Koreans stay at home and go to school

SEOUL: You can spend thousands of dollars and endless hours in crowded lecture halls to gain a South Korean real estate agent's certificate.

Or you could study for the license in the comfort of your own room with a broadband connection to a television for a fraction of the cost.

For companies selling interactive television over the Internet, soaring demand in Asia for high-quality education for children, as well as demand from people looking to change careers, offers a potentially lucrative market and the chance to lure customers away from cable television and the computer.

South Korea, where children spend hours studying in a gruelling battle to enter the top schools that can guarantee a job at the big conglomerates, is at the vanguard of educational television over the Internet in Asia.

Tuition is expensive, with spending on after-school tutoring estimated to be the equivalent of 2.6 percent of the country's gross domestic product.

Private tutors, who are highly sought after, can earn a salary similar to a banker's pay.

South Korean companies, like KT, which plan this year to upgrade their Internet-powered television services to full Internet protocol television, known as IPTV, are spearheading the move.

KT says online education for children ranks among the most successful programs on its "MegaTV" system, which also offers after-school tutoring and adult education courses.

"The response is strong for kids' programs in which they learn by playing games and solving puzzles using a remote control," said Yang Jae Geon, KT's director of media.

Young Choi, an analyst at Mirae Asset Securities in Seoul, said educational programs generated about 20 percent of IPTV revenue.

"Education is one area they can make users pay extra money," Young said. "The key is to increase the portion of paid programs."

Young said he expected IPTV use in South Korea to rise to five million subscribers by the end of 2009 from an estimated three million at the end of 2008. The overall market for IPTV could reach more than 55 million worldwide by the end of 2011, from an estimated 10 million last year, according to the research firm Ovum.

IPTV, with its immediacy, interactive features and easily navigable menus, bypasses the process of having to start up a computer and surf the Internet.

Across Asia, quality education is in constant demand and short supply. Students often fight for places at the best schools, workers pin their hopes on English skills to lift their careers and parents look for new ways to teach their youngsters.

"Game content and educational programs have big potential because both target a very important group of people - that's the young generation," said Rocky Li, marketing director at BesTV, the IPTV unit of Shanghai Media Group.

Most IPTV companies have focused on popular television shows and sports events for growth. In Europe, operators like BT in Britain gained market share by offering customers free access to digital terrestrial television. PCCW of Hong Kong has the exclusive right to broadcast popular English Premier League soccer.

But operators, many of which are fixed-line carriers muscling in on broadcasters' territory, hope that IPTV's interactive features give them an edge in the potentially lucrative teaching market.

On IPTV, lectures can be repeated at any time and they allow students to take quizzes or pose questions in real time.

In China, where history and geography programs are already offered, education is set to become the fastest-growing part of BesTV's business, Lee said, referring to the IPTV unit of Shanghai Media Group.

"In traditional TV, it's difficult to find these programs," Lee said, because of inconvenient times and limited slots. He expects overall IPTV users in China to reach two million by the end of 2008 from 600,000 now.

IPTV companies are also trying to add popular video games, from simple board games and racing to multiplayer online games, to attract computer users away from their computers.

But some analysts say a television in the living room is not the best platform for interactive programming.

"TV is something shared by the entire family," said Suran Seong, a senior analyst at Ovum. "Some parents are not comfortable with the idea of kids studying in front of a TV."

On the financial side, operators will also need to strike the right balance between subscription fees and payments to content holders.

"Big players will remain hesitant until IPTV starts to make money," said Lee Sun Kyoung, an analyst at Goodmorning Shinhan Securities. "Operators, on the other hand, are under pressure to keep fees low to expand the market."

http://www.iht.com/bin/printfriendly.php?id=10435696 ◦

Koreans stay at home and go to school

New York Philharmonic Plays Arirang in North Korea (Feb 2008)

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New York Philharmonic Plays Arirang in North Korea (Feb 2008)

Is President Lee South Korea’s Sarkozy?

Lee wants to save his country by nudging it right and toward the U.S.—but his people may not cooperate.

The congregation at Somang Presbyterian, a Seoul megachurch, has very fond memories of the parishioner who became South Korea's president on Monday. Lee Myung-bak, now 66, joined the church back in 1977, when he was the young head of Hyundai's construction company, and he didn't take long to leave his mark. Shortly after he arrived, Lee took charge of a project to build a massive new sanctuary for the fast-growing congregation. Within a year it was completed, and Somang's 70,000 members haven't forgotten.

Many are now pulling for Lee as he takes the country's helm this week and tries to steer its once mighty, now faltering, economy back on track. "We think he can get it done," says church manager Chung Jung Mook. "We'll be praying for him."

That's good news for Lee, who will need all the help he can get—divine intervention included. A cosmopolitan, business-friendly ex-CEO who's an unabashed friend of Washington, Lee will face formidable challenges as he tries to return South Korea to the upper ranks of the world economy. In an exclusive interview with NEWSWEEK last week, Lee emphasized his determination to strengthen South Korea's business fundamentals and external ties. After 10 years of leftist rule marked by skyrocketing social spending, weak economic growth and strained relations with the United States, Lee thinks he has the solution: to court foreign investment, make nice with old allies and step up English-language education—a plan he bills as "Global Korea"—while dramatically cutting taxes, spending and regulation.

But is South Korea really ready for a Sarkozy-style pragmatist who embraces Washington, the English language and big business while opposing what Park Myung Ho, a political scientist at Seoul's Dongguk University, calls the "liberal idealism" of his predecessors? For one thing, the country has a profoundly ambivalent attitude toward the rest of the world. Its export-driven economic miracle ensured the country's fate was inextricably linked to other nations'. Koreans, moreover, think nothing of sending their kids to summer camp in the U.S. or college in France. But there's also a deeply ingrained historical sense of humiliation by the foreign powers that repeatedly invaded and colonized Korea throughout its history. Small wonder, then, that the national psyche tends to swing violently between cosmopolitanism and xenophobia.

Sure enough, Lee's agenda ran into trouble before he was even inaugurated. Environmentalists and the powerful Korea Confederation of Trade Unions have blasted his pro-globalization proposals, which they see as a threat to national pride and an attempt to push a U.S.-style neoliberalism that emphasizes development over all else. To underscore his commitment to Global Korea, Lee has gone so far as to offer to bring foreigners into his cabinet—but this move, too, has drawn fire from nationalists. Recent turbulence in world financial markets hasn't helped, either, forcing Lee to back off campaign pledges to deliver growth levels not seen here for years. Still, in the interview last week, the then president-elect stressed that he hasn't lost the faith.

"We achieved [economic] development through globalization," he said, and further internationalizing remains the country's best shot at recovery.

On the surface, South Korea seems primed for such an approach. Lee, a former Hyundai president and Seoul mayor, won the election by a landslide in December. Many Koreans blamed the country's recent economic stagnation on the policies of his predecessors, Roh Moo Hyun and Kim Dae Jung, who emulated the Northern European social model, raising the welfare budget by an average of 18 percent a year. The public sector mushroomed, taxes soared and private enterprise struggled under increased regulations. Roh in particular emphasized redistributing wealth to Korea's have-nots, and his pro-labor, anticonglomerate stance discouraged investment. Last year, an Organization for Economic Cooperation and Development report warned that South Korea's economy remains "relatively isolated" and noted that foreign direct investment had been falling steadily since 2005. Economic growth slowed from 7 percent in 2002 to 5 percent last year— a rate that feels like a recession in South Korea—and youth unemployment hit the double digits (having doubled in five years). Economically speaking, the Kim-Roh era represented "10 lost years," says Gong Sung Jin, a lawmaker in Lee's Grand National Party.

