(Unofficial translation)

Fellow Koreans, the Honorable Speaker and distinguished members of the National Assembly,

Today, to the people and the National Assembly, I would like to explain the accomplishments of fiscal operations over the past two and a half years as well as the Government’s budget proposal for fiscal year 2020. I’d also like to request your cooperation. 

For the last two and a half years, the Government has worked hard to make our economy and social order more people-centered and have that transformation take root. We have laid the cornerstone for an innovative, inclusive nation to move toward an era of prosperity for all going beyond the age of prosperity. 

Our society has continued to progress while dynamically responding to changing times.

Building on the economic foundation laid by our parents’ generation, their sons and daughters have established democratic values. Our evolution into a democracy and responsible middle power is the outcome of the beads of sweat shed by the people of all generations.

Our society is now witnessing the growth of individual worth and the importance of human rights being widely accepted. We are pursuing a fair society that guarantees everyone’s efforts can be rewarded. In the same degree, various voices have begun to burst forth. It has become an era when mutual understanding, tolerance for differences and cooperation amid diversity are more desperately needed than at any time before.

Now is the time for us to once again come together with a single goal in mind on which we should set our sights.  

For decades, we’ve been unable to achieve localized production of materials, parts and equipment and the diversification of their import sources in some areas. However, just 100 days after relevant measures were taken, tangible and meaningful results are beginning to emerge. Large businesses first reached out to SMEs to work together, and public support has unleashed our scientific and technological potential. New attempts can be strange and alarming, but we have affirmed that nothing is impossible as long as we gather our resolve.  

My Administration now stands at the point in time when it should prepare for the remaining two and a half years. I believe that the path we must take is to create a country where everyone prospers together by means of an innovative, inclusive, fair and peaceful economy. 

I hope that the National Assembly will pool its insights with respect to next year’s budget proposal, which has been drafted in this direction.

Fellow Koreans and distinguished members of the National Assembly,

Bold fiscal moves are required more than ever.

Fiscal spending should take the lead in efforts to resolve the structural problems of our society, including low growth and the socio-economic divide, job shortages, a low birth rate and an aging population. With the escalation of U.S.-China trade tensions and the spread of protectionism, the global economy is rapidly deteriorating. Our economy, which is highly dependent on trade, is also facing a grave situation.

Fiscal spending should also play an active part as a breakwater that can withstand the onslaught of external shockwaves. Taking it a step further, it should serve as pump-priming to revive the vitality of our economy.

Some are concerned about our fiscal soundness. We should always keep our eye on this matter and regard it as important. 

However, the fiscal and economic power of the Republic of Korea has grown enough to enable more of our people to enjoy a higher quality of life and still remains very healthy. 

Should the government budget proposal be passed just as it is, the country’s debt to GDP ratio would not exceed 40 percent. This is an exceptionally low level compared to the OECD average of 110 percent and is among the highest echelons in terms of fiscal soundness.

Recently, the IMF forecast that this year’s global economic growth rate would be at its lowest point since the global financial crisis in 2009. It recommended that countries take bold action to increase fiscal spending to overcome the worldwide economic downturn. In particular, it singled out Germany, the Netherlands and Korea as countries that have sufficient fiscal space to implement an expansionary fiscal policy to cope with this economic situation.

Korea ranks 13th among 141 countries in the World Economic Forum’s Global Competitive Index. Its ranking has soared from 26th in 2016 and has risen for three consecutive years to 17th, 15th and 13th since 2017 when my Administration was launched. In particular, in the fields of macroeconomic stability and ICT adoption, Korea has topped the rankings for two years in a row.

Moreover, the world’s three major credit rating agencies are all keeping Korea’s sovereign ratings above those of Japan and China. This points to the fact that the world finds our economy to be more robust than we do ourselves.

