, which has just started to cool down since the announcement of government measures on November 15.

Uri Party Chairman Kim Geun-tae announced at an emergency meeting of his party held at the National Assembly on November 27, “The Uri Party will not accept government-party consultations whose direction has been set unilaterally by the government.” His remarks may be interpreted as a statement that the Uri Party will veto government policies that don’t reflect the ruling party’s opinions.

Kim’s remark was translated into reality when negotiations on revision of the investment ceiling went back to the starting point due to the opposition of the ruling party in a government-party consultative meeting held the same day.

Lawmaker Cheon Jeong-bae strongly argued at the meeting, “Though we might have to lift investment ceilings, we still need to regulate cyclical investment.”

The Ministry of Finance and Economy met another obstacle after it narrowly dissuaded Kwon Oh-seung, head of the Fair Trade Commission, from insisting on adopting regulations on cyclical investment.

Deputy Prime Minister and Finance Minister Kwon O-kyu was concerned, saying, “The public and businesses may strongly oppose a new regulation on cyclical investment if we adopt it at a time when we deregulate investment ceilings.”

More tension has risen over real estate policies.

After the three main architects of property market policies, including former Construction Minister Choo Byung-jik, stepped down, the Ministry of Finance took charge of policymaking, put more emphasis on increasing the housing supply, and took a cautious attitude toward regulation measures such as disclosing prices of pre-sale items. Since then, the ruling Uri Party has strongly defied the Ministry.

Uri Chairman Kim claimed at the special committee on property market policies and stability of the public livelihood held on November 22, “Some economic officials consider real estate policies as economic stimulus measures.”

His comment is an indirect criticism of Vice Finance Minister Bahk Byong-won’s remark that regulatory measures such as the disclosure of prices of pre-sale housing units, price ceilings on pre-sale houses, and a new system enabling buyers to pay after completing construction may reduce the housing supply.

Sogang University professor Kim Kyung-hwan said, “The ruling party seems to focus on makeshift measures that have anti-business sentiment. To tackle the real estate problem fundamentally, the only viable and straightforward alternative is to increase the housing supply.”