1. Foreword: Key Questions for Administrative Priorities

My Fellow Koreans,

I wish all of you a happy, joyous New Year.

I am speaking to you from the start of the new year because I thought it would be desirable to give the nation an overview of how the Government will manage state affairs as quickly as possible under the current economic crisis.

As a matter of fact, the Government began its new year’s tasks from the end of last year. The briefings by ministries and agencies on their undertakings were made to the President more than three months earlier than usual. It was also decided that the Government would front-load this year’s budget spending earlier than previous years. All these are attributable to the realization that the Government needs to start moving as soon as possible to help boost the economy.

Now it is the National Assembly’s turn to give support. If they do, we will be able to put further spurs to ongoing efforts to revitalize the economy and create jobs, which is the hope of all Koreans.

Before I came here today, I pondered what the public would like to know the most now. 

When will the current economic crisis ever end?
What should be done to surmount this crisis?
What will happen to my family and me as the situation gets worse day by day?

These same questions constitute my main concerns as I map out policies for this year’s state affairs.

2. Four Major Guiding Principles in Running State Affairs

Fellow Koreans,

Just as no country or no individual was able to predict accurately when this global economic crisis would begin, it is also true that no one can give an assuring answer at this time to the question about when the crisis will end. The size of global trade has shrunk, and the United States, Europe and Japan all expect to post negative economic growth simultaneously, which is unprecedented since the end of the Second World War.

How fast we will be able to overcome the crisis hinges partly on our own actions but more importantly on what actions countries around the world will take. All countries must work together through close international coordination to provide sufficient currency liquidity, drastically expand their fiscal outlays and decisively implement restructuring, thereby rekindling the fire of hope in the market. Only then, according to some predictions, will the economy gradually begin to turn around from the latter half of this year.

I will do as much as I can to help realize such a positive outlook.

As it is impossible for Korea to bail itself out of the crisis only with its own efforts, the Government has channeled all-out efforts into international cooperation since the financial crisis erupted. As a result, the Government rushed to successfully conclude a US$30 billion currency swap arrangement with the United States. The Government also clinched two more bilateral currency swap agreements with Japan and China in the amount of US$30 billion each, although many experts have raised doubts about the initiatives. With these, the country has come to secure foreign currency liquidity exceeding US$110 billion in addition to what the country already has. Consequently, the chorus of concern about another foreign exchange crisis in Korea has dissipated.

What should be noted here, however, is the fact that countries are still engaging in fierce competition behind the scenes even while they work toward international collaboration. Though poor, our fathers and mothers tightened their belts for the future and worked hard for the education of their children. Likewise, while overcoming the crisis, we need to prepare for what will come after the crisis. By doing so, we will have proper national strategies.

From this prospective, I would like to present four major guiding principles in running state affairs in 2009.

First, the Government will go all-out to ride out the economic crisis by setting the administration into an emergency economy rescue mode. Second, the Government will implement caring and well-planned programs to take care of ordinary citizens. Third, the Government will continue to push forward with ongoing reforms to make Korea an advanced, leading country. And fourth, the Government will step up efforts to prepare for the future and green growth.

3. Emergency Economic Government: Prioritizing Administrative Reform and Job Creation

Fellow citizens,

Nothing will be achieved if we hesitate in the face of crisis. Now is the time for us to gather our strength, not level criticism at each other without offering alternatives and not to stand by idly doing nothing. With hope and courage, we need to operate at full throttle for the earliest possible departure from the economic crisis. In that sense, the Lee Myung-bak Administration will work toward an emergency economic government in 2009. The Government will also continue to carry out an administrative overhaul befitting such arduous efforts.

The economic situation will be checked on a daily basis. The Government will never waste even one second in devising and implementing necessary measures. More than anything else, money should be funneled into the markets. The Government has already infused more than 20 trillion won into banks, and it will continue to take all available measures to facilitate borrowing from the bank by businesses and households. The Korea Credit Guarantee Fund and the Kibo Technology Fund will raise their capital to expand support for small and medium-sized enterprises (SMEs). In particular, a new system will be put in place promptly to exempt officials from taking responsibility for problems that might arise in the process of providing active support to SMEs.

The Government will also take extraordinary measures to help revitalize investments. People can reap great profits even with small costs if they invest in times of crisis. The Government will speed up tax cuts, deregulation and advancement of service industries to help expand investments. It will also work with the business community to help promote investments. I will take the initiative myself in attracting more foreign investments. 

The Government will do what it can to the best of its ability to boost domestic demand. More than 60 percent of the budget will be disbursed in the first half of this year, and the Government will make sure that the action will benefit local economies and SMEs first and foremost.

