President Yoon Suk-yeol took office Tuesday, vowing to push for liberal democracy and revive the market economy amid concerns that he will be confronting a host of critical challenges during his five-year term.
As the new leader of South Korea, Yoon rightly deserves to be congratulated. But the road ahead would be tougher than expected, to say the least.
The inauguration ceremony was held at the National Assembly in Seoul with 41,000 people in attendance. Ahead of the event, Yoon already started his term at midnight in the underground bunker of the new presidential office building in Yongsan-gu with a briefing by the Joint Chiefs of Staff -- an apparent gesture to show his focus on national security.
Such a move will please Yoon’s conservative supporters, many of whom want the new administration to implement a different, or preferably stern, approach toward an increasingly belligerent North Korea.
Instead of striking a strong tone against Pyongyang, however, Yoon delivered a conciliatory message: “If North Korea genuinely embarks on a process to complete denuclearization, we are prepared to work with the international community to present an audacious plan that will vastly strengthen North Korea’s economy and improve the quality of life for its people.”
Throwing in fancy expressions like an “audacious plan” is easy. But getting the plan to actually work will be extremely hard, since it is questionable whether North Korean leader Kim Jong-un cares about a massive economic growth.
Similarly, many of Yoon’s ambitious plans to fix the problems facing the nation would require actions rather than just paying lip service.
First and foremost, Yoon has to vigorously push for policies aimed at getting Asia’s fourth-biggest economy back on track. The protracted COVID-19 pandemic is receding, but serious problems are looming large. Many small businesses and self-employed workers are struggling to recover from the virus-induced slump. Global supply chain disruptions, exacerbated by Russia’s invasion of Ukraine, continue to plague local manufacturers.
More importantly, the so-called “three simultaneous highs” -- inflation, interest rates and exchange rates -- pose threats to the country’s economy, which is still beleaguered by other weaknesses.
As the US Federal Reserve is set to raise interest rates to rein in runaway inflation, the Bank of Korea is expected to latch onto the tightening trend, as Korea is nowhere near the safe zone as far as inflation is concerned. This will translate into more burdens for companies planning to boost production and investment, as well as those who took out big loans to buy houses.
As for the dispute-ridden housing market, Yoon should tread carefully. It is a highly explosive problem. It is widely agreed that the presidential candidate from the Democratic Party of Korea, now the main opposition party, lost the election because of the unpopular real estate and related tax policies espoused by the former President Moon Jae-in. Yoon is expected to normalize some of the problematic housing policies, but a misstep could backfire in a way that will send the already astronomical apartment prices soaring higher
Aside from the housing debacle, other domestic issues abound. The shortage of jobs for the young, a chronically low birth rate, the rapidly aging population and faltering pension systems, to name just four, should place extra pressure on Yoon.
North Korea’s saber-rattling of nuclear and missile programs is also a great headache for Yoon. The previous administration tried out various options to persuade Pyongyang to give up on its aggression-centered stance -- but to no avail. The North, which test-fired its 15th missile Saturday, is set to carry out its seventh nuclear test possibly this month.
To help defuse tension on the Korean Peninsula, Yoon is urged to strike a delicate balance in diplomacy with the United States and China. Improving thorny relations with Japan is another tall order.
Yoon needs plenty of support and cooperation to implement his initiatives. But the opposition-controlled National Assembly will likely make things harder. With his popularity ratings at 50 percent, a low level for an incoming president, Yoon is required to redouble his efforts in working with his friends and foes to chart a new course for the nation at this critical juncture.