Lee hopes to fix this by closing or merging overgrown government agencies, cutting corporate and property taxes and slashing regulation. He's dreamed up a huge nationwide canal project linking rivers in the north and south that would facilitate cargo transport, spur tourism in the hinterlands and create new jobs. He's also courted investment from local and foreign business leaders. In January, Lee wowed an assembly of U.S. and European investors in Seoul by treating them to a slick PowerPoint overview of his reform plans—accompanied by a commentary in fluent English. (Roh, whose formal education didn't extend beyond high school, spoke only Korean—and a notoriously coarse version of it at that.) Lee has surrounded himself with foreign-educated scholars and globetrotting business executives and even named a British banker co-chair of a special committee on national competitiveness. Sagong Il, the committee's other co-chair and a former Finance minister, says Lee wants to make the sort of changes that reformers aspire to in the United States, Germany and France.

Like France's President Nicolas Sarkozy, Lee is also determined to improve ties with the United States, which were badly damaged under Roh. Roh sought greater independence from Korea's traditional ally while pursuing reconciliation with the North. Relations with the White House grew especially strained over Kim Jong Il's illicit nuclear-weapons program: Washington favored sticks (such as sanctions), while Seoul insisted on carrots (greater aid for Pyongyang). Now, says Lee, the North won't enjoy any more largesse without first making decisive progress on the nuclear issue. "The South and North should seek joint prosperity while maintaining peace," says Lee. "[But] we cannot seek that kind of relationship, and unification, if the North keeps its nuclear weapons." It's a shift that could well bring Seoul and Washington back into synchrony.

Lee has made it clear in other ways that Washington, not Pyongyang, will remain Seoul's best friend; he says that South Korea would never have boomed or become a democracy without American help. His affection hasn't gone unnoticed: the U.S. House of Representatives recently passed a resolution congratulating him on his election (a first for a Korean leader). To further his vision of a Global Korea, meanwhile, Lee has come up with a revolutionary English-education plan, under which thousands of English teachers would be hired to make average Koreans fluent in the language.

But these ambitious projects have run into stiff opposition, which could increase now that he's taken office. Part of the problem is that Lee's mandate was never as clear as it seemed. True, he won twice as many votes as his liberal opponent, Chung Dong Young, who carried the progressive torch for the term-limited Roh. But that margin may have been mostly the result of the chaotic and confrontational Roh's unpopularity (he had a single-digit approval rating by the end of his term). "People didn't like [Roh]," says Prof. Hahm Sung Deuk of Korea University. "[But] a substantial number of people disapprove of Lee's policies." To further complicate matters, Lee won't be able to ram through reforms without solid support in Parliament—and for the moment, it remains dominated by the liberal opposition. This means Lee may have to place many of his initiatives on hold until the legislative elections in April. That will leave plenty of time for his opponents to throw wrenches into the works. His enemies are numerous and not confined to the left: a new right-wing party founded by Lee Hoi Chang, a former Lee associate who is even more conservative, could siphon crucial votes and jeopardize Lee's chances of winning a legislative majority.

While the president's approval rating is still high thanks to the honeymoon effect, it dropped from the mid-80s to the mid-70s in recent weeks due to a series of entirely avoidable missteps. His English education program was roundly criticized as unreasonably ambitious (at one point, the plans included starting to conduct many high-school classes nationwide in English) and an affront to Korean pride. His decision to reform the machinery of government before taking office triggered a row with the opposition that could slow confirmation for his cabinet. Liberal groups like the opposition United Democratic Party have accused him of planning to pursue harsh U.S.-style, winner-take-all economic policies. Arguing that Korea's welfare spending (measured as a portion of the total budget) is still just half that of countries like Sweden, they've contested his proposed cuts and his canal project, which critics charge is ecologically dangerous. The new president "is obsessed with development," says Song Young Gil, an opposition lawmaker. "Our time needs different values, such as welfare, culture and the environment."

And in a country where 48 percent of those in their 20s and 30s voice anti-American sentiment (according to a Seoul National University poll), Lee's pro-Washington stance and his hawkishness toward the North seem likely to run into serious trouble. The past few years have seen a nationalistic backlash against foreign investors who swooped in after the 1997 financial crisis, scooping up troubled assets at rock-bottom prices. Of course, the angry Korean reaction to these "vultures" overlooked the fact that they helped many local firms, such as Daewoo Motors, avoid bankruptcy. Yet tempers remain high.

Another potential problem: Lee's relative lack of political experience. His only stint as a national policymaker—unless you count his four years as Seoul's mayor—was a single term as a junior member of Parliament back in the 1990s. Critics warn that as president, Lee will find it much harder to exercise the kind of CEO leadership he practiced at Hyundai and in city hall. "There's a big difference between governing a city and governing a country," argues Hahm, who says that Lee's distaste for the grubby give-and-take of day-to-day politics could prove crippling if he tries to rule by command.

But don't count the president out just yet. Lee's biography reveals a serious talent for getting things done under the most adverse circumstances. In 1965, as a poor youngster from the sticks who had paid for college by collecting garbage, he joined Hyundai as a construction manager, building roads in Thailand. Twelve years later he was a rich man and president of the huge conglomerate—earning him the nicknames "Korea's most successful salaryman" and "the bulldozer." Lee Choon Lim, the president's old boss at Hyundai, remembers him as a "workaholic determined to fight poverty." Later, as mayor of Seoul between 2002 and 2006, Lee showed remarkable sensitivity to concerns such as environmentalism. His biggest achievement was not to build, but to tear down an elevated highway—Seoul's main traffic artery—in order to uncover a stream beneath, restoring nature to the urban core. The project has turned out to be a huge success, with the river becoming a beloved Seoul landmark. Even his most ardent supporters will concede, though, that that's still a far cry from managing the world's 11th largest economy and a volatile country with a seriously prickly sense of national pride. Yes, Lee has won all his big battles so far—but his toughest campaign is just beginning.

http://www.newsweek.com/id/114681 ◦

Is President Lee South Korea’s Sarkozy?

Tackling the English Divide in South Korea

The incoming government will seek to phase in English-language content courses for upper primary school graders to curb soaring household spending on private education.

Lee Kyung-sook, chairwoman of the presidential transition team said Wednesday that her advisors have been reviewing possible English training programs for teachers and other options to make this happen.

A Samsung Economic Research Institute (SERI) report found Koreans spent approximately 14 trillion won annually on private English tutoring, almost half of the entire household spending on private education, which has grown rapidly over the past decade.

A National Statistical Office (NSO) report showed that annual household spending on private education during the incumbent Roh Moo-hyun administration totaled 21 trillion won. Experts said that the actual figure is much larger than that.

Chairwoman Lee stated the new government views this problem as serious.

She said the surging household spending on English education is "not an educational problem but a social one."

Korea is struggling to cope with an English divide between children from wealthy parents and those from lower-income families.

In the presidential campaign, President-elect Lee pointed out that the vicious circle of poverty could come a result of the English divide.

He pledged to strengthen English education in public schools so that high school graduates will be able to speak English fluently.

The team said it had reviewed training programs for 3,000 Korean teachers and the setting up of a qualification system for native-English speakers and after school programs at elementary schools.

David Francis, a former team leader of an English immersion program at Young Hoon Elementary School in Seoul, told The Korea Times that the transition team needs to work on the details of these programs.

Francis said effective English-content courses need to include two core conditions ― qualified native-speaking educators and small class sizes.

"Daily language instruction should begin at grade one elementary, no later. During language instruction time the traditional classroom of forty students needs to be split up into at least two or if possible three smaller groups," he said.

Francis has taught literature, the humanities, and language in five countries including Singapore and Indonesia over the last fourteen years before joining Young Hoon Elementary School.

Andy Jackson, who teaches American Government at the Lakeland College bridge program at Ansan College, said English-language content courses would have to be taught as part of a program, rather than on an ad hoc basis, to be effective.

"The program would have to include a year of English immersion (with a test-out option) before content courses begin," he said.

The question is if strengthening the training program for English teachers in public schools will help achieve the policy goal.

A KBS survey in 2005 showed that 272 middle and high school teachers' average score on the Test of English for International Communication (TOEIC) was 718 out of 990.

According to KBS, these teachers had completed a 6-month long English language program before the survey.

The average TOEIC score of the teachers was slightly higher than the English requirement for college graduate job applicants at companies, which is 700.

