(Unofficial translation)

Fellow Koreans,

Around this time last year, I visited the Jincheon National Training Center to pray for the success of the PyeongChang Olympic Winter Games.

From the Opening Ceremony until the Closing Ceremony of the PyeongChang Games, Gangwon-do Province’s harsh cold weather was what kept the Government in suspense. However, that freezing cold helped bring the entire world as well as South and North Korea together in harmony, making it possible for the peace Olympics to succeed. 

There is a saying, “Winter should be as cold as it has to be.” Sufficiently cold winter weather keeps pests and diseases from harming crops and produces a rich harvest of barley. Anthropologists say an ice age spurred the birth of humanity. In sharing each other’s warmth, people began to sense a desperate need to band together.

We rung in the New Year after many changes brought forth over the previous year thanks to people power.

I am deeply grateful to all Koreans and once again extend New Year’s greetings.

Fellow citizens, 

Last year, Korea reached the US$600 billion mark in exports for the first time in history. We ushered in an era of US$30,000 per capita income. Korea became the 6th largest exporter and the 7th country to join the 30-50 club of economic powerhouses with a population of over 50 million and per capita income exceeding US$30,000. Our economic growth rate has continued to stay at the highest level among the advanced economies. At least in terms of the national economy, we have achieved tremendous development, rising above colonial rule, war, poverty and dictatorship.

Despite the astounding growth of the national economy – hailed by the world as a miracle – there are still many people who find life difficult. That is because the benefits of the economic growth that we accomplished together have been concentrated in the hands of a small number of the upper class and conglomerates, not equitably distributed among all the people. 
Over the long haul, the percentage of corporate income in the GDP has steadily increased more than the economic growth rate, while that of household income has continued to decline. The trickle-down effect has long ago ended. Also, increasing exports stopped bringing about a rise in employment long ago. Korea has inadvertently grown into one of the countries with the worst case of wealth polarization and economic inequality in the world.

Economic inequality, also dubbed the 1% versus 99% society or a winner-take-all economy, is not a problem unique to us. It is a common challenge facing the entire world. All countries have finally come to understand the fact that sustainable growth is impossible without resolving this problem. Consequently, such international organizations as the OECD and IMF as well as major countries are putting forth “inclusive growth” as a solution.

The people-centered economy and innovative, inclusive nation being pursued by my Administration are precisely in line with such thinking. Our goal is to create an economy in which all prosper together on the basis of a fair economy with a level playing field where innovative and income-driven growth enable sustainable development. It is all about creating a society where the proverbial dragon can rise from a creek to deliver a promising future.

Over the past year, this policy has enabled us to help increase real household income across the board and decrease living costs for such essentials as healthcare, education and telecommunications. Moreover, the pursuit of innovative growth and a fair economy has led to many achievements.

Nonetheless, jobs reports, more than anything else, have not lived up to quantifiable expectations. Self-employed business owners are complaining about difficulties. Conventional flagship manufacturing continues to falter. An improvement in the redistribution of income cannot be felt. Evolving industrial structures and consumption behavior characterized by automation, unmanned systems and online shopping have transformed the job market, but we have not responded appropriately. Fear of the future has swelled, and public confidence in the Government’s economic policy has declined.

My Administration is taking this economic situation very seriously. However, I want to emphasize that the hardships we are suffering now are even stronger proof of the need for the people-centered economy. 

An economic policy shift can be truly frightening. It will take time and may generate controversy. However, it is the path that we must take. We will achieve the goal of an innovative, inclusive nation by all means while sufficiently making up for any shortcomings. 

Fellow Koreans,

This year’s objective is to make the people clearly see signs in their own lives that the Government’s economic policy is heading in the right direction. To that end, tangible outcomes must be produced.

This will be a year when SMEs and conglomerates can grow together, microbusiness owners and the self-employed can grow with the people and provincial regions can grow on their specific strengths.

What is needed to sustain growth is innovation. Nothing but innovation can make it possible to transform the fast-follower model economy into a pace-setting economy and to create an economy that leads new markets by generating added value.

Innovation will help revive existing industries and foster new industries that will become new growth engines.

The Government has selected strategic fields for innovative growth and forged an ecosystem for innovative startups.

Last year, an all-time high of 3.4 trillion won was invested in business ventures, and the number of newly-established corporations exceeded 100,000, the largest ever. 

The penetration of electric and hydrogen vehicles has risen, laying the groundwork for future growth engines. Prior to 2017, Koreans were driving 25,000 electric vehicles in total, but in last year alone 32,000 new cars were added. The number of hydrogen cars has also soared to 889 from 177. The Government is planning on increasing the number of electric and hydrogen cars to 430,000 and 67,000, respectively. Some 2,000 hydrogen buses will run on the roads. This will greatly help reduce the number of diesel vehicles and the level of fine dust.