Thanks to increases in tax revenue over the most recent two years, the Government was able to reduce the amount of planned bond issues by 28 trillion won, securing fiscal space. It should be noted that the Government issuing 26 trillion won worth of deficit-financing bonds next year would fall within that fiscal space already secured.

For the past two and a half years, the foundation for an innovative, inclusive nation has been laid by a host of roles played by fiscal spending. Fiscal spending has served as a pump primer and the private sector a distributor. 

However, the policy results have just begun to appear. The fiscal roles should continue until our economy can smooth out the waves that originated abroad and regain vitality and the people can sense improvements in their lives. If we fail to take appropriate responses now, we will end up paying a heavier price in the near future. That is why an expansionary budget for next year is a must, not an option.

Fellow Koreans and distinguished members of the National Assembly, 

Fiscal spending is a means to realize national policies. Particularly, the budget and tax code revision proposals reflect the direction that our society should take as well as its goals. 

These budget proposals for next year contain four objectives: innovation for a more vibrant economy, inclusiveness for a more caring society, fairness for a more just nation and peace for a brighter future.

To this end, the Government has allocated 513.5 trillion won in total expenditures, a 9.3 percent increase from this year, and 482 trillion won in total revenue, a 1.2 percent increase. 

First, the fiscal spending aims to boost the innovative power of our economy.  

In the era of the Fourth Industrial Revolution, the power of innovation is more valuable than buried oil reserves. Innovative capabilities are the very key to national competitiveness. Future growth engines will be generated through creative inspiration, encouraging an embrace of challenges and a passion that is not restrained by the fear of failure. This is why the entire world is engaging in war without gunfire to strengthen the power of innovation. 

Over the past two and a half years, the Government has made one of its top administrative priorities the establishment of “a country that promotes startups and encourages innovation.” It has made investments to foster innovative capabilities while implementing strategies to nurture new growth industries and fuel a second venture boom – while also formulating a hydrogen economy roadmap and envisioning innovative finance.

As a result, the power of innovation is being revived. Investment in new business ventures reached an all-time high of 3.4 trillion won last year and is expected to reach 4 trillion won this year. The number of new businesses also surpassed 100,000 last year and is increasing further this year. The number of unicorn enterprises also rose to nine this year from two in 2016, placing Korea 6th in world rankings. There’s a growing acceptance of innovations that take on new challenges.

However, it's still too premature to say that our drive for the second venture boom is achieving success. Next year, we will further enhance the power of innovation in our economy. 

We’ve allocated 1.7 trillion won for data, network and artificial intelligence, the key areas of the Fourth Industrial Revolution; 3 trillion won for new growth industries, including system semiconductors, biohealth and future cars; and 2.1 trillion won for the efforts to achieve self-sufficiency in such industries as key materials, parts and equipment – all significant increases from this year.

In order to overcome sluggish exports and investments caused by the global economic slowdown, we will expand trade financing by more than 4 trillion won to help exports and provide more tax incentives for corporate investments.

To ensure that local areas spark the revival of innovation and economic vigor, we will also carry out in earnest three projects for regional economic vitality that involve the building of infrastructure related to day-to-day living, balanced national development and special regulation-free zones.

Second, the fiscal spending aims to enhance our society’s ability to generate the power of inclusiveness and power of fairness.  

When everyone can enjoy the fruit of innovation together while striving to embrace those left behind and curtail conflict, our society’s capabilities will also be strengthened. This is what inclusiveness is all about. 

Fairness is the foundation that makes innovation and inclusiveness possible. The Government has generously invested in laying the foundation for an inclusive nation, for instance, by strengthening the social safety net for the vulnerable and expanding customized jobs for young people, women and the “new middle-aged.”

As a result, the power of inclusiveness is reaching every nook and cranny of our society. 

First of all, income conditions are improving. In the second quarter of this year, both household and earned incomes grew at the highest rate in the last five years. In particular, the income of the first quintile group, or the poorest 20 percent, which had continued to decline worryingly due to the population aging, has begun to increase. I hope that the income of the poorest 40 percent will improve further thanks to the effects of policies such as the increase in the Earned Income Tax Credit extended to low-income families. 