This result indicates the training program for English teachers may be of little help in achieving the transition team's goal.

http://www.koreatimes.co.kr/www/news/nation/2008/01/113_17811.html ◦

Tackling the English Divide in South Korea

Economic Freedom - South Korea only ranked #41

Are the world's impoverished masses destined to live lives of permanent misery unless rich countries transfer wealth for spending on education and infrastructure?

You might think so if your gurus on development economics earn their bread and butter "lending" at the World Bank. Education and infrastructure "investment" are two of the Bank's favorite development themes.

Yet the evidence is piling up that neither government nor multilateral spending on education and infrastructure are key to development. To move out of poverty, countries instead need fast growth; and to get that they need to unleash the animal spirits of entrepreneurs.

Empirical support for this view is presented again this year in The Heritage Foundation/The Wall Street Journal Index of Economic Freedom, released today. In its 14th edition, the annual survey grades countries on a combination of factors including property rights protection, tax rates, government intervention in the economy, monetary, fiscal and trade policy, and business freedom.

The nearby table shows the 2008 rankings but doesn't tell the whole story. The Index also reports that the freest 20% of the world's economies have twice the per capita income of those in the second quintile and five times that of the least-free 20%. In other words, freedom and prosperity are highly correlated.

The 2008 Index finds that while global economic liberty did not expand this year, it also did not contract. The average freedom score for the 157 countries ranked is nearly the same as last year, which was the second highest since the Index's inception. This is somewhat of an achievement considering the rising protectionist and anti-immigration sentiment in the U.S., the uncertainty created by spiking global energy prices, Al Gore's highly effective fear mongering about global warming, and the continuing threat of the Islamic jihad.

Former British colonies in Asia took three of the top five places this year. But half of the top 20 freest economies in the world are in Europe. Of the five regions surveyed, Europe is the most free, continuing to advance this year with tax cuts and other business-friendly reforms. The only other region to score above the world average this year is the Americas, which is helped by strong performers like the U.S., Canada, Chile and El Salvador. At the other end of the scale Argentina, Bolivia, Haiti, Venezuela and Cuba dragged down the regional average.

Although overall global economic liberty did not expand, there were a few stars. Egypt was the most improved economy in the world, implementing major changes to its tax policies and business regulation environment and jumping to number 85 from 127th place last year. Mauritius was the second-best performer, moving into the top 20 from No. 34 last year. Trade liberalization and improved fiscal policies, including a flat tax, made Mongolia the third-best performer, and put it in the category of "moderately free" economies.

Three essays in the 2008 Index help illustrate why economic liberty matters to human progress. In "Economic Fluidity: A Crucial Dimension of Economic Freedom," Carl Schramm, president of the Kaufmann Foundation, explains that growth-driving innovation results not only from sound macroeconomic policy, but also from dynamism at the micro level.

Most important is the interaction between "institutional, organizational and individual elements of an economy," which gives rise to "the entrepreneurial energy and the speed of economic evolution." Such "fluidity," he writes, "facilitates the exchange and networking of knowledge across boundaries. This fosters both innovation and its propagation through entrepreneurship."

Mr. Schramm's essay illuminates why successful economies cannot be centrally planned. Fluidity, he writes, resembles "the idea of the 'the edge of chaos,' the estuary region where rigid order and random chaos meet and generate high levels of adaptation, complexity and creativity." It is "ideas on the margins, challenging the status quo, that lift the trajectory of an economy's performance." Try that in Cuba.

In "Narrowing the Economic Gap in the 21st Century," Stephen Parente, associate professor of economics at the University of Illinois at Urbana-Champaign, debunks several World Bank myths by showing that it is not the resources -- land, workforce and capital -- of an economy that play the most important role in explaining higher income countries. Instead it is "the efficiency at which a society uses its resources to produce goods and services."

Mr. Parente cites the microeconomic research of McKinsey Global Institute, which estimates that modern industry in India could take a huge bite out of its productivity gap with U.S. competitors by simply upgrading production techniques. India doesn't need another multilateral education project. It needs to tap into knowledge already available in successful economies -- the information and technology is out there. The trouble is that it is unavailable in many countries like India, because government barriers and constraints to limit competition make access difficult or impossible.

French journalist Guy Sorman's "Globalization is Making the World a Better Place" is a treatise on "one of the most powerful and positive forces ever to have arisen in the history of mankind." It fosters economic development, moves countries from tyranny to democracy, sends information and knowledge to the most remote corners of the globe, reinforces the rule of law, and enriches culture. International commerce in post-World War II Europe, he reminds us, wasn't invented by diplomats, but by entrepreneurs who wanted to end centuries of strife on their continent and build a peaceful union based on commerce.

Today's entrepreneurs, across the globe, have similar aspirations and abilities. If only the politicians would let them be free.

http://online.wsj.com/article/SB120036519907490279.html?mod=opinion_main_commentaries

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Economic Freedom - South Korea only ranked #41

Samsung Electronics Sales Top $100 Billion

By Kim Yoo-chul
Staff Reporter
The Korea Times

Despite lingering woes in the chip industry, Samsung Electronics posted more than $100 billion in global sales last year on the back of brisk movements in liquid crystal displays and mobile handsets.

Samsung said Tuesday it made $103.4 billion or 96.1 trillion won in sales including those from overseas operations last year, for the first time ever.

At home, Samsung posted 7.42 trillion won in net profit on sales of 63.17 trillion won.

Nevertheless, the global tech giant failed to overcome the glut in the chip industry in the fourth quarter.

Samsung reported a 6.6 percent drop in fourth-quarter earnings following losses from computer memory chip sales. The company earned 2.21 trillion won ($2.36 billion) in the Oct.-Dec. period, compared with 2.36 trillion won a year earlier. Revenue jumped 11.4 percent year-on-year to 17.47 trillion won.

Operating profit fell 13.1 percent to 1.78 trillion won. The company's operating profit margin in the memory chip business, once the company's cash cow, remained at 9 percent.

"Profits at our semiconductor division are expected to decline in the first quarter," said Chu Woo-sik, executive vice president of Samsung Electronics in charge of investor relations. "We will activate our capital spending in the memory business this year."

Samsung, which produces diverse electronics goods including LCDs, mobile handsets and semiconductors, was the second to report quarterly earnings among tech companies. On Monday, LG.Philips LCD, another flat-panel maker, said its fourth-quarter earnings reached 760 billion won, a turnaround from a loss of 174 billion won.

In the past decades, DRAMs have been the main growth engine for the world's largest computer-memory chip manufacturer but ever-declining product prices sparked by an industry-wide oversupply forced global players to reduce prices.

Samsung is worried that memory prices will likely remain weak until the second quarter of this year as investment made over the past two years by manufacturers will start to translate into more products on the market.

Against this backdrop, LCDs and mobile handsets were a savior for Samsung. Samsung reported its sales of LCD panels jumped 11 percent to 4.46 trillion won from three months earlier. Its operating profit improved 37 percent to 0.92 trillion won.

Stabilizing panel prices mainly drove the strong performance. At the end of last year, the price of a 17-inch LCD panel, one of the most favorable displays for TVs and computers, stood at $134, up from $123 a year earlier, according to an industrial consulting firm DisplayBank.

Samsung sold a record 46.3 million phones in the fourth quarter. The company, which recently overtook Motorola to become the world's No. 2 handset maker, expects to sell 200 million handsets this year. ◦

Samsung Electronics Sales Top $100 Billion

A New City in South Korea

Forty miles Southwest of Central Seoul, South Korea, thousands of construction workers swarm across a 1,500-acre pile of mud. Fifteen towers rise out of the dirt. A handful of paved avenues intersect the ruts of dump trucks, bulldozers and backhoes. It's work on a colossal order, the site of a planned 50 million square feet of office space, 35 million of residential, 4 million of retail, 5 million of hotels and 10 million of parks and greenswards.