Beginning this year, investments in strategic, innovative industries will be made in earnest. A total budget of 1.5 trillion won will be provided for the three major fundamental fields of data, artificial intelligence and the hydrogen economy. An additional 3.6 trillion won in total will be injected into eight pace-setting projects for innovative growth, including smart factories, smart cities, self-driving cars and drones. The government budget earmarked for research and development surpassed 20 trillion won for the first time in history. Science and technology, ranging from original technologies to commercialized technologies, will be fused with innovation to produce added value. 

Innovation will be blended into such traditional flagship manufacturing as the automobile, shipbuilding and petrochemical industries as well. The innovative strategy for manufacturing unveiled last year will be going into full gear. The number of smart factories was only about 300 by 2014, but it will be drastically raised to 30,000 by 2022, including this year’s 4,000. The number of smart industrial complexes will also be gradually increased from the two this year up to 10 in total by 2022. 

Deregulation is a must when it comes to increasing corporate investment and identifying new industries and services.

An amendment to the special act on internet-only banks has made it easier for IT businesses to set up a virtual bank. The enactment of a special act on financial innovation support will serve as a foundation for developing various innovative financial services.

The implementation of a Korean regulatory sandbox system will enable the speedy verification of marketability for new technologies and products and also facilitate their launch. Pan-government support will be rendered to ensure that large-scale business investment projects can be carried out as early as possible. Enhanced assistance will be particularly channeled into investments in new growth industries. 

Only when local areas’ “growth plates” expand can the national economy be revitalized. For regions enduring economic hardships, due to the restructuring of their key industries for instance, my Administration will advance 14 projects to boost their vitality. 

Public infrastructure projects that are essential for balanced national development will be exempted from preliminary feasibility surveys. Instead, strict selection standards and consultations with local governments will enable such construction to begin promptly.  

A total of 8.6 trillion won will be invested into building infrastructure that is closely linked to everyday neighborhood activities, such as libraries and gyms, thereby swiftly improving living conditions there. In addition, 170 old city centers will be reborn through an urban regeneration new deal. Living conditions in farming and fishing communities will be significantly improved through smart farms and new deal projects, respectively. 

My fellow Koreans, 

The foreign exchange crisis of 1997 left deep scars on our society. That economic crisis that unexpectedly swooped down upon us without any social safety net in place caused anxiety to spread throughout the population. 

Against this backdrop, all Koreans joined forces, overcame the crisis and achieved economic growth again but failed to halt the deepening job instability and widening socio-economic divides. 

Sustainable growth is possible only when all prosper together – this is not just simple rhetoric. We have all experienced it time and again with economic growth rates decreasing under every single administration over the past 20 years. 

To expand exports and domestic demand, the two main wheels of the economy, an inclusive growth aimed at jointly sharing their benefits is indispensable. Koreans are entitled to the happiness befitting an era of annual per capita income of US$30,000. This is what an inclusive country is all about. 

First, my Administration will further strengthen the social safety net and employment safety net. 

Focus will be placed simultaneously on increasing job opportunities and improving the quality of employment. Jobs are the very starting point of peoples’ lives. The Government will strive to ensure that the social safety net runs in conjunction with the employment safety net. 

This year, the Earned Income Tax Credit, an incentive for low-income working families, has more than tripled, and the number of people eligible for the incentive has also more than doubled. As a result, a total of 4.9 trillion won will be disbursed to 3.34 million households. My Administration will also build a Korean unemployment assistance system to provide support for living expenses during job searches or re-employment programs. 

As the number of permanent employees increased last year, the number of employment insurance subscribers soared by 470,000. It is truly welcome news as it means that the number of workers who are now protected by the social safety net has increased accordingly. In the days to come, employment insurance will be expanded to cover self-employed contract workers and artists, who have been left in employment insurance blind spots. 

As part of the efforts to ease the hardship facing society’s vulnerable, the monthly basic pension and the pension for those with disabilities were increased, and the monthly child benefit was introduced last year. This year, the basic pension and the pension for those with disabilities will rise to 300,000 won – with low-income families being the first to benefit.  

Last year saw a groundbreaking expansion of health insurance coverage, and a lot of people are already feeling the actual effects of lowered medical costs. This year, a renal ultrasonography and an MRI of the head and abdominal area will be covered by health insurance. Coverage for dental care and traditional Korean medicine will also be expanded. My Administration will strive to ease anxiety and ensure that health insurance alone suffices when receiving medical treatment. 

Burdens on the shoulders of families with relatives suffering from dementia were halved last year. This year, the number of nursing homes will be increased to better take care of those patients. Three years later in 2022, the Government plans to make sure that one out of every four senior citizens is eligible for medical service house calls. 