Nothing is more important than the creation of jobs in steering the economy in the new year. All sectors in the country need to join multifaceted efforts to keep and create jobs. At the end of last year, I proposed that the Government take the lead in coming up with opportunities for young people to work considering the great shortage of jobs for them. All government ministries and agencies put their heads together and created 70,000 internships for them. This program is expected to give young people good experience that will greatly help them to find better jobs in the future.

New occupational training programs will be introduced this year. They include the global youth leaders program that will give young Koreans various international experiences and the Work, English Study and Travel Program (WEST) that will give them chances to work and learn in the United States for 18 months. Notably, these programs are carefully designed to benefit people from low-income families. I suggest young people go into the website at www.worknet.go.kr now. You will be able to find detailed information about diverse government-sponsored programs there. A genuine spirit of youth means the courage that is not afraid of failure; it is an unwavering spirit of challenge. Now is high time for the young people of the nation to exert that spirit.

The Government will provide active support for SMEs to preserve and create jobs. For instance, a factory in Cheongju allowed its workers to take temporary leaves of absence instead of laying them off. For this kind of company, the Government is planning to provide subsidies of up to three quarters of those workers’ wages. For those SMEs that hire unemployed young people as interns, the Government will shoulder half of their wages.

The number of the self-employed is gradually decreasing as the economy worsens. The Government will provide proactive support for solo businesses that can be run with creative ideas and simple services. As with the example of the old lady with excellent culinary skills in making tasty red pepper paste who became a successful business owner, anyone with creative ideas can start a successful business.

When it comes to protecting jobs, harmonious labor-management relations matter the most. Unlike businesses in other countries, many Korean businesses resorted to job sharing and refrained from carrying out layoffs. For their part, labor worked together with management even in the face of wage cuts. They all deserve our applause. Let us all pool our efforts to make sure that the current crisis will serve as an opportunity to reform the confrontational labor-management culture, which undermines the nation’s competitiveness.

To this end, the conglomerates particularly need to obtain the confidence of their workers and civil society through transparent management on their own initiative. On the premise that they will make innovative endeavors on their own, the Government will continuously implement market-friendly policies.

4. The Government Will Pay Close Attention to the Everyday Lives of Ordinary Citizens

Fellow citizens,

At the end of last year, I was greatly moved and encouraged by three old women. At dawn one day, I came across an old lady named Park Bu-ja at the Garakdong Agricultural and Marine Products Wholesale Market in Seoul. She walks to the market about an hour to save bus fare and earns about 20,000 won a day. When I attempted to encourage her saying that the going must be very tough, she answered, “Whom do I have to blame when everybody goes through difficulties?” Rather, she comforted me by saying that every morning she prays for the nation and me. Thinking that even this old lady who barely manages to have three meals a day is concerned about the nation, I was greatly touched by her compassion.

After about 10 days, I received a parcel from an 83-year old woman living in Seattle in the United States. After reading an article about my having given my 20-year old scarf to Mrs. Park in the market, she started knitting a scarf for several days straight. I was really grateful to her for her wholehearted concern, and I was deeply moved.

A few days ago, I dropped by a restaurant, which serves pork ribs, to listen to the problems of SME owners. They were having a year-end party there. The owner of the restaurant, an old woman who has been in business for about 30 years, said, “When the nation faces difficulties, an increasing number of people tend to raise their voices and blame others. That does no good at all. The best thing is for everyone, in whatever position, to do what they are supposed to do as well as they can. I myself will also work hard to support my family.” The SME owners at the restaurant became solemn.

I was infinitely proud of being the President of such caring people and grateful for their encouragement. The words and warm-hearted acts of those three old women gave me a great deal of energy.

One virtue that we really need to have in these challenging moments is caring concern for each other. At a time like this, the Government will administer state affairs in such a caring manner. The Government will pay close attention to the everyday lives of ordinary citizens and make sure that lives are not threatened.

I am well aware that soaring interest rates on household loans and education expenses as well as concern for unexpected unemployment constitute the most worrisome factors for families. Last year, the Bank of Korea slashed the benchmark interest rates in a drastic manner. At this difficult time, high interest rates could marginalize the working middle class. The Government will do all it can to relieve their burden stemming from high interest rates. It will crack down on the unlawful ways which private money lenders use to forcefully collect debts.

On top of this, the Government will introduce the Earned Income Tax Credit (EITC) starting from this year, through which it will subsidize low-income, working families with up to 1.2 million won a year.

One of the very first undertakings of the Administration following its launch was to subsidize college tuition fees for students from low income families. This year the subsidy will be further expanded. My firm belief is that there should not be a single student who is excluded from education because of poverty. In addition, the Government will guarantee that no student will have to skip meals.

