South Korea splits economy ministry in major overhaul of economic governance SEOUL, January 02 (AJP) - South Korea on Friday formally split the Ministry of Economy and Finance into two separate ministries, a move the government says will strengthen fiscal discipline and policy accountability but that raises questions about coordination in economic crisis management. The reorganization creates the Ministry of Planning and Budget and the Ministry of Finance and Economy, separating budget authority from macroeconomic, financial and tax policy. The two ministries officially launched at the Government Complex in Sejong, marking one of the most significant changes to South Korea’s economic governance in nearly two decades. The Ministry of Finance and Economy began operations following a signboard ceremony at the former ministry’s main building, while the Ministry of Planning and Budget moved into Building 5, previously occupied by the Ministry of Oceans and Fisheries. The physical separation underscores the institutional overhaul, which divides budget and economic policy functions that had operated under one roof. Under the new structure, the Ministry of Planning and Budget will be responsible for national fiscal management, including budget formulation, execution and performance evaluation. The Ministry of Finance and Economy will serve as the government’s economic “control tower,” overseeing macroeconomic management, financial and tax policy, and external economic affairs. It is the first time since the Ministry of Economy and Finance was launched in 2008 that budget and economic policy functions have been separated, ending an 18-year combined system. The government said the change was driven by concerns that concentrating budget, tax and economic policy in a single ministry had led to excessive power and reduced policy flexibility. With large-scale fiscal spending becoming more routine, officials said an independent budget authority would help reinforce fiscal discipline, while a dedicated finance and economy ministry could respond more nimbly to economic cycles and focus on industrial and financial policy. However, questions remain over whether the Ministry of Finance and Economy can function effectively as an economic control tower without direct budget authority. Critics warn that policy impact could be limited if growth strategies and crisis responses cannot be backed by swift budgetary action. Policy coordination between the two agencies is also emerging as a key test. Because fiscal policy plays a central role in economic stabilization, misalignment between budget planning and macroeconomic policy could weaken outcomes. Past periods of institutional separation were marked by coordination failures and disputes over responsibility, some observers say. The Ministry of Planning and Budget faces immediate challenges from population aging, rising welfare spending and mounting calls for expansionary budgets to support a slowing economy, while being tasked with preserving fiscal soundness. Its effectiveness will likely depend on strengthening midterm fiscal planning and maintaining tighter control over spending demands from other ministries. The Ministry of Finance and Economy is launching amid heightened global uncertainty, including shifting interest-rate trends, intensifying U.S.-China technology rivalry and ongoing supply-chain restructuring. It must balance inflation control with efforts to revive growth, while managing tax policy, financial-market stability and external economic negotiations without direct budget levers. Analysts say the reorganization risks confusion and accountability gaps. But if clear roles and a permanent coordination mechanism are established, the split could enhance both fiscal discipline and economic responsiveness. The government has said it plans to limit policy friction through regular consultations and joint response systems. 2026-01-02 11:19:52

OPINION: Are museum admission fees worth it? SEOUL, December 22 (AJP) - Debate is intensifying over whether the National Museum of Korea should start charging admission fees. Proponents of free entry argue that public museums exist to serve everyone, while opponents point to chronic budget shortfalls that leave few viable alternatives. But this debate often fixates on price, overlooking a more fundamental issue: what, exactly, would visitors be paying for, and is the experience worth charging for? That question becomes clearer when looking abroad. At many major tourist sites, from Egypt's pyramids to Europe's cathedrals and ancient ruins in South America, locals and foreign visitors often pay different prices. Locals may pay only a few bucks, while foreigners can be charged much more. At the ticket window, travelers inevitably do the math and ask themselves: Is it worth paying this to go in? Sometimes the answer is yes. Sites that offer compelling narratives, carefully curated collections, and immersive environments can make even high fees feel reasonable. Visitors understand that conservation, research, and meaningful public engagement require substantial investment. But the opposite is just as common: steep admission fees paired with neglected galleries, faded signage, and little information for visitors. Even when officials say fees fund repairs and restoration, it can be hard to see the results. "What exactly am I paying for?" Even so, most people still visit these places. They buy the ticket despite their doubts, partly because the opportunity may not come again. Having already spent heavily on airfare, lodging, and transportation, the admission often feels like a relatively small additional cost. Skipping signature sites can feel like both an emotional regret and an economic loss, a kind of obligation to see what represents the country. At that point, "value" is not only about how well a site is managed or presented. It is also about symbolism, national identity, and experiences that seldom come around again. Visitors weigh whether it is worth the price, but they also consider what they would miss and when that loss feels significant, they choose to pay. Before debating admission fees, South Korea needs to answer a more fundamental question: does the museum offer experiences compelling enough that visitors would genuinely regret walking away? Foreign tourism to South Korea has surged, driven in part by the global popularity of K-pop and hit dramas. Many visitors now arrive with cultural and historical curiosity, seeking more than sightseeing or shopping. The country has extensive cultural heritage, but whether it is curated and presented to meet global visitor expectations is a separate question. Admission fees are not merely about revenue. They are a public statement that something is "worth the time to see." Charging admission is hard to justify when spaces are poorly managed, artifacts lack context, and explanations are unhelpful. When a site or exhibition presents a strong story and a thoughtfully crafted experience, visitors are more willing to pay without hesitation. * This article, published by Aju Business Daily, was translated by AI and edited by AJP. 2025-12-22 09:17:24

