[Presidential Election D-1 Month Pledge Analysis②-Economy] KOSPI 5000·Potential Growth Rate 4%... Fierce Battle to Win 'Gaemi' Voters' Support

Lee Jae-myung Advocates '5·5·5 Era'... Top 5 Global Economies, $50,000 National Income, KOSPI 5000
Yoon Seok-yeol Sets 4% Potential Economic Growth Target... Proposes Complete Abolition of Capital Gains Tax on Stocks
Ahn Cheol-soo's '5·5·5 New Growth Strategy'... 5 Super-Gap Technologies, 5 Global Companies, Top 5 Economies
Sim Sang-jung Promotes 'Greenomics'... Pledges 1.5 Million Jobs Based on It

[Asia Economy Reporter Kum Boryeong] About a month before the presidential election, candidates' 'economic pledges' are also becoming more concrete. To appeal to voters on how to lead the domestic economy over the next five years, they are presenting goals such as entering the top 5 economic powers, raising the potential growth rate, and economic growth based on green energy. Since the number of individual investors in the stock market has increased to 10 million after COVID-19, strategies to capture their votes are also intensifying.

◆'5·5·5 vs Potential Growth Rate 4%'

Lee Jae-myung, the Democratic Party presidential candidate, proposed the '5·5·5 era,' which abbreviates the world's top 5 economic powers, $50,000 national income, and KOSPI 5000. The means to achieve this include the '4 major transitions,' '2 major reforms,' and 'national large-scale investment.' The four major transitions cover science and technology, industry, education, and national territory. Among these, the industrial sector is the most eye-catching, with reform plans subdivided into digital, energy, manufacturing growth strategies, small and venture companies, service industries, and exports. In particular, the plan is to make manufacturing, which was the main driver of the $30,000 national income, the new driver for growth to $50,000. He also promised generous investment. The candidate said, "Through the government's large-scale pre-investment, we will induce bold investment from private companies and lead economic growth."

Yoon Seok-youl, the People Power Party presidential candidate, presented a national vision of a 4% potential growth rate for Korea at his New Year's press conference. The goal is to raise the current potential growth rate, which is in the 2% range. Regarding the chronic problem of low growth, he proposed a 'private sector-centered' solution rather than a government-centered one. He believes that using private creativity and market efficiency can increase economic growth potential and job creation capacity.

Ahn Cheol-soo, the People's Party presidential candidate and a 'science and technology' expert, unveiled the '5·5·5 New Growth Strategy' as Korea's blueprint. The plan is to secure 5 major super-gap technologies, nurture five global companies at the level of Samsung Electronics, and then enter the top 5 economic powers. To this end, Ahn plans to reorganize government organizations to fit a science and technology-centered nation.

Sim Sang-jung, the Justice Party presidential candidate, emphasized 'Greenomics,' which leads green innovation to revitalize regional economies. The five principles of Greenomics are: an economy that is definitely safe from the climate crisis, an advanced economy leading global competition, a domestic demand-based economy that revitalizes regional economies, a job-friendly economy, and an inequality-resolving economy guaranteed by publicness and participation of small and medium enterprises.

However, experts pointed out the feasibility of the visions presented by the presidential candidates. Professor Sung Tae-yoon of Yonsei University's Department of Economics said, "KOSPI 5000 or a 4% economic potential growth rate can be seen more as hopes rather than visions or pledges," adding, "If they try to achieve these goals excessively, it could rather cause more difficulties for the economy."

On the 3rd, at the KBS studio in Seoul where the presidential candidate debate jointly hosted by the three terrestrial broadcasters was held, presidential candidates Sim Sang-jung of the Justice Party, Lee Jae-myung of the Democratic Party of Korea, Yoon Seok-youl of the People Power Party, and Ahn Cheol-soo of the People Party (from left) are taking a commemorative photo before the debate. (Photo by Yonhap News)

◆Capturing the Votes of 10 Million Ants

As 'Donghak Ants' have emerged as the leading force in the stock market, pledges targeting their votes are pouring out.

Candidate Yoon recently drew attention by proposing the 'complete abolition of capital gains tax on stocks.' From 2023, the government plans to expand the application criteria for capital gains tax to include major shareholders and individual investors, imposing up to 25% tax on trading profits exceeding 50 million KRW annually, but he intends to completely eliminate this tax. Regarding this, Yoon said, "Whether big or small investors, a lot of funds need to flow into and activate the stock market itself so that ordinary investors can also make profits," adding, "Right now, it is necessary to further activate the stock market."

With the KOSPI breaking through 3300 last year but recently falling to the 2600 range during trading, candidate Ahn also seems to agree with abolishing the capital gains tax on stocks. Considering the U.S. quantitative easing reduction and interest rate hikes, Ahn said, "It will be difficult to realize profits from stocks," and added, "I think it is appropriate to ease this part (capital gains tax on stocks) at least temporarily."

The securities industry views this positively. A securities company official explained, "Those who invest in stocks do so expecting profits, so if a new tax is introduced, they will have considerable dissatisfaction and may leave the stock market," adding, "Eliminating capital gains tax is a big help to revitalizing the stock market."

Candidate Lee, who aims for KOSPI 5000, emphasized 'responsibility of pension funds for stock market stability,' 'ban on re-listing after physical division,' 'enhancement of fairness in stock short selling,' and 'strict punishment for market manipulation.' In particular, the ban on re-listing after physical division seems to consider the recent split listing of LG Energy Solution from LG Chem.

Regarding short selling, one of the major issues in the stock market, presidential candidates are focusing on improvements. Lee plans to secure fairness by correcting differences in stock borrowing periods for short selling between individuals and foreign investors. Yoon plans to actively consider introducing a circuit breaker that automatically bans short selling if stock prices fall excessively. Ahn also emphasizes the need to improve the structure where individuals suffer losses due to information asymmetry. Sim agrees on the need for measures to protect small shareholders.

(From left) Lee Jae-myung, Democratic Party presidential candidate; Yoon Seok-youl, People Power Party presidential candidate; Sim Sang-jung, Justice Party presidential candidate; Ahn Cheol-soo, People’s Party presidential candidate (Photo by Yonhap News)

◆Emphasis on Digital and Future Energy

As the industrial transition period approaches, presidential candidates have also presented job expansion pledges tailored to this. Candidate Lee declared that he would create more than 3 million jobs through digital, energy, and social service transitions. Specifically, he plans to invest 135 trillion KRW to create 2 million digital-specialized jobs. He also fully accepted the '1 million social service jobs pledge' advocated by former People Power Party lawmaker Yoo Seung-min, showing a stance free from partisan logic.

Candidate Yoon also presented job policies focused on digital. He believes that if the foundation of the digital economy is solid and new industries and technological development occur, quality jobs can be created. He even referred to a government that properly nurtures information and communication technology (ICT) and innovative ventures as a 'proper job government.' He plans to focus intensive support on small and medium enterprises with future competitiveness. Along with this, he emphasizes that most quality jobs are created in the private sector and places importance on private sector leadership. Yoon stated, "I will abolish all regulations that hinder job creation."

Candidate Ahn argues that securing super-gap technologies in display, secondary batteries, hydrogen energy industries, and bio industries is necessary. His logic is that if highly technological companies emerge, job creation will follow in partner companies and other areas.

Candidate Sim promised to create 1.5 million jobs by revitalizing regional economies through Greenomics. He plans to create more than 500,000 stable green jobs through energy transition investments, green remodeling, and ecological transition in agriculture and fisheries, and to realize 1 million employments through a 'regional job guarantee system' supported by the public sector by discovering more jobs in environment, community, and care sectors.