Second, bolder investments will be made in children. 

Starting this New Year, the monthly child benefit will be disbursed to every family with a young child. The limit on the age of the children targeted will also be raised from 5 to 6. 

Nationally and locally funded kindergartens are being expanded faster than planned. Last year an additional 500 classes opened, which surpassed the target number. This year, a total of 1,080 new classes, which is about twice that of last year's expansion, will be added. 

In 2017, a total of 393 nationally and locally sponsored daycare centers were established, and during last year, 574 new centers were set up, far exceeding the target of 450. This year 685 daycare centers will be added, including those at workplaces. Starting from September this year, it will become mandatory to establish a daycare center at an apartment complex with more than 500 households. 

The Government initially pledged to ensure that four out of every ten children will be able to attend nationally or locally funded daycare centers and kindergartens by 2022, but we will make that happen a year earlier. The transparency of private kindergartens has to be increased as well. I ask the National Assembly to pass the three kindergarten-related bills at the earliest date possible.  

The number of children to be covered by extended after-school daycare programs will markedly increase to 530,000 by 2022 from 360,000 last year. Eight out of every ten elementary school students from double-income households will be able to use state-assisted daycare centers. 

Third, we will deal with safety issues as an overriding national task. 

As part of the efforts to prevent deaths from industrial accidents, the Government will put into practice relevant countermeasures with a sense of responsibility and determination. Not a single life was lost from a construction crane accident last year thanks to preventative measures. My Administration will halve the number of deaths from industrial accidents by 2022. We will also make concerted efforts to ensure that the recently passed National Assembly act to prevent the outsourcing of hazardous jobs is enforced as intended. 

Last year, we saw remarkable achievements in preventing the spread of Middle East respiratory syndrome (MERS) and infectious diseases in livestock. Taken with the case of effective accident prevention in regard to construction cranes, this serves as a reminder of the fact that our endeavors combined with keen awareness bring about corresponding achievements.  

At the end of last year, however, the people were unnerved by a series of accidents that were closely related to everyday life, including the derailment of a KTX train, the fire at a KT Corp. building, the rupture of a hot water pipeline and a deadly accident in a pension in Gangneung. All these incidents came together to alert the Government to the fact that many more safety-related areas requiring attention still remain. 

Fourth, national competitiveness will be measured by how many skilled innovators we nurture. 

Before the end of my term in office, we will foster 45,000 master's and PhD degree holders in pace-setting innovative growth areas as well as 40,000 skilled innovators in science and technology as well as information and communication technology. A new university major specializing in artificial intelligence will be established, and relevant assistance will be provided to promote the growth of top-notch software engineers through an academy for innovation.  

Vocational training for those areas related to new technologies will be greatly expanded, thereby helping job seekers land a job while facilitating business and market growth. The Government will strive to provide the most-needed vocational training at every stage: attending school, seeking employment, working for a company and reentering the job market.

Concerning the plan for implementing social policies for an inclusive nation that guarantee daycare, education, work, leisure, life after retirement and other basic living requirements, I will make a report separately as early as possible.    

Fifth, I will make it clear that small business owners, the self-employed and farmers are the basis of the national economy. 

Traditional markets and small businesses in neighborhoods will be protected and assisted so that they can thrive. Countermeasures will be enhanced to help the small business owners and self-employed suffering from minimum wage hikes. 

The farm gate price of rice during last year’s harvest rose sharply for the first time in years, to 193,000 won per 80 kg sack. This may have helped raise the income of farming households. This year, focus will be placed on reforming the rice subsidy system designed to promote the public good, and smart agricultural administration policy will be implemented in a way that puts farmers first. 

The fisheries subsidy will be raised by 50,000 won this year, raising the total that a fishery household can receive to 650,000 won. Subsidized vehicle fares for ferry transport will be significantly expanded for residents living on islands, and the Government will subsidize the transportation of necessities beginning in June next year.       

Sixth, I will make sure that each and every one of the people can take pride in our culture and enjoy related achievements. I will ensure that our culture will pave the way for future industries. 

People around the world are enthralled with Hallyu, such as the K-pop boy band BTS and Korean TV dramas. This proves our culture’s potential. I will help create an environment in which everyone competes fairly and creators are treated reasonably so that a second BTS and a third Hallyu can emerge.  

This year, 1 trillion won will be invested to build culture-related infrastructure for daily life. Subsidies for low-income households will be raised so that they can use a special debit card to pay for diverse cultural activities. A total of 30 sports facilities for people with disabilities will be built, and another subsidized debit card will be given to 5,000 low-income individuals with disabilities to help them take sports-related classes. 