Rome wasn't built in a day, and New Songdo City won't be complete until 2014, at the earliest. By then, perhaps 65,000 people will live, and 300,000 will work, in this fabricated-from-scratch urb. There will be an international school (already half-built), a hospital, museums, a convention center, a golf course overseen by Jack Nicklaus, a giant mall designed by Daniel Libeskind and a 65-story office tower. Songdo is being pitched as a digitally linked and model green city. Total estimated cost: $30 billion. That doesn't include the $10 billion the Seoul government is kicking in for infrastructure, like a 7-mile bridge (half-completed) with a suspension span to link Songdo with Incheon International Airport. "Unless you've been to Dubai or China," says Christopher Niehaus, vice chairman of Morgan Stanley Real Estate, which has an 8.75% interest in the venture, "it's hard to grasp the scale of this thing."

Hard to fathom, too, that behind this megaproject is a little-known Manhattan developer called Gale International, with a 70% stake in Songdo. Founded 22 years ago by Stanley Gale, the privately held developer has scraped out improbable deals in the past. In 2001 it spent $350 million in a frumpy Boston market to build the first office tower on spec there in more than a decade; after leasing the building for three years Gale sold the 36-story One Lincoln tower for $705 million in 2004, at the time the largest real estate deal in Boston's history. Last year it unloaded most of its portfolio to the REITMack-Cali Realty Corp. for $545 million. What's left: a piece of the $1 billion complex in Florham Park, N.J. of training grounds for the New York Jets, plus residential and commercial properties, and two Boston projects, one to develop Seaport Square ($3 billion), the other to develop One Franklin Street ($700 million), site of the old downtown Filene's.

Gale has never attempted anything like Songdo. "This isn't about one building," says John Hynes III, Gale's partner and chief executive. "This is about master planning a whole new city, and that will get anyone's blood flowing."

Brazil's new city Brasília was something of a flop, as was suburban Columbia, Md. Will it be different this time?

Since it signed on six years ago, Gale has battled intractable bureaucrats, a greedy Korean partner, hidebound ideas of urban planning and a public long wary of foreign investors. There have been commercial hurdles: Gale has so far nailed not a single blue-chip tenant. And physical challenges, too. Because the land underneath Songdo didn't exist, the government of Incheon dumped 110 million cubic yards of dredged sand and mountain rubble into the Yellow Sea. To support the skyscrapers, engineers called for 7-foot-diameter concrete piles to be drilled through 23 feet of landfill, 108 feet of seabed and 56 feet of bedrock.

Gale and Hynes arrived in South Korea serendipitously, without prior experience in Asia. Firmly planted in New York City, Gale, 57, had real estate roots going back to his paternal grandfather, Daniel, who became a broker in 1922 (the Daniel Gale Agency is now part of Sotheby's). Hynes, 49, opened Gale's Boston office in 1999 after spending 20 years brokering leases. A co-captain on Harvard's hockey team, Hynes comes from blue-blooded stock. His grandfather, John B. Hynes, was Boston's mayor from 1950 to 1960; the city's convention center bears his name. Hynes' father anchored Boston TV newscasts for decades.

The road to Songdo ran through the International Monetary Fund. As part of a $58 billion bailout, following the Asian currency crisis of the late 1990s, the bank insisted that South Korea increase its foreign reserves and seek outside investment--a requirement that collided with a longstanding law that barred non-nationals from owning Korean soil. (That law changed in 2003.) Seoul agreed to appoint a foreign developer for Songdo. In 2001 project officials selected Jay Kim, a Korean-American and former senior scientist of nuclear power plant design at Westinghouse, to approach U.S. developers. Kim, who lives in Pasadena, Calif., came to the U.S. 50 years ago after his family was separated in the Korean War. (If his brother is alive, he's somewhere in North Korea.) Kim found that few American companies wanted anything to do with a risky venture abroad. "Most developers were making a ton of money right here," Gale says. Kim dug up Gale when reading an Internet article about One Lincoln tower. Hynes agreed to meet Kim for a 20-minute cup of coffee in Boston. That afternoon Hynes agreed to fly to Korea. Two days later he called from Incheon: "Stan, you've got to get over here. These guys are serious. This is for real."

Gale hired Kohn Pedersen Fox Architects to design the city. (Among its projects: the Mohegan Sun Casino and the Shanghai World Financial Center.) The plans proved to be a little difficult because the landfill didn't yet exist. "The zoning back then was high-tide, low-tide," Hynes laughs. Gale spent two years and $10 million investigating the viability of the project. By the time it submitted the master plan in 2002, Gale had persuaded Morgan Stanley to join as a minority partner for $350 million in cash. That investment has so far secured $4 billion in loans from Korean banks, which Gale has used to buy land and build. It will borrow in chunks and eventually blow through $20 billion in loans at interest rates of 7% to 8%, retiring the debt as it sells property and splitting the profits with small shareholders, like Morgan Stanley and Lehman Brothers, and large ones like 30% owner Posco, the $25 billion (sales) Korean steel and construction giant.

The Incheon government agreed to sell the initial 100-acre parcel for $50 million in cash plus a promise from Gale to build a $150 million convention center and donate it to the city. Under the original deal, the government was going to pay for the center but extracted the freebie in return for expedited condo approvals. The convention center may well become Songdo's signature for its arching, multipeaked structure that evokes Sydney's opera house. But for Gale the building would prove to be the first of many hiccups.

The developer offered to build a 100-acre park and donate it to the city--if it got permits to build an underground parking garage, a nature center and an art museum. These, Gale figured, would provide cash flow to service debt on the park buildings. But municipal officials first okayed, then backed off the deal. After a year of haggling, Gale finally got approval for its plans.

Gale has also sparred with its Korean partner. It all started after the first sale of apartments in May 2005. The application line stretched for 2 miles, as Gale drew 170,000 qualified offers for 2,200 units. They sold out in one day for $1 billion. Posco--due 30% of the construction jobs, some commercial, some residential--cheekily asserted that going forward it would build all residential projects, trying to avoid holding equity in the riskier office buildings, of which it was obliged to front 30%. Gale said no but invited Posco to be part of the competitive bidding for the remaining 70% of residential. "They should win those bids," says Hynes. "But are they happy with that? No. They wanted the sure thing." Such accommodation would have wrecked Gale's business. It depends on netting 20% on residential projects in order to have enough cash to reinvest in office space. Posco says it's abiding by all its agreements.

Add to that some hostility from the Korean press, which has pegged Gale as a slash-and-burn opportunist, a typical American capitalist. Dallas' Lone Star Capital faced government charges of stock-price manipulation after it bought 71% of Korea Exchange Bank for a cheap $1.2 billion in 2003 following unrest in Korean credit markets. The Seoul government later blocked a May 2006 sale of that stake for $7 billion. "There is a desperate effort in Korea right now to compare us to Lone Star," Hynes says, "but we couldn't be any more different."

Some Koreans view the whole project with skepticism. "I think it's too early to say whether it will be successful or not, but initial opinions here aren't favorable," says Sohn Hyun-duck, economics editor at the Maeil Business Newspaper, Korea's vanguard publication. Gale has come under fire for building lucrative residential units before commercial lease buildings. Koreans want to see commercial space built and filled with big international companies with cachet.

So does Gale, even though it has only one such potential customer, United Technologies, the industrial conglomerate. Helping with introductions was Christine Todd Whitman, the onetime New Jersey governor and chief of the Environmental Protection Agency, who sits on the Songdo International Advisory Board and is a director at United Technologies. "No decisions have been made," says a United Technologies spokesman. Hynes says Gale is in discussions with Boeing and Microsoft, as well as Samsung Life, Shinhan Bank and Korean Air, among others.

Songdo will be one of the world's greenest cities. Wastewater from sinks and showers will be recycled for irrigation and toilet flushing, requiring two sets of pressurized waterlines in each apartment and office. Gearless elevator systems from Otis will use 75% less energy than standard ones; its elevators have flat polyurethane-coated steel belts that require no lubrication. United Technologies' Otis will debut its ReGen drive, which draws energy from a fully loaded descending elevator or a lightly loaded ascending car and converts it to electricity.