Job recovery also continues. The monthly average employment rate for the first nine months of this year was 66.7 percent, the highest ever, with the youth employment rate also being the highest in 12 years. The number of the newly employed rose by more than 450,000 and 340,000 in August and September respectively, so the annual increase in the number of employed people is expected to reach in the mid-200,000s, well above the target of 150,000. The proportion of regular full-time employees also hit a record high of 69.5 percent of all workers this year, and the number of workers covered by employment insurance has increased by more than 500,000, attesting to improvements in job quality.

But we still have to make a greater effort. The quality of jobs should be improved further, and we should prevent a rise in unemployment for those in manufacturing and in their 40s. We need to further foster the power of inclusiveness and power of fairness in our society.

Above all, we will strengthen the social safety net to make it more tightly knit. By reducing the blind spots in the system created by the National Basic Living Security Act, a total of 79,000 additional households will become eligible for benefits. We will implement in earnest the employment support program, a Korean-style unemployment allowance designed to provide about 200,000 job seekers presently not covered by employment insurance with benefits aimed at facilitating their employment and related support services. 

In order to enhance the fairness and inclusiveness of education, we will expand the free high school education that just started to benefit graduating third year students this year to include those in the second year next year. In the year after next, we’ll make high school education completely free by applying the benefit to all grades.

Young people represent the future of our society. We will supply them with 29,000 rental apartments. In addition, we will further increase the number of SMEs receiving subsidies to hire additional young employees, and we will increase the number of young adults eligible for financial support after having worked with an SME for two to three years. 

The more women participate in society, the more mature and advanced it becomes. This is also a countermeasure to population aging. We will provide more income tax incentives to businesses that employ women facing career interruptions.

The elderly in the era of an aging population should be allowed to serve longer as the driving force behind social development and enjoy welfare through work. We will increase fiscal spending to create quality jobs for the elderly. We will also increase the number of public service jobs by 130,000 to total 740,000 and extend their duration. Although some criticize budget spending being used to create short-term jobs, there is no question that welfare connected to employment is preferable. In addition, we will raise the basic pension to 300,000 won for an additional 1.57 million senior citizens from low-income families from next year.

The self-employed and micro-business owners are the proud main players in our economy. While drastically increasing emergency management stabilization loans and special credit guarantees, we will also issue 5.5 trillion won worth of gift certificates designated for certain local areas and traditional markets. 

Third, fiscal spending is aimed at enhancing the power of peace, a key to our future.

The Korean Peninsula is now facing the final critical juncture on its way toward a permanent peace. It is the wall of denuclearization that we all must surmount together. Only dialogue can bring down the wall.

As we have counterparts and must move in step with the international community, we can't afford to arbitrarily race ahead. Still, compared to just two years ago when nuclear and missile threats escalated into fears about war, the path we have to take is now clear. With faith in the progress of history, we must do everything we can for dialogue for the sake of peace.

Strong security is what we absolutely need to be able to determine our own destiny, independent of others. Now, the focus of our national security is deterrence against North Korea, but even after unification were to take place one day, we would still require strong security capabilities in order to stand tall as a sovereign state among the world powers.

We've set aside more than 50 trillion won for national defense next year. While reinforcing key defense systems such as next-generation Korean submarines and reconnaissance satellites, we will increase monthly wages for soldiers by 33 percent to reward their military service. For sergeants, their pay will increase from 410,000 won to 540,000 won.

We will make our best efforts to fulfill our international roles in a responsible manner as well as to secure increased support from and expand cooperation with the international community. We will allocate significantly more funds for public diplomacy and official development assistance to provide support for sustainable growth and the virtuous cycle between peace and development. In particular, the budget increases will primarily be funneled into strategic areas, including the four major powers and the countries related to my Administration’s New Southern and Northern Policies.

