Consulate General of the Republic of Korea in Hong Kong

Remarks by the President at the New Year Press Conference

on January 12, 2015

Fellow Koreans,

2015, a new year full of hope, has dawned. I wish you all and your families abundant happiness and peace.

Over the past year, there were many difficulties at home and abroad, but we have overcome them all and entered the Year of the Blue Sheep. All this has been possible thanks to your unwavering and steadfast support. Once again, I am grateful to you for extending your trust and keeping an eye out for my Administration.

There have been several disturbing incidents recently. But now, I am committed to working out measures to prevent anything similar from happening again. Especially in regard to the distressing case involving the leak of Cheong Wa Dae documents, I feel heavyhearted and sorry that it has caused so much frustration.

Civil servants are supposed to serve the nation with dedication and selfless service. Any act that disrupts discipline at work for personal advancement should not happen and can never be condoned. Some false documents, whose authenticity had not been verified, were leaked and caused undue confusion. Acts that create disturbances with falsehoods should never be repeated—for the sake of young people and of building an upright society.

Fellow citizens,

Since my inauguration, I have worked as hard as I can only for the future of our people and the Republic of Korea. I will continue to give my all in service during the rest of my tenure. I will work to reestablish discipline in the civil service so that there will never be another occasion when public officials plunge the country into confusion.

Now is the time for us to put this situation behind us and pull together to revive the economy. This is a very significant year, marking the 70th anniversary of liberation. In addition, in this third year of my Administration when there will be no nationwide elections, we have a golden opportunity to regain economic vitality and pool the nation’s capabilities. Making the most of this opportunity, the Government will work together with you to turn 2015 into a year of hope.

Fellow Koreans,

The world economy is going through a period of great transition in the wake of the global financial crisis, and competition among countries is increasingly intensifying.

At a crossroads that will determine whether our economy takes off or stagnates, we need to reform economic fundamentals and put new growth engines in place by fundamentally setting right the wrong systems and practices that have long accumulated. If not, we will be destined to lag behind in world competition.

How we respond to these challenges and crises will not only affect the current generation but also have a direct bearing on the survival of future generations. With a view to surmounting these challenges, I unveiled my Three-year Plan for Economic Innovation last year.

I said that my Administration would help create an economy with solid fundamentals by rectifying the problems of lax management in the public sector as well as wrong market systems and practices, make a dynamic, innovative economy through the creative economy initiative and ensure balance between domestic demand and exports so that the fruits of growth would be equitably distributed.

If these plans are carried out as scheduled, I am convinced that the economy will maintain a potential growth rate in the 4 percent range, an employment rate of 70 percent and a per-capita income of US$40,000.

Last year, the first year for the three-year plan, the Government focused on implementing core tasks. As a result, it is estimated that Korea’s economic growth has outpaced the global growth rate for the first time in four years, and more than 500,000 new jobs have been created for the first time in 12 years. Even amidst the global economic downturn, Korea achieved record-high exports, trade surplus and trade volume, dubbed as the “triple crown,” for two consecutive years.

Despite these accomplishments, it is regrettable that the warm breeze of economic recovery has yet to evenly permeate all corners of our daily lives. I will redouble efforts to resolve these difficulties by all means.

Fellow Koreans,

I believe that all these difficulties you are suffering can be ascribed to the structural problems in the Korean economy.

Only when we take a fundamental approach through structural reform, no matter how hard and difficult it might be, will we be able to leave a healthier Republic of Korea to future generations. A means of achieving this goal is the Three-year Plan for Economic Innovation, which has been chosen as the best among the G20 growth strategies.

As this year is the first year when the budget drawn up for this plan will be disbursed, it will be carried out in earnest based on institutional frameworks formulated last year.

First, I will help create an economy with solid fundamentals by stepping up structural reform efforts centering on four major areas—the public sector, labor, finance and education. These four areas are integral parts of the economy and society, and they are closely connected pillars. Nonetheless, they have long served as the fundamental causes of socio-economic inefficiency and diminishing competitiveness, thereby causing public distrust.

To begin with, the second-phase normalization of public institutions will be pushed and made to lead the reform drive in other fields. Reform in the public sector is the beginning of all reforms.

