South Korea’s Lee marks first year with vow to find new growth engines

SEOUL – South Korean President Lee Jae Myung said his administration will unveil a large-scale investment project aimed at supporting a wider range of future growth engines while also preparing plans to leverage excess tax revenue generated by the semiconductor industry. 

Speaking at a press conference marking the first anniversary of his presidency on June 8, Lee pledged to move beyond semiconductors for driving the nation’s economy by fostering world-leading competitiveness across a range of industries.

“Above all, the fruits of growth must not remain confined to a select few corporations, regions or sectors,” he said in prepared remarks.

The comments underscore Lee’s efforts to broaden South Korea’s industrial base at a time when booming semiconductor exports have become a key driver of economic growth and also a source of resentment among those who are not benefiting from the sector’s surging profits and bonuses.

Lee said the gains and opportunities generated by society as a whole should extend to small and medium-sized enterprises and start-ups, spread across regions and sectors, and translate into tangible improvements in people’s daily lives.

The President said his government will soon unveil a large-scale investment project that would represent what he called a “fundamental transformation” of the nation’s growth strategy.

Lee also said the government will determine how to most effectively utilise surplus tax revenues generated by the semiconductor industry and ensure that the National Growth Fund fulfils its purpose of delivering “growth for all”.

The government-backed fund is South Korea’s flagship investment initiative to channel 150 trillion won (S$123.4 billion) into advanced industries, such as chips and artificial intelligence, over five years.

In a question-and-answer session following his remarks, Lee said excess tax revenue generated by the country’s semiconductor boom should be used primarily to strengthen long-term growth potential, rather than being treated as ordinary fiscal revenue.

He distinguished between excess tax revenue and extraordinary corporate profits, saying the two concepts are often conflated in public debate.

Lee stopped short of proposing specific measures while cautioning that any discussion of excess profits should be approached carefully so as not to undermine innovation.

Separately, Lee said his administration will seek concrete results from diplomatic and security initiatives, including the revision of the Korea-US Nuclear Cooperation Agreement, the introduction of nuclear-powered submarines and efforts to restore wartime operational control ahead of schedule.

South Korea unveiled a road map in May to develop nuclear-powered submarines and deploy the first vessel by the late 2030s, after Lee secured President Donald Trump’s backing during a summit in 2025.

Progress since then appears to have been slow, with the sensitive issue of supplying nuclear fuel for the submarines among the complications.

Lee has enjoyed strong public support since taking office following the impeachment of former president Yoon Suk Yeol, whose declaration of martial law in late 2024 triggered a political crisis that ultimately led to his removal from office. 

The President’s Democratic Party recently secured a sweeping victory in local elections, winning 12 of 16 major mayoral and gubernatorial races.

The result expanded the party’s influence beyond its parliamentary majority and is expected to give Lee fewer obstacles in pursuing his policy agenda.

One notable setback came in the Seoul mayoral race, where voters appeared to express concerns over worsening housing affordability and rising property prices, an issue that remains one of the administration’s biggest domestic challenges.

In his opening address, Lee pledged to crack down on stock price manipulation and property-related crimes as part of a broader effort to strengthen market order and eliminate unfair privileges.

The comments come as Chinese President Xi Jinping has embarked for North Korea for his first visit to Pyongyang since 2019, underscoring the diplomatic challenges facing Lee as he seeks to improve ties with the Kim Jong Un regime.

Despite a series of conciliatory steps by Seoul, North Korea has largely ignored Lee’s outreach while continuing to expand its nuclear capabilities and deepen cooperation with China and Russia. BLOOMBERG