Tax watchdog launches audit of trendy bakery café SEOUL, December 18 (AJP) - The National Tax Service on Thursday launched a special tax audit of trendy bakery café London Bagel Museum, which has come under scrutiny following the death of a young employee in his 20s allegedly due to overwork. According to industry sources, tax authorities raided the café's operator LBM in central Seoul and seized tax-related documents. Specific reasons for the audit were not immediately disclosed, with the tax watchdog saying it could not confirm details regarding audits of individual taxpayers. The audit comes as the café works to improve overall working conditions following the employee's death, which exposed excessive overtime, rampant workplace abuses, and other labor violations. 2025-12-18 17:29:44

Newlyweds fall below 1 million for second straight year SEOUL, December 12 (AJP) - The number of newlyweds has remained below one million for the second year in a row, the Ministry of Data and Statistics said on Friday. About 952,000 couples married last year, down 2.3 from a year earlier. First-time newlyweds with children accounted for 51.2 percent, down 1.3 percentage points from the previous year, with an average of 0.61 children per couple. Only 49.1 percent of dual-income couples had children, compared with 55.2 percent of single-income couples. About 48.3 percent of couples with employed wives had children, compared with 56.7 percent of couples with non-working wives. Homeownership was also related to childbirth, with 56.6 percent of homeowners having children. For non-homeowners, the figure was 47.2 percent. The proportion of dual-income households among first-time newlyweds rose to 59.7 percent, with their average annual income at 76.29 million won (about US$52,000), up 5 percent from the previous year. Their average income stood at 93.88 million won, much higher than the 55.26 million won for single-income couples. About a quarter of them or 23.8 percent earned between 70 million and 100 million won Homeowners earned 84.01 million won on average, well above the 70.52 million won earned by non-homeowners. The proportion of newlyweds with loans slightly declined to 86.9 percent, with a median loan balance of 179 million won, as many borrowed to afford apartments to start their married life. * This article, published by Aju Business Daily, was translated by AI and edited by AJP. 2025-12-12 14:44:15

South Korea prepares rule changes to channel financial capital into AI, chip sectors SEOUL, December 11 (AJP) - South Korea plans to relax rules that restrict financial capital from investing in high-tech industries, including artificial intelligence and semiconductors, while maintaining the core principle of separating industrial and financial capital, the government said on Thursday. Deputy Prime Minister and Finance Minister Koo Yun-cheol briefed President Lee Jae Myung on the proposed regulatory changes during a policy briefing session in Sejong. President Lee said the administration was preparing “practical measures within the separation principle,” adding that the work was nearing completion. Lee also asked whether the government was creating special provisions to secure funding for early-stage, capital-intensive technologies. Koo said the proposed adjustments would not alter the underlying separation rule, which prevents financial firms from exerting control over industrial companies. “We have preserved the principle, but we are proposing regulatory easing to support sectors that require massive investment,” he said. South Korea introduced its financial–industrial separation policy in 1982 to stop conglomerates from using financial affiliates as private funding channels. The framework was tightened after the 1997 Asian financial crisis, when chaebol-led cross-support and aggressive expansion were criticized for exacerbating systemic risks. Debate over easing the restrictions resurfaced in the 2010s as major technology platforms such as Kakao and Naver expanded into financial services. Although the cap on industrial capital’s stake in banks was raised from 4 percent to 34 percent, voting rights and other limitations remained in place. Growing demand for regulatory relaxation has continued alongside the rapid rise of digital finance, but concerns over market concentration and conflicts of interest have slowed progress. The Lee administration, however, has stressed that high-tech strategic sectors — including semiconductors and AI — require more flexible capital rules. The Ministry of Economy and Finance said it plans to move forward with measures to ease the investment constraints. * This article, published by Aju Business Daily, was translated by AI and edited by AJP. 2025-12-11 15:16:27