Another goal: to make Songdo the largest so-called ubiquitous city, where wireless networks and radio-frequency identification will link all information systems--every laptop, stoplight, cell phone, TV and toaster. Residents, it's hoped, will be able to time their commute out the door with the changing walk signals on the street 50 stories below. The buildings' heating and air patterns will adjust as weather changes.

"Seven more years," muses Hynes. "It's a marathon, but we're hitting some milestones now." That's making a virtue of necessity. The last American who tried for a quick conquest of Incheon was Douglas MacArthur, in 1950.

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A New City in South Korea

To save, South Koreans use credit cards

By Choe Sang-Hun
International Herald Tribune

Whenever Park Kyung Jin goes shopping, she methodically reviews which of her many credit cards to pull out. Not that the 28-year-old office worker is a shopaholic; rather, like millions of other South Koreans, she knows this is an easy way to trim costs.

"You feel like a loser if you pay in cash," she said, noting the generous discounts South Korea's intensively competitive credit card companies offer as incentives to use their products.

Thanks to what began in the late 1990s as a government campaign to fight corruption, South Korea has become one of the world's most credit card-friendly countries. As part of its effort to fight the all-too-free flow of cash in the underground economy, the government encouraged consumers to use credit cards and threatened tax audits of enterprises that refused to accept them. It even gives income tax rebates to people who report their annual expenditures using credit cards.

The result is that last year nearly half the 454 trillion won, or $491 billion, in private consumption in South Korea was settled with credit cards, one of the highest ratios in the world, government officials said.

Although South Korea ranked just 34th in per capita income among countries in 2005, it ranked fifth in per capita credit card spending, according to the Bank of Korea, the country's central bank.

Paying electronically is easy in this technology-savvy, densely populated country. In 2005, for every million people, there were 403,000 electronic cash registers that allowed them to pay with credit and debit cards, Bank of Korea data show. In Japan, there were 10,765 such terminals for every million people. This means South Koreans can pay for virtually anything with credit cards: parking tickets, highway tolls, pizza deliveries, even a 2,000-won bill at a street-corner noodle shop.

With cards everywhere, the challenge to vendors is to stand out to attract consumers. Gasoline stations, bookstores, airlines, shopping malls, telephone companies, bakeries, amusement parks, KFC outlets - even hospitals - give discounts if a customer presents the right type of card.

The incentives are so many and so diverse that, Park said, "Here a credit card is not just a tool of payment, it's also a way of saving money."

For instance, when Park wanted to buy a knitwear shirt for her husband, she visited a department store run by the Hyundai conglomerate, because her Hyundai card gave her a 5 percent discount and she could pay in interest-free installments over three months.

On her way home from work, she often buys groceries at a store owned by the Lotte conglomerate, where her Lotte card gives her a 5 percent discount.

Elsewhere, she uses her Citibank card, which gives her two free miles on the South Korean airline Asiana for every 1,500 won she spends. With 30,000 miles, she hopes to get a round-trip ticket to Japan.

Card companies also give their cardholders "point cash," a small percentage of each settlement. This point money, saved in the cardholder's account, can be spent like cash. People use it to buy movie tickets, pay for gasoline, make political contributions or donate to the homeless.

Card companies can also deposit the point money in the customer's personal bank account, as happened to Park in October, when she received 50,000 won of point money saved on subway and bus fares she had paid by credit card.

For both card companies and retailers, point money has become an essential tool for attracting customers through partnerships. For each credit card, there are up to two million shops where the consumer can use the card and get point cash.

"In South Korea, for virtually any payment you make at retail shops, there is a way you can save money if you use a credit card," said Jeong Sang Ho, a vice president at Hyundai Card, which has six million cardholders and controls 13 percent of the country's credit settlement market."

South Korea is a tough place to be a card company. You have to keep coming up with creative new incentives to stay in competition."But," he added, "it's the best place to be a cardholder."

Hyundai Card, a joint venture between the South Korean automotive giant Hyundai Motor and General Electric of the United States, plans to expand into the United States, China and India. It hopes that some of the business models developed for the picky South Korean retail market - a graveyard for some of the most competitive global brands, like Wal-Mart, Nokia, Nestlé and Google - will help.

In one business model Hyundai Card is proud of, it lends point money, usually 500,000 won, for the purchase of a Hyundai car with a Hyundai card. The cardholder must pay the loan within three years using point cash accumulated through other purchases on the card.

"This ensures that the cardholder will continue to use our card," said Kang Byung Kyoo, a Hyundai Card executive.

Other card companies like Samsung and Shinhan make similar loans to people who buy electronics or newlyweds who purchase furniture.

When the South Korean began encouraging credit card use in the late 1990s, card companies established kiosks on the streets and even issued cards to college students, luring them with cash gifts.

In a country with 23 million economically active people, the number of credit cards surged to 105 million in 2002 from 42 million in 1998. The bubble burst a year later, when the number of defaulters soared 41 percent to 3.7 million. Some were driven to suicide.

After huge debt write-offs, mergers and tightening standards for issuing cards, the six leading credit card companies posted a combined 2.2 trillion won in profit last year, recovering from a 7.7 trillion won loss three years earlier.

Now there are an average four credit and other settlement cards for each economically active South Korean, compared with an average five for an American.

With such cards being a principal tool for attracting customers, virtually every retail chain in South Korea is issuing "membership cards," which look like credit cards and offer discounts but are not used for payment. The most popular are membership cards from SK Telecom and KTF, the two main cellphone companies in the country. They give discounts at thousands of restaurants and movie theaters. Increased used of a cellphone yields greater discounts.

So the wallet of Lee Ji Won, a 29-year-old office worker, is crowded with a dozen credit and membership cards, including one from her dermatologist.

"There are so many," she said, "you sometimes really need to study the manuals to figure out which card you should use at which place to get which benefits." ◦

To save, South Koreans use credit cards

Postcard: North Korea

By: Jenn Gearey

There were seven of us gathered in the Red Wall Hotel in Beijing—an Australian criminal lawyer for the insane, a Scottish lord living out his 007 fantasies, two communism-curious retired Italian mechanics, a retired Italian pilot who made a sport of traveling to the world's most inaccessible places and a young Italian accountant living in Austria. And me, the not-so-secret journalist from Canada who was surprised to even be invited. We had all signed up for a most peculiar adventure: we were going to North Korea. As tourists.

This was made possible by a little-known NGO based in Europe called the Korean Friendship Association, which has created "friendship" (a.k.a. tourism) delegations for foreigners who want to catch a glimpse behind the curtain of the Hermit Kingdom. Anyone can apply—anyone, that is, with a passport that isn't from the U.S., Japan or South Korea. I turned in my application in September, and two months later I was in Beijing, where I plunked down $4,000 in cash for the 10-day trip. The next day my fellow travelers and I received our visas and boarded a Soviet-era Tupolev plane belonging to Air Koryo, the national North Korean airline, for the two-hour flight to Pyongyang. We had no itinerary because our trip was considered "secret" information at that point. After landing, we were asked to hand over any cell phone, computer with GPS, radio and video camera—all forbidden from that moment forward.

Before we arrived at our government-run hotel (which had authentic North Korean touches like no heat or hot water despite the freezing temperatures), our minibus stopped at a statue of the deceased Great Leader Kim Il Sung, where we were told to bow and present flowers. Being a tourist in North Korea was going to be even more bizarre than we had thought.

Our tour guides were, of course, actually government minders. They led us through each day's treadmill tour of statues and museums dedicated to Dear Leaders past and present. But their real job was to keep an eye on us and to control the images we would take back home. For example, when we passed any sort of poverty still life—women washing dishes in the gutter, an old dirty truck piled high with cabbage—they either ordered us to put our cameras down or deleted our pictures after the fact. The guides also had an unsettling habit of taking pictures of us at every tour stop, for reasons they never quite explained. Every once in a while they let slip information that made it obvious they were electronically monitoring our hotel rooms and phone calls. All in a day's work for a North Korean tour guide.

How did we respond to Big Brother? Some among us were braver than others. The Austrian-based accountant tried to goad the guides into talking politics; the Italian retirees criticized the constant Kimilsungist propaganda, but only in Italian. After a while, I rebelled against the picture policing, even daring to sneak a snapshot of a grim military convoy with thousands of conscripts headed to points unknown.

