Korean economic team blasted for inconsistency

Korean economic team blasted for inconsistency

Friday, March 7, 2014 – 10:06

Kim Yon-se

The Korea Herald/Asia News Network

The Park Geun-hye administration appears to be discontented with the economic policies created by Deputy Prime Minister and Finance Minister Hyun Oh-seok.

This was suggested through the remarks of Prime Minister Chung Hong-won on Thursday, who claimed that the state economic policy team has failed to gain public credibility due to its inconsistency in carrying out major policies.

During a ministerial meeting for national policy fine-tuning, Chung criticized the Finance Ministry’s recent reversal of its taxation policy. Hyun also participated in the gathering at the Seoul Government Complex.

Mentioning the ministry’s change of position during the past week on taxing income from monthly housing leases, Chung said, “The reversal of government policies has been linked to social woes and the public’s distrust in the administration.”

He also said it would be better for the government not to unveil or push for any particular policies without garnering public support.

Market insiders say that the revised plan for taxing housing rental income, for instance, would be beneficial neither to monthly tenants nor small-sized housing lease providers. “The Finance Ministry has failed to increase the number of beneficiaries of non-taxable income,” said a real estate broker.

In addition, Minister Hyun has been criticized for taking a lukewarm attitude toward the issue of mounting consumer debt.

Though economists have issued warnings about the household debt worth 1 quadrillion won (S$1.14 trillion), recent countermeasures unveiled by the Finance Ministry and financial regulators have been deemed a watering down of past measures.

“Over the past few years, the government promoted active private consumption by easing rules on credit card businesses in a bid to revitalize the economy. Policymakers should have curbed the financial sector’s reckless lending before the consumer debt began to hamper the GDP growth,” said an analyst at Hyundai Securities.

Last year, even some lawmakers of the ruling Saenuri Party said that Hyun should be held accountable for incurring public anger over the government’s taxation policy.

The proposed revision to the 2013 tax code, unveiled by the Finance Ministry, sparked a backlash from a variety of sectors, as the change would raise the tax burden of those who in the middle-income bracket starting from this year.

Rep. Cho Won-jin of the Saenuri Party earlier said that the present economic policy team was ill-equipped to deal with the current global economic difficulties.

Attention is being paid to whether President Park will replace her senior economic policymakers, including Hyun.

 

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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