Showing posts with label koreality south korea kupetz. Show all posts
Showing posts with label koreality south korea kupetz. Show all posts

Friday, December 14, 2007

Elections in South Korea - 19 Dec 2007





NOT many people can realistically hope to be elected president on their birthday. But December 19th is not only election day in South Korea but also the 66th birthday and 37th wedding anniversary of the runaway favourite, Lee Myung-bak. Mr Lee is a former mayor of Seoul who has led the opinion polls throughout the year by a country mile. This month prosecutors absolved him of involvement in an investment fraud, seemingly clearing away his last hurdle before the vote.

Yet few seem to muster much enthusiasm for the birthday boy. At his campaign rallies supporters clad in blue sweatshirts bearing his likeness try to galvanise onlookers with chants, dance routines and a throbbing, disco-like campaign song. The crowds remain desultory. In one stop outside Seoul earlier this month, the biggest cheer was for a group of children who waved at the candidate from the open windows of their school.

This is odd. Presidential elections used to arouse paroxysms of emotion in South Korea. If Mr Lee were to win, he would bring an end to a decade of rule by two presidents, Kim Dae-jung and Roh Moo-hyun, who were liberal in the Korean sense (that is, slightly less pro-business and pro-American). His party represents the conservative old guard, though he himself is not a member of the traditional elite, nor does he hold their hardline views about North Korea. Whoever becomes president, moreover, will take over at a time when relations between the hermit kingdom and the rest of the world have reached a delicate point, with the rest still unsure about whether the North will give up its nuclear weapons.

Why then has the 2007 campaign ignited so little passion? Perhaps because Mr Lee has enjoyed a lead in the opinion polls for so long (in the week before the vote, he was over 20 points ahead of his main rivals, who seem almost to have given up). Perhaps because no one else has caught the public's imagination either. The main challengers include a disaffected former leader of Mr Lee's Grand National Party, Lee Hoi-chang, who has twice failed to win the presidency. The leading liberal candidate, Chung Dong-young, is a former television anchorman who has turned off voters with his personal attacks on Mr Lee.

And perhaps because of the man himself. Raspy-voiced, with a reputation for being aloof and prickly, Mr Lee is not a natural politician. He refuses to appear on South Korea's main commercial broadcaster, MBC, because he accuses it of bias. Every day ranks of police officers guard the main entrance of MBC as Mr Lee's supporters denounce its journalists. But like the presidential campaign itself, the protests lack numbers and fire.

Ordinarily, his opponents might have been able to exploit Mr Lee's stilted manner. Instead it has become an advantage. Koreans care mainly about the economy. They want a competent manager and Mr Lee seems to fit the bill. As a child, he helped his mother sell popsicles and seaweed rolls. He put himself through university by working as a rubbish collector. He rose through the ranks of Hyundai to become chief executive of ten different affiliates. Lingering suspicion that his business dealings may not have been pristine has been overlooked. South Korea is going through a period of relative economic malaise and voters want faster growth than the 5% achieved last year under President Roh, the best showing of his presidency.

Rising property prices have pushed workers in Seoul, home to half the population, far away from the capital, causing endless commutes to 12-hour-a-day jobs. Parents who pay for private classes so their children can keep up in pressure-cooker schools want changes to the education system. Many Koreans demand a comprehensive social-security system, as befits the world's 13th largest economy. The next president will also have to ensure it is not business as usual between his office, the Blue House, and the country's conglomerates. The biggest, Samsung, stands accused by a former executive of widespread bribery, including of politicians.

Mr Lee is responding to these varied demands with a comprehensive—even grandiose—list of promises. He says he can get growth up to 7% a year, bring average incomes up to $40,000 a year and make South Korea the world's seventh-largest economy by 2017. All this is to be achieved by cutting taxes, trimming public spending by 10%, easing the burden of regulation, improving the efficiency of medical spending and building a giant canal system through the middle of the country to create jobs and cut pollution. He is not promising to make pigs fly.

If he wins, Mr Lee will face divisions in both country and party. Since the end of the Korean War, South Korea has been split along regional lines. The eastern part, Gyeongsang, has traditionally produced the country's leaders (Mr Lee grew up there, though he was born in Japan). They have tended to favour their hometowns at the expense of the south-west Jeolla region.