Last year, public institutions were able to reduce debts in the amount of 24 trillion won through their own painstaking efforts, also saving one trillion won in welfare benefits over the next five years.

In implementing the second-phase normalization plan, unnecessary or overlapping functions that have accumulated over time will be either eliminated or responsibility for them will be concentrated in one organization; public institutions will thus be made to focus on their core areas of competence.

The success of these endeavors will help improve productivity and efficiency in the public sector, enabling it to provide the most effective and affordable public services to the people.

The government employees’ pension must be reformed.

The deficit in the pension in the amount of 2.5 trillion won was covered with taxes last year. The pension deficit is forecast to snowball to 3 trillion won this year and to 10 trillion won in a decade. If left unattended like this, it will end up saddling the next generation with an astronomical amount of debt reaching as high as 484 trillion won in total or 9.45 million won per person.

No one questions that the civil servants who have devoted themselves to the nation day and night have laid the foundation of this country. I understand that it will be hard, but I sincerely urge the ruling and opposition parties to make concessions and pass without fail the public pension reform bill along with other stimulus package measures, including the introduction of the extension of retirement age and the wage peak scheme, by the month of April as they agreed to.

By pursuing reforms in the labor market in a mutually beneficial manner, the Government will create more job opportunities and reinvigorate the economy. Labor market reform is not a matter of choice but an indispensable survival strategy. Without addressing persistent labor market dual structure, typified by discrimination against non-regular workers, it would be difficult to create decent jobs and revitalize the economy.

On December 23 last year, representatives from labor, management and the government came to an agreement on the principles and directions for reforms in the labor market. Through this, we found a seed of hope that Korea would also be able to realize a grand social compromise as was done in the Netherlands and Denmark.

If the labor market is reformed, it would allow young people, the future of the nation, to have quality jobs and would help further enhance our country`s competitiveness. I urge representatives from labor and management to work out a master plan for the reform of the labor market by the end of March without fail in a spirit of collaboration for mutual benefit.

Now is high time for the financial sector to resume its role of a driving force for economic growth. First and foremost, we have to do away with financial institutions` outdated, risk-free practices of only lending on the basis of collateral or a guarantee in the interest of self-preservation. The Government will create an environment where financial experts with creative minds, who provide funds to businesses by evaluating their technological prowess or growth potential, are treated well.

Financial deregulation also has to be carried out in an unprecedentedly sweeping manner.

As a result of settling for such an out-of-date online security regulation as ActiveX for far too long, overseas direct purchases by domestic consumers have skyrocketed while such purchases by foreigners have remained in their infancy.

If foreign consumers` direct purchases from Korea`s online markets are increased thanks to deregulation measures that facilitate online payments as in some other countries, the benefits could be tantamount to those from exports.

The Government will do its best to carry out educational reform for the sake of the nation`s ambitious far-sighted vision for the next 100 years. Above all, we will further expand the implementation of the free-learning semester, which is designed to help put the dreams and gifts of students into action by freeing them from the sole focus on the entrance examination. I urge public institutions to take the initiative in providing students with such opportunities.

The Government will finalize the plan to halve university tuitions by making them contingent on income within this year as promised, thereby making sure that there are no students who give up going to college because of financial hardship.

For a shift to education focused on meeting the actual demands of industries, a Swiss-style vocational training school featuring an apprenticeship will be started on a test basis, and increased assistance will be given to community colleges that enter into a contract with businesses for the employment of their graduates.

As part of efforts to build a society where abilities come before educational background or credentials, government organizations will take the lead in greatly expanding employment based on the National Competency Standard starting this year.
Fellow Koreans,

The second strategy for economic innovation is to recover economic dynamism.

To this end, the Government will first spread the principles of a creative economy to all industries nationwide to infuse new vitality into the economy. In order to actively foster and support SMEs, key players of the creative economy, the Government will open Centers for Creative Economy and Innovation in 17 provinces and cities by the end of the first half of this year. These Centers will be linked to conglomerates for exclusive one-on-one assistance and will provide one-stop support services for matters related to finance, law and business consulting. Importantly, by connecting them with specialized local industries, they will be nurtured into hubs that lead the local economy.

