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How South Korea election might reshape Yoon's policy agenda

South Korean President Yoon Suk Yeol promised to renew his administration after his party suffered a big defeat in legislative elections, with the result increasing the risk that more of his policy priorities may be blown off course.

Yoon, who took office in May 2022, was not up for election this time but his capability to pass legislation is likely to be even more inhibited after the opposition led by the Democratic Party increased its bulk after a bad proving by Yoon's. conservative People Power Party.

Here are some policy areas that might be affected:

TAX ON INVESTMENTS

Yoon's pledge to ditch scheduled capital gains tax on earnings. from financial investments will probably tumble, analyst state, as. it will be difficult to persuade parliament to amend the bill.

The tax, focused on enhancing financier sentiment and stock. worths, is developed to levy at least 20% if annual capital gains. from stock investments exceed 50 million won ($ 36,700). Those. making more than 2.5 million won in other monetary possessions are. Subject to the tax.

It was due to be presented in 2025, but the federal government in. January stated it must be abolished as the levy would seriously. injure the hunger amongst regional financiers for regional stocks.

VALUE-UP PROGRAMME

Momentum for Yoon's project to improve the stock exchange,. called the Business Value-Up Programme, will weaken, experts. say.

The plan, revealed in February, looks for to remedy a tendency. for noted South Korean business to have lower valuations than. worldwide peers due to aspects such as low dividend payouts and. poor business governance.

Finance Minister Choi Sang-mok recently said the government. strategies to minimize corporate taxes on a portion of increased. shareholder returns, however the proposal might deal with opposition in. parliament if it is considered to benefiting cash-wealthy. conglomerates, experts said.

RENEWABLE VS ATOMIC ENERGY

The election result might offer an increase to some industries,. including sectors such as renewable resource, electrical automobiles. and batteries, experts said.

The Democratic Celebration wishes to increase the part of. renewable energy in South Korea's energy mix to 40% by 2035 from. less than 10% now, produce a belt of wind and solar power farms,. and think about a law comparable to the U.S. Inflation Reduction Act. ( INDIVIDUAL RETIREMENT ACCOUNT) which intends to boost investment to deal with climate risks.

The celebration also pledged to provide half-price electric. automobiles by promising aids connected to marital relationship and. giving birth.

The Yoon government's strategies for South Korea to end up being. the greatest in nuclear power might be disrupted by resistance. from the opposition.

Shares in nuclear reactor parts maker Doosan Enerbility. and plant engineering firm KEPCO Engineering & & Building. fell 6.9% and 9.2% respectively in afternoon trade,. versus a 0.2% increase in the wider market.

DEFENCE SALES, CHIPS NOT LIKELY TO BE AFFECTED

Experts said the election was not likely to change South. Korea's enthusiastic plans to improve defence exports.

The Democratic Party did not consist of the defence. market in its project promise book, it did discuss the need to. expand trade finance which has actually been a barrier to overseas. defence orders, NH Financial investment & & Securities said in a note.

As for the semiconductor industry, which accounts for almost. a fifth of South Korea's exports, both the opposition and ruling. celebrations appear agreed on the need for continued support.

South Korea's existing tax breaks for investment in. semiconductor facilities will end this year. While the. Democratic Party might stonewall the government's push to relieve. taxes in some fields, many of its members are likely to back. extended tax breaks for chip financial investments, experts stated.

MEDICAL REFORM PLANS

Yoon has actually taken a hardline against doctors who oppose a major. healthcare reform strategy, the centrepiece of which is to increase. the variety of brand-new medical trainees by 2,000 a year to make up. what the government states is an extreme shortage of physicians.

The strategy, which also includes rewards for medical professionals to. practice in areas other than Seoul, the capital, has broad. public assistance however there has actually been increased public concern over. the long standoff between the federal government and medical professionals.

The walkout by student doctors since Feb. 20 did not play. significantly during the campaign and it was unlikely for Yoon. to accept a compromise and modification course, given the general public. assistance for the initiative itself, experts said.

DIPLOMACY

Taking a tougher line on North Korea, Yoon has made it a top. priority to reinforce security alliances with the United States. and Japan.

Diplomacy did not play a considerable function on the. campaign path and some analysts said Yoon may even focus more. on his overseas program now, though those plans might also be at. threat if the opposition looks for to cut spending plans with its majority.

(source: Reuters)