The Government will further expand the social safety net designed to save families faced with unexpected hardships because of the economic crisis. An emergency support system for families in crisis was introduced, under which the Government will shoulder living and medical expenses for six months in case those families suffer from unemployment, suspension or closure of business. If anyone dials 129 anywhere in the nation, the officials in charge will visit the troubled families within a day and take protective measures.  

A caring society will not be achieved with Government policies alone. When all members of our society participate in sharing what they have, we will be able to build a warm, caring society. Moreover, when the nation is in a dire situation, it becomes all the more necessary for the leadership to take the initiative and make sacrifices. I hope we will be able to practice the virtue of sharing by putting ourselves in the shoes of other people—in the shoes of workers disheartened by layoff, the shoes of young people who failed to land a job, the shoes of small shop owners discouraged because business is so slow and the shoes of the CEOs of SMEs, which went bankrupt because exports have come to a halt. The devotion and initiative of leaders are the very source of national integration and will serve as a driving force that helps us surmount the crisis. 

In the face of crisis, the family constitutes the strongest bulwark. Up until now, I personally have been faced with all sorts of obstacles. However, the family has become the very source of my energy all the time. The most beautiful memories of our life have certainly something to do with our families. As long as family members and neighbors harbor caring concern for each other, we will be able to weather the current hardship.  

5. Ongoing Reforms for the Establishment of an Advanced, Leading Nation

My fellow citizens,

The Lee Myung-bak Administration is the first administration in history, which was born without any connection with illegal election campaign funds. Thinking over the historical significance of the Administration, I want to make it crystal clear once again that I am committed to fighting against corruption and irregularities. My Administration will root out corruption and irregularities in all areas of our society, including the civil service. It will thoroughly track down those who commit violent acts or other crimes against ordinary citizens and sternly deal with them. It will uphold the rule of law, thereby laying a firm groundwork for the establishment of an advanced nation.

What is urgently needed together with a firm respect for the rule of law is to foster a strong mindset of reform that will help elevate moral and ethical standards in our society. Ethics are the very root of a strong nation. In the school curriculums, the Government will further strengthen character education that teaches honesty, confidence, transparency and impartiality. I urge the religious communities, civil society and the media to proactively participate in the campaign aimed at raising ethical standards and making our society clean.

The Administration has so far pushed for deregulation, advancement of state-invested enterprises and educational reforms. These goals will be realized without fail even under a very difficult situation. Regulatory reform constitutes one of the core tasks in revitalizing the economy. Last year saw much progress in terms of deregulation. They include streamlined procedures for establishing industrial complexes and manufacturing plants. Still, there are a lot of bills pending in the National Assembly. We have a long way to go. Accordingly, the Government will further accelerate the reform drive.

The plan to advance the state-invested companies is aimed at returning them to the hands of the people in name and substance. It is aimed at raising the quality of services with less cost. The National Agricultural Cooperative Federation will be returned to the farmers, and the National Federation of Fisheries Cooperatives will be returned to the fishermen. This kind of reform will have to be made on an ongoing basis. That is because reform of the state companies will result in cutting excessive fat from them as well as creating more jobs in the private sector.

The best investment for the future is investment in education. The educational philosophy of the Lee Myung-bak Administration is absolutely clear. That is that every citizen should be provided a fair opportunity to receive education. Self-discipline and creativity should overflow wherever students are being educated.

For a starter, the Government intends to transform schools in the farming and fishing villages into e-learning institutions. The Government will begin to establish 150 public boarding high schools in farming towns and small and medium-sized cities. Around the country, it will also build 50 Meister high schools within this year that offer technological training free of tuition. In this way, the students should be able to get a job upon graduation and would not have to go to college if they do not choose to.

It is about time schools and teachers, not to mention students and parents, willingly engaged in competition for better education. School information will be made public, and teacher evaluation systems will take root. In this way, the people will be able to personally feel changes being made in public education. In every region, a hub university will be fostered and R&D investment in science and technology will be expanded in the country’s attempt to emerge as a major power in this sector.

The Government feels as much responsibility for educating adults as it does for educating children. We need to have mid-to long-term plans in anticipation of a super-aging society. Over the short term, the Government will carry out drastic reform in job training and occupational retraining in preparation for possible cuts in industrial production and hours of operation. Workers are likely to change jobs more than three times in their lifetime and smooth occupational transition is crucial. To this end, the Government will put a substantial system in place for life-long education and life-long employment.