Seoul raises market watch after Fed rate cut SEOUL, December 11 (AJP) -South Korea’s deputy chiefs of fiscal, monetary and financial policy convened an emergency macro-financial meeting Thursday, after the U.S. Federal Open Market Committee (FOMC) delivered its third consecutive interest rate cut and signaled only limited easing ahead. The meeting — held via conference call — brought together Lee Hyoung-il, vice minister of economy and finance; Yoo Sang-dae, deputy governor of the Bank of Korea; Kwon Dae-young, vice chairman of the Financial Services Commission; and Lee Se-hoon, senior deputy governor of the Financial Supervisory Service. The officials reviewed immediate market reactions and discussed potential spillovers to Korea’s financial system. The usual post-Fed positive response was restrained. As of 10:00 a.m. Thursday, the KOSPI was up 0.6 percent to 4,161.14, while the KOSDAQ gained 0.5 percent to 939.33, extending a modest relief rally after the Fed’s decision. The won weakened 0.5 won to 1,467 per dollar, reversing earlier gains as foreign exchange volatility persisted. Officials noted that domestic stock markets remain broadly stable, but pointed to concerns over rising government bond yields and heightened swings in the foreign exchange market — vulnerabilities that could intensify under diverging global monetary conditions. The U.S. Federal Reserve on Wednesday reduced its benchmark federal funds rate by 25 basis points, bringing the upper bound to 3.75 percent, the lowest level in more than three years. The move completes three consecutive cuts since September, totaling 75 basis points of easing. Despite the latest cut, the Fed signaled caution about the path ahead. In its quarterly projections, FOMC officials penciled in just one rate cut in 2026, suggesting the central bank wants clearer evidence of easing inflation and labor market slowdown before resuming substantial policy accommodation. Fed Chair Jerome Powell said policymakers are “well positioned to wait and see how the economy evolves,” citing delayed employment and inflation data caused by the recent U.S. government shutdown. Private payroll data from ADP showed employers shed 32,000 jobs in November, underlining cooling momentum in the labor market. Global markets broadly expected the cut, but took note of the Fed’s downward revision to inflation forecasts and upward revision to growth expectations. U.S. Treasury yields fell and the dollar weakened following the announcement. Korean policymakers highlighted a growing policy divergence: while the U.S. appears set to continue gradual easing, Japan is approaching a rate hike, a rare tightening move for the Bank of Japan. This split among major central banks, they warned, could generate volatility across global asset classes, capital flows and exchange rates. Participants agreed the Korean economy is entering a phase where external shocks can transmit more quickly, requiring a reinforced monitoring regime. Vice Minister Lee emphasized the need to maintain a 24-hour joint monitoring system across fiscal, monetary and supervisory authorities. He called for “swift, coordinated responses” to any instability in financial or foreign exchange markets, underscoring Korea’s commitment to pre-emptive risk management. 2025-12-11 10:09:57