Others on the tour just gave in. At a stop near the end of our trip, our Australian comrade wrote in a guest book, "Long live North Korea and good luck with the war against the United States."

If there was a highlight to all this strangeness, it was our visit to the demilitarized North--South Korean border. It was there, of all places, that we expected to be on a leash. But in fact, we were freer there than we had been anywhere else—permitted to take pictures of the soldiers on guard and given enough space by our minders that we could have even made a dash for the South Korean border. I don't know if tourists have ever defected from North Korea, but after more than a week of constant surveillance and ceaseless propaganda—basically, living like a member of its society—it didn't seem like such a bad idea.

◦

Postcard: North Korea

South Korea and Japan to resume FTA talks

Optimism is in the air that the stalled and deadlocked free trade talks with Japan will see a fresh breakthrough under the economic stewardship of President-elect Lee Myung-bak.

Rosy speculations abound, as the 66-year-old former Hyundai CEO has been stressing improved relations with Japan, while underscoring the importance of "practical diplomacy'' and economic cooperation.Recent remarks by the country's president-in-waiting and Japanese Prime Minister Yasuo Fukuda prioritizing the advancement of pan-Asian ties, will combine to create an even cozier atmosphere for a renewed start of trade talks between the neighboring countries.

Seoul and Japan have so far held six rounds of free trade agreement (FTA) negotiations, but the talks have been at a standstill since November 2004 due to difficulties in bridging the gap over the level of market opening. Korea has called for a high-level opening in the agricultural and fisheries industries, while Japan has demanded only a 50 percent "let-in'' for Korean agricultural imports with a quota on fishery goods.

As the bilateral talks between the world's second and 13th-largest economies continued to go sour, both have been blaming each other for the stalemated.With this Seoul-Tokyo status and further FTA possibilities in mind, Lee, who promised to be an "economy president,'' fronted the free trade agenda as one of his primary campaign pledges.

"The ongoing talks with the European Union will be finalized soon, followed by evaluations and opening of new FTA talks with China, Japan, Russia and other countries,'' Lee said on his campaign trail.

Professor Jeong In-gyo of Inha University, who worked as an advisor for Lee's FTA policies, Tuesday said, "Japan's position regarding an FTA with Korea is showing signs of change,'' according to Yonhap News.

He added that Lee's administration may prioritize finishing off the deal with Tokyo first, before moving onto new accords.

Many factors seem to be driving these efforts, but economic experts and the business circle, which have been strong backers of Lee, were said to have voiced the necessity of the bilateral deal.

The Federation of Korean Industries and the Japan Business Federation jointly agreed last month in Tokyo to push for the conclusion of the Korea-Japan FTA.

And Japan's largest business daily, the Nihon Keizai Shimbun, reported last week that high expectations have been placed on the resumption of the stalled talks, contributing to the optimism.

http://www.investkorea.org/InvestKoreaWar/work/ik/eng/nr/nr_01_read.jsp?no=608300001&l_unit=90202&bno=712280002&page=1&sort_num=3709 ◦

South Korea and Japan to resume FTA talks

North Korea set to miss nuclear deadline

North Korea appeared set Monday to miss a year-end deadline to disable a key nuclear reactor and declare all its nuclear programs, key elements of its disarmament as agreed to in an international accord.

The U.S., Japan and South Korea expressed disappointment. But there was no indication that North Korea would immediately face any sanction — suggesting countries involved in negotiating the agreement were reluctant to raise tensions after a year of progress in the long-standing dispute.

The communist country promised in October to disable its main nuclear reactor at Yongbyon, north of Pyongyang, and give a full accounting of its nuclear programs by Dec. 31 in return for energy aid and political concessions.

The North shut down the plutonium-producing facility in July and disablement work is under way in cooperation with U.S. experts.

But diplomats have said the North is likely to miss the year-end deadline for disablement because a key step — removing fuel rods from the reactor — could take several months. South Korean Foreign Minister Song Min-soon has said there would also be problems in meeting the deadline for disclosure.

There was no immediate comment from North Korea on Monday. Last week, a North Korean official complained of delays in the delivery of economic aid and said the country would have no choice but to slow disablement.

Song, however, downplayed the remarks and said the disablement work was going well.

The United States, which has said it was not aware of delays in delivering aid to the North, criticized the country's failure to disclose its nuclear programs.

"It is unfortunate that North Korea has not yet met its commitments by providing a complete and correct declaration of its nuclear programs and slowing down the process of disablement," State Department deputy spokesman Tom Casey said Sunday.

"We urge North Korea to deliver a complete and correct declaration of all its nuclear weapons programs and proliferation activities and complete the agreed disablement," he said.
South Korea's Foreign Ministry pressed the North as well.

"Our government urges North Korea to faithfully declare all nuclear programs at an early date and complete disablement steps without delay," the ministry said in a statement.

Japan also expressed regret that the North appeared set to miss the deadline, and urged the regime to declare its nuclear programs immediately.

"North Korea must provide a complete and accurate declaration of all its nuclear programs at the earliest possible date, and make swift and solid progress in disabling its three nuclear facilities at Yongbyon," Japan's Foreign Ministry said in a statement released Monday.

The nuclear standoff began in late 2002 when the U.S. accused the North of seeking to secretly enrich uranium in violation of a 1994 disarmament deal.

In late 2003, the North began negotiations over its nuclear program with the U.S., China, Japan, Russia and South Korea. As talks stalled, North Korea conducted its first nuclear test, an underground blast, in October 2006.

Renewed talks led to a disarmament deal in February.

Reasons for the delay in declaring the nuclear programs appear related in part to the country's suspected uranium enrichment program. Song has said that more consultation was required on the alleged program. ◦

North Korea set to miss nuclear deadline

Korea's reading and math performance

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Korea's reading and math performance

A landslide in South Korea - does a new era beckon?

AS VOTING ended in South Korea’s presidential election, exit polls indicated what most in the country had anyway expected: the opposition Grand National Party’s Lee Myung-bak was to be the country’s president. Mr Lee won a thumping endorsement, securing close to 50% of the vote in a 12-man presidential field. Mr Lee’s victory brightens the conservative GNP's prospects of also winning control of the legislature in elections next April.

So ends a decade of liberal rule by Kim Dae-jung and his successor Roh Moo-hyun. South Koreans are disillusioned with Mr Roh, who talked about improving their lot but failed to deliver robust economic growth. His divisive rhetoric angered many. “A president has to bring the country together,” Hyundai's chairman and a legislator, Chung Mong-joon, suggested. “Roh Moo-hyun divided the country.”

Many South Koreans believe that Kim Dae-jung’s “Sunshine Policy’’ of being friendly towards North Korea, which continued under Mr Roh, brought them little in the way of security. Kim Jong Il’s dictatorship developed and tested nuclear bombs despite it. South Koreans suspect that vast amounts of money have been paid to the north in return for summits with the dictator. Mr Lee wants an end to aid if North Korea does not give up its nuclear-weapons programme. He intends to use six-party talks (with China, America, Japan, Russia and North Korea) to put pressure on the north.

Raised in poverty, like many of his 49m countrymen, Mr Lee has an appealing chutzpah. Voters evidently liked the 66-year-old's strong personal story: he overcame malnutrition, paid his own way through university by working as a rubbish collector, and eventually rose to become the boss of ten Hyundai affiliates. His pragmatism helped, too. He is not an old-guard conservative. He was arrested and jailed during his university days. As mayor of Seoul, the capital, he sought to beautify the city. He planted trees, widened pavements, created green public spaces and improved public transport.

Mr Lee’s last election rally was in the centre of Seoul beside the Cheonggyecheon stream. The revival and beautification of the 5.8km waterway through the city became a symbol of his success as mayor. For many voters his ability to graft a consensus among Seoul’s diverse interest groups, to complete the project, augurs well for his time in higher office.

