Lee urges caution on excess-profit debate, warns of chilling effect on investment

President Lee Jae Myung said Monday that any debate over how to handle excess corporate profits must proceed with great caution, signaling concern that pressure on companies to redistribute such earnings could dampen investment and undermine economic growth.

Speaking at a press conference marking his first year in office at Cheong Wa Dae's banquet hall, Lee warned that if South Korea moved unilaterally on the issue, "companies could all flee." "Leading high-tech firms from abroad will become reluctant to invest here," he said.

The event, held under the slogan "Irreplaceable Korea," ran for more than 100 minutes and was broadcast live. Lee laid out four major policy goals for his second year in office and fielded questions on pressing issues in real time.

On measures to counter rising prices stemming from the prolonged war in the Middle East, Lee mentioned implementing a maximum oil price system and tapping strategic petroleum reserves. "By normalizing market order, we will be able to avoid the worst-case scenario of prices rising unnecessarily and excessively," he said, adding that inflation "is being managed in a relatively stable manner compared to other countries." He said he did not expect the situation to reach crisis level.

Asked about the excess-profit distribution debate that Policy Chief Kim Yong-beom had ignited, Lee drew a distinction between the use of excess tax revenue and the distribution of excess corporate profits, saying the two concepts had been conflated, causing confusion. He acknowledged, however, that the question of excess profits "is highly contentious."

Lee noted the competing claims on those profits — workers who contributed to generating them, shareholders who invested in the company, the government that poured resources into research and development, and citizens whose subsidies helped fund the effort. "Is this really a matter subject to labor disputes? Doesn't it fall under what is called management prerogative? One could argue it is not a subject for labor disputes," he said. "I have thought about it a great deal but have not reached a conclusion."

On social pressure for companies with high operating profit margins to return a portion of those earnings, Lee said the idea "is in some ways similar to raising the corporate tax" and called it "an agenda that could have a very serious impact on national industrial policy."

He went on to warn that mishandling the issue "could end up stomping on seedlings that are only just beginning to sprout." He added that the discussion should not be confined to South Korea alone, given its potential impact on international trade order, and said he believed "international-level dialogue" was needed.

Asked whether the results of the June 3 local elections — specifically the Seoul mayoral race — reflected public sentiment over real estate prices in the greater metropolitan area, Lee said the factors behind the outcome were varied. "I see real estate as a constant," he said. "I believe I have done a reasonably good job of holding back upward pressure on prices." He suggested that real estate prices had been more of a positive than a negative factor for his party.

On additional regulations including tax measures, Lee said tax-related steps would not be possible until around July. He added that policies to increase housing supply were being finalized and would be announced soon, with an emphasis on moving faster.

Lee also addressed the stock market index, which recently hit 8,000 before pulling back. "I still think it is undervalued," he said. "Share prices fluctuate — no country moves in a straight line. They advance with ups and downs."

He also highlighted a broader benefit of rising share prices. "Who gains from a rising stock market? It is not only those holding large-cap or semiconductor shares who benefit. All citizens are benefiting," he said, pointing to gains in the national pension fund's assessed value as "the most dramatic part" of the market's normalization.

Lee also addressed young people who raised concerns about ballot shortages during the recent local elections. "They are truly precious — sensitive and perceptive, and this is something we must prepare for and respond to," he said. "I am grateful to the young people who prompted this fundamental reflection."

"That a democratic republic's government allowed the exercise of voting rights to be handled so carelessly, without any contingency plan — this is not a matter of vote counts or outcomes. It is in itself a very serious problem," Lee said. He added that he felt he had grown "somewhat numb" to such issues and reflected on his own lack of sensitivity to the importance of sovereignty. "I, too, reflect deeply on this as a fundamental matter concerning the exercise of sovereignty in the Republic of Korea," he said.

On what action to take regarding the National Election Commission, Lee said he could not act alone. "It seems a problem has arisen within the constitutional system," he said, adding that he planned to meet with relevant parties that afternoon to hear views on the right approach.

By Moon Hye-hyun, Jeon Hyun-geon and Kim Hae-sol