South Korea's fixated weak won calls for a long-term policy reset SEOUL, December 09 (AJP) - South Korea is running out of quick fixes. With the local currency stuck in the band of 1,470 won per dollar for nearly a month and inflation pressures reawakening, economists say the country can no longer rely on ad-hoc tools, verbal interventions, or temporary tax cuts to stabilize forex. Instead, the entrenched weakness of the won is exposing the need for a fundamental, long-term overhaul of the nation’s macroeconomic, energy-import, and capital-flow policies. The won slipped below 1,470 won on Monday, presumably through interventionist hands. The currency has risen for five straight months—from an average of 1,366.95 won in June to 1,469.48 won in December, a 7.5 percent jump—enough to unsettle inflation that had only recently begun to stabilize. Already, the import price index spiked 1.9 percent in October, the fastest pace since January, pushing domestic supply prices up 0.9 percent. Consumer inflation, at 2.4 percent, risks drifting higher as companies face steeper dollar-denominated input costs and begin passing them on. The Bank of Korea and global investment banks now expect inflation to hover near or slightly above 2 percent next year. When a Weak Won Stops Being a “Phase” The deeper concern is that the weak-won environment may no longer be a passing cycle but the country’s new structural baseline. A Bank of Korea study estimates that if a 10 percentage-point depreciation persists for more than three months, annual inflation rises 1.61 percentage points—a hit that could dull any nascent recovery in private consumption. That emerging pattern is already visible at the small-business level. Even after government-backed spending coupons lifted third-quarter sales by 5.3 percent year-on-year, profits still fell 4.63 percent from the previous quarter because of elevated costs, according to KB Securities. “Domestic demand is improving, but inflation pressure is strengthening in parallel, weakening the elasticity of the recovery,” said economist Ryu Jin-i. She expects consumer prices to peak in the third quarter of next year, pushing the central bank into a difficult trade-off between growth and inflation. Policy Ambiguity Is Becoming Its Own Risk Markets say they cannot tell whether the government sees the won’s weakness as structural or temporary—and that uncertainty is beginning to carry its own costs. Standard verbal warnings about “excessive one-sided moves” have had virtually no effect, largely because foreign inflows remain tepid and dollar demand remains firm. A brief episode involving the National Pension Service’s (NPS) hedging strategy fueled further confusion. Officials suggested higher hedging ratios could stabilize the won by increasing demand for the currency, only to backtrack after public pushback over using pension assets for currency management. Deputy Prime Minister Koo Yun-cheol later stressed that the government had no intention of “mobilizing the pension fund as a temporary tool”—a clarification that left markets questioning the strategic coherence of the policy framework. Other inflation-containment tools—fuel tax cuts, emergency tariffs, and public-fee restraint—have been stretched to their limits. The country’s longest-standing fuel-tax reduction is still in effect. Tariff relief for grains and raw materials has been repeated so often its impact is fading. And public-utility price controls are hard to sustain if the weak-won trend continues. At a recent policy briefing, Presidential Policy Chief Kim Yong-beom outlined three priorities: encouraging the repatriation of Korean companies’ overseas profits, examining retail investors’ overseas investment risks, and reassessing the NPS’s hedging framework. Yet each carries structural tension—tax architecture, capital-market liberalization principles, and pension-fund fiduciary duty—that makes them difficult to execute swiftly. Structural Pressures Mount Behind the Scenes Economists warn that the country’s 40-month run of Korea–U.S. interest-rate inversion continues to siphon funds into higher-yielding foreign assets. “Intervening with ten billion dollars stabilizes the market for a day or two at most,” said Hansung University’s Kim Sang-bong. “These are not fundamental solutions.” Corporate hedging behavior also reflects the shift: currency-risk insurance purchases fell 32.7 percent in the first 11 months of the year, and plunged 45.8 percent in October alone—evidence that companies now see the high exchange rate as the new normal. Meanwhile, Korea’s heavy dependence on imported energy and food magnifies its exposure. A government plan to import 100 billion dollars of U.S. energy over four years diversifies away from the Middle East but raises transportation and logistics costs. Japan and China have aggressively pursued food-supply diversification; Korea’s efforts remain tentative by comparison. Even raw-material reserves are feeling the squeeze. The Public Procurement Service raised its nonferrous metal stockpiling budget to 80 billion won, but the same money now buys less because of rising global prices and the weaker currency. A Moment to Rebuild Fundamentals Although Korea’s current-account surplus—bolstered by a rebound in semiconductor exports—helps cushion capital outflows, economists emphasize that a long-term remedy lies not in patchwork interventions but in reinforcing macroeconomic fundamentals and improving the domestic investment environment. “Instead of relying on short-lived measures, it is time to redesign the policy framework from the ground up,” said Seoul National University economist Ahn Dong-hyun. “Korean companies are investing more abroad than they are reshoring. Regulatory improvements and a stronger domestic base are essential to reversing that trend.” For now, the won remains pinned near 1,470 won per dollar—an indicator not just of currency markets but of a broader strategic question: whether Korea’s policymakers can shift from crisis response to a durable, forward-looking policy architecture that prevents the weak-won, high-inflation cycle from becoming a structural feature of the economy. * This article, published by Aju Business Daily, was translated by AI and edited by AJP. 2025-12-09 07:36:00

