Hyun’s team must display stronger leadership to revive economy

Concern and criticism are mounting over the poor recognition and responding capacity of the government’s economic policy team led by Deputy Prime Minister for Economy Hyun Oh-seok. On public dispute between the Land, Infrastructure and Transportation Ministry and the Safety and Public Administration Ministry over reduction of the rate on real estate transaction tax, President Park Geun-hye said, “I hope that the Deputy Prime Minister for Economy takes the leadership role to devise measures to address the issue and reports to me.” Analysts say that Park’s remarks are meant to criticize the reality that different ministries are not cooperating seamlessly in overall economic policy and to reprimand Hyun for the lack of leadership. Rep. Choi Kyung-hwan, floor leader of the ruling Saenuri Party, also blasted the team, saying, “The worry is that our economic team may be too optimistically viewing the economic reality.”

In a bid to boost executive capacity and coordination function in economic policy, the Park Geun-hye administration reinstated the deputy prime minister for economy position for the first time in five years. It is fair to say that the performance Hyun’s economic team has displayed thus far is close to Grade “fail,” however. In surveys of economic and financial experts and entrepreneurs recently conducted by the Dong-A Ilbo and the Chosun Ilbo, majority of respondents gave negative views on the economic team. Certain critics say that limited leadership of Hyun, who was an economic policymaker but never served as presidential secretary for economic affairs, mister or vice minister, an issue that some critics raised when he was named to head the economic team, has become a reality.

The government has suggested a set of measures to shore up the service sector, but it failed to touch upon measures that are more impactful in generating future growth momentum and creating jobs, due to concern over opposition by the political circle and privileged interest groups. Such issues include incorporated medical institutions open for investments (for-profit hospitals), incorporated drugstores, establishment of private schools from advanced countries, and introduction of remote medical treatment. Despite vowing to deliver on the president’s election pledges for provincial regions, the government has failed to present specific timelines or plans to mobilize the necessary budget. If certain policies are deemed necessary for the people and state, the Deputy Prime Minister for Economy should persuade the political circle and people, and spread consensus, but Hyun has displayed little, if any, presence in this regard.

Dark clouds are cast over the environment surrounding the Korean economy and businesses. According to a survey of the 30 largest conglomerates, which was conducted by the Federation of Korean Industries, those that answered they will reduce investments and employment in this year’s second half from their original plans announced early this year amounted to six and four, respectively. External variables are also very negative as evidenced by the International Monetary Fund’s further slashing of this year’s global economic growth target to 3.1 percent, down 0.2 percentage points from 3.3 percent it announced in April. The government’s economic team is facing a situation where it must play a role that is more important than ever before.

Considering the importance of consistency and predictability of economic policy, it is not desirable to frequently replace Cabinet members in charge of economy. But if the incumbent economic team fails to address its practice of hopelessness, those who demand early replacement of the team could gain ground. Hyun’s team must renew its commitment and boost its capacity in policy implementation and cooperation with other government agencies. The power and stature of the deputy prime minister for economy derives to a significant degree from the president’s confidence in him. As such, President Park is also advised to empower Deputy Prime Minister Hyun.