The Government will also push ahead in earnest with the Strategy for Innovation in Manufacturing 3.0; it will create new future growth engines through innovation in the manufacturing processes such as the expansion of smart factories and the development of such core technologies as the Internet of Things, 3D printing and big data, and it will help the manufacturing industry reestablish itself as a magnet for excellent, talented young people.

On top of this, the Government will redouble its efforts to foster new energy industries to turn the crisis posed by climate change into an opportunity. While cutting down on the emission of greenhouse gases, it will secure new breakthroughs for growth such as electric vehicles, zero-energy buildings and environment-friendly energy towns.

Korea`s economic territory is expanding day by day.

Korea has recently been able to conclude FTAs with five countries, including China, Canada and Vietnam, as a result of engaging in several rounds of consultations with the heads of state in a creative manner, departing from the existing approaches that resulted in the slow progress in negotiations over the past nine years.

As the combined markets of Korea`s FTA partners have expanded to account for over 73 percent of global GDP, it is now possible for domestic businesses to export with enhanced price competitiveness. With government support measures for FTA utilization taking more concrete shape, an increasing number of SMEs have won new overseas contracts. Accordingly, the rate of export increase to FTA partner countries is more than twice the average rate of overall export increase. The Government will continue to provide necessary support so that FTAs will serve as a solid foundation for the expansion of exports by our businesses.

In order to turn critical situations caused by rice tariffication and FTAs into an opportunity, the Government will push ahead with strategies to develop agriculture into a future growth engine and export-oriented industry. With the launch of a Sejong creative town as a starter, smart farms will be up and running in earnest. If we develop and utilize ICT standard models in various sectors, including rural tourism, distribution and education, it would make it possible to advance the nurturing of agriculture into a sextic industry.

The Government will foster agriculture as an export industry so that, using FTAs as a stepping stone, our farm produce will go beyond China and Southeast Asian countries to reach Halal food markets, too.

On the strength of our advanced technological prowess, healthcare services will also be nurtured as a future growth engine and export industry.

Fellow Koreans,

Culture constitutes a core content that continuously provides new momentum to a creative economy, and it spearheads the moves to pioneer new economic territories. Many countries in the world are now creating new industries with culture and developing new markets with the culture industry, thereby forging cultural territories. If we lag behind at a time when many countries around the world are engaged in fierce competition to secure increased cultural and digital territories, we would end up losing future growth engines and income sources for the next generations.

The Government will generate new future growth engines, which are mainly driven by creative culture, to make our future brighter.

First of all, the Government will promote the value of intangible cultural assets through measures for active support and development, thereby fostering the culture content industry as a main pillar of a creative economy. If it is coupled with Korea`s strengths in digital technology, it would become possible to bring about a new digital culture industry that could change the trends of the global digital consumer market.

If we forge a new platform that encourages a more systematic cycle between supply and demand of cultural content and digital culture, it would also be possible to develop a new market of a scale beyond our imagination.

As such, by pioneering future markets by means of culture and gaining new growth momentum, the Government will endeavor to help our nation emerge as a cultural powerhouse in the world.

My fellow citizens,

The third strategy for achieving economic innovation is to strengthen domestic demand as a means to achieve balance between domestic demand and exports. To this end, our most urgent priority is to reform the entrenched regulations that have been the underlying cause of weak domestic demand and low growth.

Deregulation is vital to shifting the economic center from the Government to the private sector. Last year, concerted government-wide action resulted in the reform of 3,000 regulations, three times more than in the previous year. At the end of the year, we adopted a regulatory guillotine approach that dealt with various persistently unresolved regulations in one stroke.

Through measures to relieve outstanding entrepreneurs from joint liability for loans, the Government made it possible for young people with bright ideas and technological skills to start new businesses undaunted. Government approval of carbonated water production facilities at bottled water factories also helped launch a new carbonated water market.

Following successful implementation of the second phase of deregulation this year, companies and foreign investors will be able to invest more freely. Jobs will also increase substantially, bringing significant gains in economic recovery.