Regardless of whether the policy scope or related budget is large or small, I will help build the foundation for an inclusive nation and implement related policies. 

Fellow Koreans,

An equitable and just society is a calling that my Administration, which was brought in by the candlelight demonstrations, cannot forget even for a moment. 

As soon as it was launched, my Administration set about forcefully eradicating deep-rooted evil perpetrated by those in authority. Each ministry and agency, including prosecutors, the police, the National Intelligence Service and the National Tax Service, started self-driven reforms, voluntarily uncovering past wrongdoings and correcting them. There is not even one case to date of these law enforcement institutions greatly disappointing the people as they had in the past. My Administration will never tolerate regressing back to the errors of the past, having learned a lesson from what happened with the previous Administration. 

Now, my Administration will ceaselessly continue to eradicate deep-rooted evil in everyday life so that ordinary people do not have to experience the frustration caused by a wall of injustice hindering normal activities. 

I will help swiftly push reforms that root out deceit and illegalities such as embezzlement by kindergarten owners, recruitment-related irregularities, the culture of abusing one’s power and tax evasion. I will fight unfairness without compromise until the people can sense a transformation in our society.

I now intend to conclude the reform of law enforcement institutions through legislation. I ask for the National Assembly’s cooperation with passing related bills so that the reforms are not just dependent on the good faith of an administration. These bills are related to the National Intelligence Service Act, the creation of an agency responsible for the investigation of crimes committed by high-ranking officials and the adjustment of the investigative authority between prosecutors and the police.     

At the last meeting of the standing state affairs consultative body comprising the ruling and opposition parties and the Government, the participants agreed to rectify unfairness and create the institutional framework for a fair economy and promised to make endeavors to amend related laws, including the Commercial Act. I will strive to further invigorate this standing body to speed up the legislation of bills related to a fair economy. 

Fellow Koreans, 

In the past year, the people opened up a path toward peace. We have become a main player on issues regarding the Korean Peninsula. We have overcome power politics and taken the lead in forging our own destiny. We have experienced and confirmed before our own eyes that our efforts can bring us peace.  

The path toward peace on the Korean Peninsula still continues to expand even at this moment, and it will speed up even more this year.   

It was very comforting to hear that the remains of 13 soldiers killed during the Korean War were found during the operation to remove land mines on Arrowhead Hill. Along with the remains, we could regain the spirit of reconciliation that has laid buried in our battlegrounds. When we initiate an operation to locate other remains in April, we will be able to fulfill the duty of the nation by excavating many more of the fallen. 

The second North Korea-United States summit – to take place soon, and a reciprocal visit to Seoul by Chairman Kim Jong Un of North Korea will be other turning points that will firmly solidify peace on the Korean Peninsula. We will not loosen our guard until the promise to denuclearize the Peninsula is kept and peace is fully institutionalized. 

Peace can drive economic growth. The desire to prosper lies in the people of both South and North Korea. The connection of railroads and roads between the two Koreas will help find new breakthroughs for our economy.    

The Gaeseong Industrial Complex and tourism in Geumgangsan Mountain were beneficial to both South and North Korea. We welcome North Korea’s intention to resume their operation without conditions or compensation. As such, the prerequisites for the two Koreas resuming operation of the Complex and Geumgangsan tourism have essentially been met already. My Administration will cooperate with the international community, including the United States, to resolve the remaining issues such as international sanctions as soon as possible.  

Peace on the Korean Peninsula is expanding northward and southward. We will move forward to create economic and security communities in Northeast Asia through the New Northern Policy. We will diversify our trading destinations through the New Southern Policy and create a people-centered community of peace and prosperity with countries in those regions. 

This year marks the 100th anniversary of the March First Independence Movement and the establishment of the Provisional Government of the Republic of Korea. In the past century, we have built an independent democratic republic based on popular sovereignty by breaking free of colonial rule and dictatorship. We are now dreaming of building a peaceful, prosperous and powerful country and overcoming division. We are now passing the last crucial moment of realizing our dream. 

Before long, permanent peace on the Korean Peninsula and an innovative, inclusive nation where everyone prospers will arrive before us. 

Kim Gu, one of our independence leaders, said in his 1947 statement titled My Wish: “The only thing I desire to have wholeheartedly is the power of sophisticated culture. The power of culture makes ourselves happy and, moreover, brings happiness to others.”  

The next century of the Republic of Korea demands a new spirit and new culture from us. 

As we safeguarded democracy through the most peaceful means by holding candlelight protests and brought each other happiness with the utmost maturity, I hope that a culture of shared prosperity will blossom through concessions, compromises and agreements. 

We have come so far without losing sight of our common goal. We have achieved much in the cold. We will accomplish it all: peace, innovative growth and an inclusive nation as well. 

Thank you.