Bowing Samsung chief heralds economy shift by S Korea’s Moon

Bloomberg

When South Korean President Moon Jae-in was greeted with four deep bows from de facto Samsung Group chief Lee Jae-yong earlier this month in India, the footage quickly went viral back home.
The overseas encounter between two of South Korea’s most powerful men — their first since Moon’s election on an anti-establishment platform last year — struck a chord. The meeting was the most visible sign yet that the president, who once decried the cozy ties between government and the country’s industrial giants as a “ deep-rooted evil,” was courting business support as his economic policies fall flat.
“It gave me an impression that Moon’s government is realising that they have to lead discussions with conglomerates, which have played a major role for the economy and are represented by Lee,” said Howard Lee, a managing director for investment bank BDA Partners in Seoul. “They’re not enemies and have to work together.”
More than a year into his single five-year term, Moon faces growing resistance to his pledges to build an “income-driven” economy as hiring slows and investment falls. The president’s once-lofty poll numbers have slid amid opposition to the government’s plan to increase the minimum wage by 10.9 percent — a move opposed by both employers who must cover the costs and workers who were expecting more.
Business groups warned the new rate could force some employers to close, weighing on an economy already seen as vulnerable to any decline caused by US President Donald Trump’s tariffs.
South Korea’s finance ministry lowered this year’s projected economic growth to 2.9 percent, down from an earlier forecast of 3 percent.
“All my friends voted for Moon, but one of them got fired recently from a convenience store because the owner decided to work himself,” said Choi Jae-young, a 24-year-old student who’s looking for work after he completes his degree in the US. “I feel that we’re still far away from the world that Moon described as the future under his presidency. The job market isn’t any better.”
The public has focussed more on economic issues as the glow fades from Moon’s historic April summit with North Korean leader Kim Jong-un. The government has conveyed a more business-friendly message, with Moon’s trade-and-industry minister pledging “strategic cooperation” with companies while he promotes deregulation and the role of local conglomerates — known as “chaebol” — in creating jobs. “Income-driven, innovation-based and fair economies should be pursued at the same time,” Moon said. “I’d like to emphasise again that we can’t choose one over another.”
During a five-minute meeting with Lee on July 9, Moon praised Samsung for supporting India’s growth and urged the company to “invest more and create more jobs” at home as well, presidential aide Yoon Young-chan told reporters. Lee responded that he would make a greater effort.
Moon “floated the idea of an ‘income-driven’ economy to improve ordinary citizens’ livelihoods, but that’s not yielding quick positive results and North Korean issues aren’t something that Moon himself can fully control,” said Ka Sang-joon, a political science professor at Dankook University.
“That means Moon will now focus more on job creation, unemployment and other economic issues.”
The discussion with Lee was symbolic not least because Samsung, whose revenue is equivalent to about one-fifth of South Korea’s gross domestic product, was opening the world’s largest mobile phone factory in India. Lee was also the most high-profile executive embroiled in a influence-peddling scandal. Lee was convicted of bribery and released in February after a court reduced his prison sentence.