As president Mr Lee says he will slash taxes and ease regulations in order to boost consumer spending. At a news conference the day before the poll he promised a “new era” of economic growth once he takes office in February. He even made specific predictions, suggesting that South Korea’s main stock index will rise to 3,000 one year into his presidency and will be at 5,000 when his five-year term ends. The Kospi closed at 1,861.47 on the day before the election.

If there is a cloud already on the horizon it concerns corruption. Mr Lee sees South Korea’s chaebol (conglomerates) as important allies in reviving the economy. Thus many suspect he will not press prosecutors to investigate alleged bribery and influence peddling at Samsung. Mr Lee, too, is under investigation for his role in an investment scheme that defrauded thousands. He protests that he “has never been involved in scandal as a CEO or as Seoul mayor” and blames his opponents for spreading propaganda against him. By the time Mr Lee is scheduled to take office, he promises, his name will be cleared.

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A landslide in South Korea - does a new era beckon?

Baby girls now welcome in South Korea

When Park He-ran was a young mother, other women would approach her to ask what her secret was. She had given birth to three boys in a row at a time when South Korean women considered it their paramount duty to bear a son.

Park, a 61-year-old executive, now gets a different reaction. "When I tell people I have three sons and no daughter, they say they are sorry for my misfortune," she said. "Within a generation, I have turned from the luckiest woman possible to a pitiful mother.

"In South Korea, once one of Asia's most patriarchal societies, a preference for baby boys is receding. And that has led to what seems to be a decrease in the number of abortions performed after ultrasounds that reveal the gender of a fetus.

According to a study released by the World Bank in October, South Korea is the first of several Asian countries with large gender imbalances at birth to reverse the trend, moving toward greater parity between the sexes.

Last year, the ratio was 107.4 boys born for every 100 girls, still above what is considered normal, but down from a peak of 116.5 boys born for every 100 girls in 1990. The most important factor in changing attitudes toward girls was the radical shift in the country's economy that opened the doors to women in the work force as never before and dismantled long-held traditions.

Demographers say the rapid change in South Koreans' feelings about female babies gives them hope that gender imbalances will begin to shrink in other rapidly developing Asian countries -- notably China and India -- where the same combination of a preference for boys and new technology has led to the widespread practice of aborting female fetuses.

orlandosentinel.com/services/newspaper/printedition/sunday/orl-skorea2307dec23,0,390019.story ◦

Baby girls now welcome in South Korea

Ex-Hyundai CEO wins South Korean Presidency

A former Hyundai CEO known as "The Bulldozer" for his determination to get things done rolled over all opposition and financial fraud allegations to win South Korea's presidency Wednesday, ending a decade of liberal rule.

A day after his landslide victory, Lee Myung-bak pledged to work for a nuclear-free Korean peninsula and strengthen Seoul's alliance with the United States.

"The most important thing is for North Korea to get rid of its nuclear weapons," he told a news conference Thursday.

Lee, who turned 66 on election day Wednesday and has also served as the mayor of Seoul, earned his win on a wave of discontent with incumbent President Roh Moo-hyun, whom many believe bungled the economy and dragged down the country's rapid growth.

The National Election Commission said Lee had 48.7 percent of the vote after all ballots were counted. Liberal Chung Dong-young was a distant second with 26.1 percent.

It was the biggest margin of victory in any South Korean presidential election. The candidate with the most votes wins and there are no run-offs. Turnout was a record low 63 percent of 37.7 million eligible voters.

South Koreans apparently wanted change so badly that they were willing to overlook accusations of ethical lapses that dogged Lee throughout his campaign.

Just days before the election, parliament approved an independent counsel investigation into allegations that Lee manipulated stock. The investigation is to be completed before the Feb. 25 inauguration, and Lee has said he will step down if found at fault.

"After all, the people chose the economy over morality," the Maeil Business Newspaper wrote in an editorial for its Thursday editions.

Lee's conservative Grand National Party asked for a veto of the independent counsel bill. "What I'm asking for President Roh to do is veto such legislation before he leaves office for the sake of the national unity," Kang Jae-sup, chairman of the Grand National Party, told KBS radio Thursday.

Presidential spokesman Oh Young-jin responded by saying Roh had earlier expressed his intention to sign the investigation bill.

Lee emphasized the economy in his campaign with a "747" pledge — promising to raise annual growth to 7 percent, double the country's per capita income to $40,000 and lift South Korea to among the world's top seven economies. He also proposed a "Grand Canal" linking Seoul to the southern port city of Busan that would improve transport and be a tourist attraction.

"Today, the people gave me absolute support. I'm well aware of the people's wishes," Lee told supporters at his party's headquarters. "I will serve the people in a very humble way. According to the people's wishes, I will save the nation's economy that faces a crisis."

Lee heads to office amid progress in the long-running standoff over North Korea's nuclear weapons program, fostered by U.S. political and economic concessions to Pyongyang.

The president-elect is expected to tie aid to continued compliance with international demands in the atomic dispute in line with Washington's wishes, but was not expected to make any dramatic change in assistance while the North remains on the path to disarmament.

"The North's abandonment of its nuclear programs is the way for the North to develop" its economy, Lee said in his comments to reporters Thursday.

Lee said he would not shy away from raising the North's shortcomings. "I think unconditionally avoiding criticism toward North Korea would not be appropriate."

On relations with Seoul's key Washington ally, Lee said he would "renew the common values and peace based on trust."

The Bush administration congratulated Lee on his victory, saying it expected close cooperation with his government over the North Korean nuclear dispute.

"We have a long history of cooperation and friendship with South Korea and fully expect that'll continue with this new government," said State Department spokesman Tom Casey.

Hundreds of supporters watching the results on a giant TV in front of the Grand National Party's headquarters burst into song Wednesday evening as Lee's victory became clear.
"I am very happy and it is like retaking democracy after a decade" of liberal rule, said Park Mi-won, a housewife in her 50s.

Lee rose from the poverty that gripped the peninsula after the 1950-53 Korean War and worked as a janitor to put himself through college.

He first gained prominence as head of Hyundai's construction unit, which symbolized South Korea's meteoric economic rise in the 1960-70s. As Seoul's mayor from 2002-2006, he undertook beautification projects in the city that earned him environmental credibility and were viewed as redemption for earlier eyesores he built with Hyundai in the country's haste to develop.

It was during his three decades with the Hyundai Group that Lee earned the nickname "Bulldozer" for his drive to push through challenges. In one instance, he completely took apart a bulldozer to study its mechanism and figure out why it kept breaking down.

"I feel good that the right person was elected. I voted for him because he is an economic president," said Lee Myung-ja, 60, a housewife who was among crowds gathered to watch vote results near a restored stream in central Seoul that was Lee's landmark project as mayor. "I hope President Lee Myung-bak will focus on economic growth so as to make the people better-off."

Taking the luster off Lee's victory were lingering allegations of involvement in a stock manipulation case in which a former business associate faces criminal charges for illegal gains of millions of dollars. A video released Sunday by his liberal rivals showed Lee saying in 2000 that he founded the firm at the center of the case.

Lee has said the taped comments were taken out of context and denied the allegations, but consented to the independent counsel to clear his name. He is the country's first president-elect to face a criminal probe.

By South Korean law, a president-elect can be prosecuted but he would receive immunity from most criminal lawsuits after inauguration.

http://news.yahoo.com/s/ap/20071220/ap_on_re_as/skorea_presidential_election_40

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Ex-Hyundai CEO wins South Korean Presidency

Daewoo in deal with Paramount for theme park

Daewoo Auto Sales and Paramount Pictures of the United States signed a contract yesterday to build a 1.5 trillion won ($1.6 billion) theme park in Songdo by 2010.

The attraction will be in an area where the Korean government has been building an economic zone to attract foreign investors and companies. The deal comes as a number of Korean companies and provincial governments are scrambling to make deals with foreign entertainment groups to revive the fortunes of the regional economy and lure more foreign tourists.

Daewoo Auto Sales said in a statement yesterday that the two companies would kick off construction of the project in July 2008. It is expected to create 13,000 jobs and spur new economic activities worth about 1 trillion won by the time it is completed in late 2010, the company said.