Once peace is established on the Korean Peninsula, our economy will have a new chance. We will also strive to lay the foundation for a peace economy whereby peace and economic cooperation on the Korean Peninsula mutually reinforce a virtuous cycle by linking railroads and roads and further expanding economic, cultural and people-to-people exchanges between the two Koreas. North Korea's bright future will only become possible on this foundation. I urge North Korea to reciprocate. 

My fellow citizens,

I solemnly listened to the differing voices of the people. I’ve once again keenly realized the people's aspirations for fairness and reforms.

The Government has strived to eliminate the privilege, deceit and unfairness prevalent in our society to date, but the people had much higher expectations. 

What the people have been demanding are fundamental changes – even in regard to the lawful unfairness and privileges that are inherent in institutions. They want the leaders of society to demonstrate a higher standard of fairness. As President, I will bear a heavy sense of responsibility. 

Innovation, inclusiveness and peace can only exist when they are based on fairness. Fairness has to be established anew in society, education and culture overall as well as in the economy.      

Deeply honoring the people’s demands, the Government will more resolutely push reform for the sake of fairness. We will renew our commitment to help fairness take root in society with the Anti-Corruption Policy Consultative Council established for a fairer society taking a central role.

A fair economy is the core foundation of an innovative, inclusive nation. Unfair trade practices have been corrected as problems with contractor-subcontractor relations are resolved. Corporate governance has been upgraded and mutually beneficial cooperation, including protections for small businesses in residential neighborhoods, has been achieved. However, we still have a long way to go. We will continue to work to help pass or amend fair economy-related bills: the Commercial Act, the Monopoly Regulation and Fair Trade Act, the Fair Transactions in Subcontracting Act and the financial consumer protection act. By doing this, the fair economy can begin to accomplish tangible results.

What is most heartbreaking to the people is unfairness in education. The Government will thoroughly conduct the recently launched comprehensive fact-finding investigation into the screening of students’ academic and non-academic records for college admissions, including extra-curricular activities, and seek ways to resolve the phenomenon of ranking high schools by their placement records. The Government will also come up with a plan to reorganize the college entrance system, including raising the portion of students who are accepted solely on the basis of their College Scholastic Ability Test scores. 

Regarding recruitment, the Government has investigated the employment practices of public organizations and had the Board of Inspection and Audit look into the matter. It’s also working to promote fair recruitment and eliminate employment irregularities by requiring public institutions to make hiring decisions based solely on performance assessments. Its efforts are also changing the status of contract workers to that of regular workers. The Government will conduct thorough investigations and take strict measures to completely eliminate recruitment-related irregularities going forward. It will also continue to improve related systems while seeking redress for victims who have suffered as a result of such irregularities. 

We will boldly rectify a wide variety of injustices that impact people’s lives such as tax evasion, work place discrimination and unfairness related to compulsory military service, thereby meeting their expectations.     

Fellow Koreans and distinguished members of the National Assembly, 

The public consensus taking shape recently among varying opinions is that reform of the Prosecutors’ Office is urgent. No law enforcement agency can be above the people. Improper investigation practices must be rectified for the sake of prosecutorial authority being exercised with restraint – that is in an impartial way that simultaneously respects human rights.    

Last week, the Government already briefed the people on ways to overhaul the Prosecutors’ Office, and these steps can be taken without revising existing laws. Before October ends, the rules to protect human rights during investigations will be enacted. These include forbidding the launch of an investigation under unreasonable pretexts and the questioning of suspects in the middle of the night. They also would ban the public disclosure of details related to criminal cases. 

The reforms – including impartial personnel appointments and effective monitoring of the Prosecutors’ Office – will not stop until the Prosecutors’ Office can be seen as an agency that works for the people – no longer one that wields absolute power. I believe that this is the type of Prosecutors’ Office that not only the public but also most prosecutors earnestly long for.  