Today, I appeal to you, my fellow citizens. Particularly, faced with global economic crosscurrents, I plead with you to use the crisis as a chance to reform the physical constitution of the nation. I truly hope that all the economic players will resolve to sacrifice themselves and voluntarily join the reform movement.

6. Green Growth and Preparation for the Future

Fellow Koreans,

What we do right now will decide what kind of country our growing children will inherit down the road. Suppose we neglect to make preparation for the forthcoming super-aging society and climate change in the 21st century under the excuse of the current crisis, then our children are likely to have to shoulder an enormous burden.

That is why I laid out a vision for green growth last year. Now that we have to take the path for green growth, what is needed is action in earnest.

The Government is exploring for new growth engines in three sectors encompassing green technological industries, hi-tech fusion industries and high value-added service industries. The nation’s drive for a Green New Deal Policy is being ignited in earnest. The major thrust will be on developing original technology in the field of new and renewable energy involving solar power, wind power and fuel cells. Projects regarding recycling as well as energy efficiency for buildings and vehicles will be carried out this year without delay and on a large scale. For all this green work, the Government will install a green growth council directly under the President while pushing for a basic law for green growth.

The Government has already announced a plan to revitalize the country’s four major rivers. It is a multi-purpose project conducive to preventing natural disasters, responding to climate change, preserving the environment, improving water quality and assuring abundant water in addition to promoting tourism and leisure industries. It is expected to create 280,000 new jobs. This kind of work produces more than twice as many jobs as manufacturing for the same amount of investment.

The areas surrounding the four rivers will be turned into large environment-friendly parks, which in turn will be linked by bicycle paths. The result will be the blossoming of a new ecological culture.

Since Korea is strong in IT, it is well positioned to launch the fusion industry as a new growth engine by combining IT with the broadcasting, communications, new materials, robotics, biotechnology and food industries. In addition, high value-added service industries involving the medical, tourism, educational and financial sectors will be nurtured strategically. In this way, the Government will strive to produce good jobs and enhance national wealth in a fundamental manner.

7. Global Diplomacy and South-North Relations Will Be Pushed in a Mature Manner

My fellow Koreans,

Even at this time of a global economic crisis, the opportunities for Korea are increasing in the international community.

For some time, Korea-U.S. relations were less than desirable. Since my Administration took over, however, the two countries have made agreements on the Visa Waiver Program as well as currency swap lines. Bilateral ties are being reborn as a strategic alliance based on ever-more-solid mutual trust.

For a long time, it was said that it would be next to impossible to gather the leaders of Korea, China and Japan in one place. However, with Korea’s initiative, the trilateral summit was held in the region for the first time. A new age of cooperation has dawned in Northeast Asia that has gone through an age of conflict for the past 100 years. The Republic has concluded an agreement with Russia providing for the installation of railways and gas pipelines running through South Korea, North Korea and Russia. A grand, historic project linking the Korean Peninsula and the vast Siberian region is panning out. The country is poised to conclude FTAs with the EU and India during this year while developing more and more markets in Central and South America. The pragmatic diplomacy based on national interest that I have employed since my inauguration has begun to bring about good results.

In addition to that, the country will carry out its duties as a cochair of the G-20 nations from this year. In the OECD, which is composed of advanced nations, Korea has been chosen as chair of the 2009 Ministerial Council Meeting.

The Republic of Korea is not the marginal state it was in the latter part of the 19th century when it suffered the whims of international currents; nor is it the flickering candle that it was during the foreign exchange crisis. The country is emerging as a responsible member of the leading nations helping create a new international order.

South-North relations should be resolved smoothly with a more flexible and mature attitude. Last year marked the 60th anniversary of national division. It is about time the South and North overcame confrontation and conflict and opened a new age of cooperative coexistence and coprosperity. I hope that North Korea will be able to read the change of the times and forge ahead with us for a bright future.

I am willing to engage in dialogue with the North at any time and am ever ready to cooperate with it as a partner. It is my earnest wish that the North will unshackle itself from old, outmoded tactics of instigating conflict within the South and will come forward with a cooperative attitude.

Concluding Remarks: Every Crisis Has an End

My fellow Koreans,

Our hopes for a better future and our courage that refuses to give in—they are the most important ingredients in overcoming a crisis.

Let us all join hands. This is not a time to blame other people or disparage ourselves. Now is the time to encourage one another and march forward together.

Fellow citizens,

Every crisis is bound to have an end. The great Korean people have overcome numerous crises and ultimately written a history of success. This history will continue in 2009 as well. In this new year, let us turn the crisis into a great opportunity without fail so that historians will record it as the year that saw a solid foundation laid for becoming a leading advanced country.

Thank you very much.