For reviving consumer sentiment and improving domestic demand, the recovery of the real estate market will also be indispensable. Last year, as a result of efforts to rectify excessive regulations that had long hampered the market, housing transactions reached their highest level in eight years, and a gradual recovery is underway.

Through elimination of regulations, supply of inexpensive land for development and aggressive financial support and tax incentives, the Government will work to significantly expand the availability of long-term rental housing in the private sector and bring about a reduction in housing expenses.

In addition, short-term, variable-rate mortgages will be converted to long-term, fixed-rate mortgages, easing the burden on households and stimulating domestic demand.

The Government will also continue working to reduce healthcare costs and remedy blind spots in welfare. As in 2014, medical expenses related to the four major categories of illness—cancer, heart disease, cerebrovascular disease and various rare, incurable diseases—will continue to be lowered this year, together with costs of higher-level hospital accommodations, the selection of a doctor and caregiver services.

The National Basic Living Security program will be restructured into a system of customized allocation that provides higher-quality services to a larger number of people while ensuring that beneficiaries still receive necessary support in healthcare or housing even if their incomes increase.

Fellow citizens,

Seventy years ago, the Korean people struggled with one united spirit for the independence of the nation and welcomed liberation together. With the same fervency of purpose, we today must close the door on these last 70 years of division and set out on the path to achieving the unification that we have so yearned for.

Korea’s liberation was won amid innumerable difficulties on the intrinsic strength of the people. I believe this strength will be a means for realizing unification on the Korean Peninsula.

This year, as we commemorate the 70th anniversary of liberation, efforts will be made through the Committee for Unification Preparation to seek the ideas and aspirations of the Korean people concerning the vision and direction of unification, achieve nationwide, supra-partisan consensus and establish a firm foundation for peaceful unification.

The North must assent to dialogue without further hesitation.

I hope the South and North will be able to open the door to unification together, jointly discussing ways to improve the quality of life for the North Korean people and recover the sense of commonality between South and North Koreans, beginning with seeking a fundamental resolution to the issue of separated families.

To establish the basis for advancement in inter-Korean relations and peaceful unification, the Government will create channels for substantive dialogue and cooperation by way of private-sector support and partnership.

In view of the ages of surviving family members, separated families in particular are an issue that cannot be put off any longer. I look forward to a receptive response by the North so that a reunion of separated families can be arranged sometime before or after the Lunar New Year.

I also hope the two sides will be able to hold various joint events in commemoration of the 70th anniversary of liberation.

The basic foundation of peaceful reunification is strong national defense. While firmly maintaining the ROK-U.S. alliance, the Government will further fortify the Korea-China strategic cooperative partnership, seek renewed relations with Japan on the 50th anniversary of normalized ties and also work for the stable advancement of Korea-Russia relations.

On this basis, efforts will be made to promote a virtuous cycle of North Korean denuclearization and improvement in inter-Korean relations. I hope that this year the South and North will be able to engage with one another peacefully and freely and move on to engagement with Eurasia and the wider world. I look forward to your combined support as we seek to bring the history of division to a close and achieve peaceful unification on the peninsula.

My fellow Koreans,

From one of the poorest countries in the world after the Korean War, Korea has risen to become the 10th largest economy and the only country to successfully accomplish heavy chemical industrialization without going to war. Ours is the first country in the world to have gone from aid recipient to aid donor. Such is the strength of the Korean people, which is why I am confident we will be able to overcome whatever difficulties lie before us.

Looking back as I head into the third year of my term, I cannot recall a single moment when I breathed easy or let myself rest from working to revitalize the economy and bring improvements to your lives. Yet, I regret that there are things that have not yet met your expectations. My hope now is to partner with all of you to successfully achieve the Three-year Plan for Economic Innovation and see to it that you reap the benefits. To this end, I will reorganize Cheong Wa Dae and pursue with boldness and determination those policies the people need, communicating with them along the way.

The Administration and Cheong Wa Dae will endeavor to make a fresh start, bringing the people hope and earning their trust. I will devote my final opportunity to serve this country to laying the groundwork for economic prosperity in the coming 30 years and achieving peaceful reunification. I ask you all to join together in strength to make 2015 a year of hope and resurgence for the Republic of Korea.

Thank you very much.