I also hope that the National Assembly will play the most important role in reforming the Prosecutors’ Office. I call on the Assembly to process the legislative bills related to reforming the Prosecutors’ Office as soon as possible, including one to establish an investigative agency to probe corruption among high-ranking public officials and another to adjust the investigative authority between the prosecution and the police.

Opinions differ over the need for such an investigative agency, but I’d like to ask what kind of alternative we have if, like in the past, the Prosecutors’ Office fails to voluntarily take strict disciplinary action against its internal irregularities. The agency is very significant in that it can also act as a special body to investigate influence peddling committed by relatives and others with a special connection to the president. If there had been stringent means to rectify power-bred corruption, past abuse of power in state affairs could have been prevented. The legislative bill to create the agency will help high-ranking officials remain more alert, upright and sound, beginning with this Administration.         

Also, addressing the people’s demands for livelihood and safety cannot be delayed.   

As the implementation of reduced working hours will be expanded next year, complementary legislation, including passing the bill for a flexible working hour system, is urgent. This will provide businesses predictability. As soon as possible, the three data economy-related bills concerning responses to the Fourth Industrial Revolution and the special act for the materials, parts and equipment industries to achieve technological self-sufficiency must be processed. Many livelihood-related bills are still pending at the National Assembly, such as one to promote venture investment, a basic act for small business owners, proposed revisions to the Act on Preserving Agricultural Income and three revisions related to the management of kindergartens. 

The bills related to safety, young adults and women are still pending, such as a bill to make firefighters civil servants of the central government in order to strengthen public safety and disaster responses, a basic act for young adults and the proposed revision of the Act on Special Cases Concerning the Punishment, etc., of Crimes Related to Domestic Violence. In addition, a proposed revision to the act aimed at advancing the National Assembly is also pending. 

I call on the National Assembly to pay more attention to the people’s demands concerning their livelihood and safety. 

Recently, the opposition has proposed various agenda items related to fairness. These concern the college entrance system, recruitment and promotion at public institutions, “parachute appointments,” labor union members bequeathing their jobs, military service and taxation reforms, fair trade between large companies and SMEs, changing the status of contract workers into that of regular workers and resolving real estate issues. 

Sufficient progress could be made in many of these areas if the ruling and opposition parties and the Government can sit down face to face and discuss them. 

Without legislation by the National Assembly, policies for the livelihood of ordinary people cannot permeate into the lives of the public. In particular, to unite the people and to untie the tangled threads of national affairs, I urge the National Assembly to convene the standing state affairs consultative body, comprising representatives from the ruling and opposition parties and the Government, as promised, and to hold more meetings with ruling and opposition party heads, thereby restoring cooperative governance and bringing the 20th Assembly to a successful conclusion. 

Fellow Koreans, the Speaker and lawmakers, 

I envision a Republic of Korea where everyone prospers together. We must further upgrade the achievements that all of us have worked hard together to make. Only when conservative and progressive ideas harmonize in a practical manner can we move toward a new era. 

I believe politics should always maintain a fear of the people. I will be the first to listen carefully to those with different opinions and I and those with similar beliefs will thoughtfully reflect on our views. This is an era where past values and ideologies no longer make sense. Some things must be boldly pushed while others should be postponed or their implementation slowed down to our regret. We need to discuss and cooperate to make the right decisions at the right time. 

I intend to listen more attentively and more often to the people’s voice and work together with the National Assembly. 

Since this is the National Assembly’s last regular session of the year, I hope that the 20th Assembly will be assessed as one that worked for the livelihood of ordinary people by concluding the piles of livelihood-related bills and processing next year’s budget proposal and the proposed tax law revisions within the prescribed period. 

I hope that we will be able to grow the power of innovation, power of inclusiveness, power of fairness and power of peace and that a country where everyone prospers together and an economy that cannot be shaken by anyone will first materialize here in the National Assembly, the hall of the people’s will. 

Thank you