Daewoo Auto Sales, established in 1993 by the now-defunct Daewoo Group, has recently expanded its business portfolio from car sales and parts production to car rental and construction.

“We estimate the new movie theme park will attract about five million people or more annually and post annual sales of 1.1 trillion won,” Daewoo Auto Sales said in a statement.

The movie theme park, to be erected on a 50-hectare site, will feature a 3D simulation studio to allow visitors to experience movies produced by Paramount Pictures like “Transformers.” There will be a water park, a kids’ studio featuring animated film characters like SpongeBob SquarePants and a hotel, according to Daewoo.

Attracting theme parks has become something of a fad here. In November, Gyeonggi Province signed a memorandum of understanding with Universal Studios for a 2.9 trillion won attraction in Hwaseong, 25 miles south of Seoul, by 2012. The city government of Siheung, Gyeonggi, is also negotiating with Disney and MGM Studios for a park.

http://www.investkorea.org/InvestKoreaWar/work/ik/eng/nr/nr_01_read.jsp?no=608300001&l_unit=90202&bno=712140018&page=1&sort_num=3703 ◦

Daewoo in deal with Paramount for theme park

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. ◦

Elections in South Korea - 19 Dec 2007

Cargo trains begin service between the two Koreas

The first cargo train providing regular service across the border between the two Koreas in more than a half-century left Tuesday for the North. The 12-car train carrying construction materials will cross through the heavily fortified Demilitarized Zone dividing the peninsula on its journey to the North Korean border city of Kaesong, where the two Koreas operate a joint industrial zone. It was to cross back later Tuesday.

The service is one of the tangible results of an October summit between North Korean leader Kim Jong Il and South Korean President Roh Moo-hyun that outlined a series of joint projects. It comes months after the two sides conducted a one-time test run of passenger trains on two reconnected tracks on the western and eastern sides of the peninsula.

The cargo train will make a 10-mile round trip every weekday to North Korea.

It remains unclear whether regular passenger train service will start anytime soon, but one of the train's engineers was hopeful Tuesday.

"I expect a day will come when South Koreans visit North Korean tourist attractions freely by train," Shin Jang-chul, whose parents are from what is now North Korea, told reporters before departing.

South Korea hopes the inter-Korean railway will ultimately be linked through North Korea to Russia's Trans-Siberian railroad and allow an overland route connecting the peninsula to Europe — significantly cutting delivery times for freight that now requires sea transport.

The cargo rail service is likely to give a further boost to the sprawling Kaesong complex, which marries South Korean technology and management expertise with North Korea's cheap labor.
Currently, 64 South Korean companies operate factories there, employing about 21,600 North Korean workers and producing a range of goods including watches, clothing and shoes.

South Korea hopes the Kaesong project will encourage isolated North Korea to reform its centrally controlled economy and eventually open up to the outside world.

The rail lines between the Koreas were severed shortly after the outbreak of the 1950 Korean War. The conflict ended in a 1953 cease-fire that has never been replaced by a peace treaty, leaving the sides technically at war.

Already, dozens of cars, trucks and buses regularly cross the border between the two Koreas via reconnected roads both to the Kaesong complex and also to a tourism resort at North Korea's Diamond Mountain.

The transport links between North and South were reconnected after the first-ever summit between leaders of the divided nation in 2000.

http://news.yahoo.com/s/ap/20071211/ap_on_re_as/koreas_trains_6 ◦

Cargo trains begin service between the two Koreas

Universal Studios picks site for South Korean theme park

Universal Studios picks site for $3.1 billion South Korean theme park

Universal Parks & Resorts and South Korea's Gyeonggi province said they have agreed on plans for a $3.1 billion theme park to be built south of Seoul.

The park, to be built in the city of Hwaseong, is set to open in 2012 and will lead to the creation of over 58,000 new jobs, said a press release provided by Universal Parks & Resorts, the operator of Universal Studios theme parks, and Gyeonggi province. The release said the two sides would sign a formal agreement later.

Universal Parks & Resorts, a division of General Electric Co.'s NBC Universal, operates parks in Orlando, Florida, and Hollywood, California, in the United States, as well as in Osaka, Japan.

The parks include attractions based on Universal films including "E.T. The Extra-Terrestrial" and "King Kong," as well as movies made by other studios such as "Spiderman" and "Shrek."

Universal, which first announced plans for a park in South Korea in May, is cooperating with South Korean partners including Posco Engineering & Construction Co., a unit of steelmaker Posco.

Universal Parks & Resorts is also developing Universal Studios parks in Singapore and Dubai.

The location, about 19 miles south of Seoul and also close to its main international airport in Incheon, will be conducive to attracting both South Korean visitors as well as those from nearby China, the release said.Plans are for the facility to also include a convention center, hotels golf courses and an outlet mall, the release said. ◦

Universal Studios picks site for South Korean theme park

North Korea: Capitalist sprouts in unfertile soil

SOME members of North Korea's elite have long drunk the world's most expensive cognac and nibbled caviar. Others in Pyongyang, capital of the world's last Stalinist regime, drive luxury imported cars. Fairness and equality are proudly touted as the hallmarks of North Korea's self-reliant brand of socialism. But with more cash circulating under the country's economic reforms and goods more plentiful, Pyongyang residents are fast becoming consumers. Remarkably, some are also becoming investors in the property market—despite the government's theoretical monopoly on the allocation of housing.

Inspired by neighbouring China, North Korea initiated economic reforms in 2002. Most wage and price controls were dropped and the market was opened to some private commerce. After five years of reform, the new wealth has gravitated mainly to the city's privileged class.
One recent trend is for residents to trade up to bigger, newly built apartments. Under the country's Land Law, passed in 1977, all land belongs to the country and co-operatives, and cannot be bought, sold or even occupied. Yet a North Korean student who studied in China says businessmen are satisfying the demand for up-market housing by obtaining land rights from the local authorities and financing construction with capital from their customers. Chinese experts on North Korea say that the government itself has actually played an active role. Some of its agencies have financed the redevelopment of their properties with capital from their staff. They have then turned a profit by selling the new apartments through the government's housing department.

The student says each apartment covers about 150 square metres (1,600 square feet) and costs as much as $40,000 in the popular Moranbong and Central districts of Pyongyang. Construction is now under way at six or seven sites in the capital's residential areas. The building methods used are outdated, dominated by handmade concrete bricks. A five-storey building can take six months to complete. Because the construction is illegal there are fears that some of the newly built blocks might lose their permits or be confiscated even if they have already been paid for.
Officially, each citizen is entitled to receive 14 square metres of living space. But occupation, rank and “contribution” to the country can make a big difference. A “hero mother” who gives birth to triplets would receive a 200-square-metre home. One 28-year-old woman, who works as a tour guide, boasts of living in the Moranbong district in a 170-square-metre apartment with four bedrooms and two bathrooms, thanks to her father's senior government position. Only married couples are eligible for an apartment from the government, but the guide, who says she is single, claims to be wangling one for herself.

The government probably tolerates privately financed buildings because it is strapped for cash and cannot afford to build housing for its citizens. Many uncompleted, suspended building projects dot Pyongyang's skyline. Cranes gather rust, still perched on top of the buildings. North Koreans hope that foreign capital will help finish the buildings. According to Tigereye62.com, a website covering business in North Korea that is based in China's border city of Dandong, the government is soliciting $50m-60m for Pyongyang's historic Taedong-gang Hotel. The building, where “Dear Leader” Kim Jong Il spent many years with his father, Kim Il Sung, burned down four years ago. The government is also hoping foreign investors will stump up $30m-45m for the partly completed Ryugong Hotel, which was designed to be Asia's tallest, with 105 floors. Construction has been stalled since 1992 because of a lack of funds.

The building mini-boom is good for the tiny cognac-sipping elite. But its members must worry about how the poverty-stricken majority, reared on promises of equality, will react to the sight of their new homes and growing prosperity. ◦

North Korea: Capitalist sprouts in unfertile soil