South Korea's economy shows gradual recovery as consumption improves: KDI SEOUL, December 08 (AJP) - South Korea’s economy is showing signs of gradual improvement, driven by stronger consumer spending, but risks remain from a prolonged construction downturn and persistent global trade uncertainties, the state-run Korea Development Institute (KDI) said in a report published on Monday. In its December economic assessment, KDI said the delayed effects of interest rate cuts and continued government support were lifting household consumption, helping to sustain a modest recovery despite weakness in the construction sector. Since August, KDI has shifted from a negative assessment to describing the economy as entering a consumer-led recovery phase, a view it has maintained in recent monthly reports. The think tank said export momentum has been supported by a global semiconductor upturn, but warned that uncertainty surrounding trade conditions remains high. Industrial production in October fell 3.6 percent from a year earlier, partly due to fewer working days, but showed a combined 1.6 percent increase across September and October. Construction output declined 14.2 percent year on year, underscoring the depth of the sector’s slowdown. Manufacturing production rose 1.6 percent, led by a 14.6 percent jump in semiconductor output. Service sector production grew 3.6 percent, supported by health and social welfare services, up 6.6 percent, and finance and insurance services, up 4.2 percent. Consumer spending showed further signs of recovery. Retail and service consumption rose a combined 1.3 percent in September and October, although October retail sales increased only 0.3 percent, partly reflecting the Chuseok holiday. “Interest rate cuts are gradually taking effect, and with the consumer sentiment index at 112.4, consumption is expected to continue improving,” the KDI report said. Construction investment remains weak despite a recent uptick in building orders. KDI also highlighted ongoing uncertainty over external trade conditions, including tariff negotiations between the United States and South Korea and pending rulings by the U.S. Supreme Court. * This article, published by Aju Business Daily, was translated by AI and edited by AJP. 2025-12-08 13:59:18

South Korea's finance chief rules out using pension fund for FX intervention SEOUL, December 05 (AJP) - South Korea’s finance chief pushed back against speculation that the government might lean on the National Pension Service to help stabilize the weakening won, saying market fundamentals — not state intervention — should guide currency movements. Deputy Prime Minister and Finance Minister Koo Yoon-cheol, speaking in a radio interview Friday, said the government has no intention of directing the NPS, one of the world’s largest institutional investors, to adjust its dollar holdings for exchange-rate purposes. “The pension fund requires dollars for overseas investments and converts them back during payouts,” he said. “We intend to establish a new framework that reflects these structural realities, not one based on government intervention.” Koo said the administration is focused on balancing foreign-exchange supply and demand in the near term but argued that the only durable solution lies in strengthening the competitiveness of Korean companies and the broader economy. “Our goal is to build an economic structure in which foreign exchange flows naturally,” he said. * This article, published by Aju Business Daily, was translated by AI and edited by AJP. 2025-12-05 11:12:40

Deutsche Motors, BMW's South Korean distributor, under 'special' tax probe SEOUL, November 21 (AJP) - South Korea’s National Tax Service has launched a tax probe into Deutsche Motors, the country’s official distributor of BMW vehicles. Industry sources said tax officials recently visited the company’s Seoul headquarters to secure documents and computer records as part of the inquiry. The investigation is being led by the Seoul Regional Tax Office and is classified as a "special" audit, according to the sources. Deutsche Motors has faced heightened scrutiny amid a stock manipulation scandal. Former Chairman Kwon Oh-soo received a suspended prison sentence in April in connection with the case. Separately, a special prosecutor team led by Min Joong-gi is examining whether prosecutors adequately investigated the matter after the Seoul Central District Prosecutors’ Office declined to indict in July last year then-first lady Kim Keon-hee, who is suspected of being involved in the stock rigging case. * This article, published by Aju Business Daily, was translated by AI and edited by AJP. 2025-11-21 16:45:42