The Grand National Party is also beset by internal rifts, notably between Mr Lee and Park Geun-hye, the daughter of a former military dictator, Park Chung-hee. Ms Park wants to run for president in five years' time. She also wants a hand in picking the party's candidates for parliamentary elections due in April 2008. If they cannot work together, Mr Lee's proposals may face an icy reception in parliament.

Mr Lee has few specific ideas about getting North Korea to give up its nuclear weapons, beyond making aid and investment conditional on disarmament. “North Korea must take steps to demonstrate it wants peace before there is widespread economic assistance or investment by South Korea,” says one of his closest foreign-policy advisers. In Mr Lee's view, the last two presidents have weakened South Korea's military alliance with America, and he promises to reinvigorate it. He also plans a range of co-operative economic agreements with Asian neighbours—and with Russia, in the hope of securing long-term oil and gas contracts in eastern Siberia. In short, all things to all countries.

Many South Koreans have been disappointed by the decade-long rule of liberal presidents who promised much but failed to deliver either strong growth or uncorrupt leadership. They were also put off by President Roh's inability to create more jobs and reduce social inequality. In contrast Mr Lee's record as mayor of Seoul suggests he can get things done. But if he does win, he will do so partly because he has raised expectations—and will suffer all the more if he cannot live up to them. ◦
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Thursday, August 02, 2007

South Korea's financial markets






For those South Koreans who want to transform their sometimes insular country into an Asian financial hub, July 3rd was a momentous day. South Korea passed its own version of Britain's “big bang”, the 1986 deregulation that enabled London to become a global financial centre. In South Korea the legislation will remove bureaucratic barriers in its securities industry and help brokers, banks and possibly insurers to consolidate.

For those foreign bankers who wonder why anyone bothers to get off a plane in Seoul, a decision by a tax appeals court on July 5th sent just the opposite message. Lone Star Funds, a Texas-based buy-out firm, lost an appeal on a $110m assessment stemming from the lucrative sale of an office block held in what had been thought to be a tax-exempt subsidiary. The ruling refocused attention on what, for both Lone Star and South Korea, has been a public-relations disaster.

Back in 2003, when South Korea was stuck in a protracted slump, Lone Star was something of a hero. It came in when other investors would not and made investments that included taking control of a big bank. It seemed a shrewd bet. In the subsequent recovery, the returns were spectacular—too much so for some South Koreans, who believe that Lone Star got too sweet a deal. Well-publicised prosecutions followed a public outcry. Lone Star is now involved in two big trials and a number of smaller actions, all suggesting it manipulated figures in order to buy companies on the cheap or to avoid paying taxes. It is fighting the charges.

Lengthy lawsuits are not the only factors discouraging investment in South Korea. Foreign-exchange controls make it hard to repatriate profits. The local currency, the won, is not much use in global markets. Regulatory filings must be done in Korean. No foreign company has so far listed on Seoul's stock exchange. Legal barriers limit, or exclude, foreign law firms and accountants. Foreign hedge funds and private-equity firms have, with few exceptions, passed judgment with their feet and stayed away.

Most of the big financial institutions are present, but labour negotiations can be so wretched that many bankers consider the country toxic. Even lenient banks are not let off. Standard Chartered is viewed by competitors as a particularly accommodating employer in South Korea. But a union has festooned the lobby of its Seoul headquarters with hostile billboards.

And yet South Korea's good intentions should not be written off. Its advocates start by spreading a map. The country lies between Japan and China and has a good airport. Its people are well educated; many study abroad. Communications are excellent. In just a few years, Seoul has lost its gritty-city image and the country's television shows, movies and fashion have become hits throughout Asia. For an expatriate banker, it need not be a backwater. South Korea's stockmarket is hitting records, its banks are healthy, foreign-exchange reserves are strong and savings are growing.

More importantly, attitudes are improving. Restrictions on foreign lawyers and accountants are being relaxed; a free-trade agreement has been struck with America. A non-American banker says he was stunned to read the fine print of the deal and to see how much it helped his own business. At the moment, South Korea's financial ambitions seem quixotic, but no Asian market can boast of superlative disclosure and transparency. An opportunity exists for any country that gets it right.

http://www.economist.com/printedition/index.cfm?d=20070714
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