President Lee says South Korea's heavy reliance on real estate 'primitive'

President Lee Jae Myung said Wednesday that the remaining three years and 11 months of his term matter more than the first year, while calling on his cabinet to focus on long-term policy execution and correcting entrenched problems. He made the remarks in his opening address at the second ministerial briefing since his inauguration, held at the Cheong Wa Dae banquet hall.

Lee doubled down on the need to redirect liquidity away from real estate and toward capital markets. The remarks came as the Kospi, which had once climbed as high as 9,385 points, had fallen back to 6,783 points on Tuesday, underscoring his continued commitment to market stabilization and capital market development.

"Normalizing and advancing the capital market is a very important national policy," Lee said. "When available resources are locked up in real estate, the results for economic growth and resource allocation become deeply irrational." He added that the outsized share of real estate in South Koreans' asset portfolios was "primitive."

Analyzing what it would take to shift capital toward productive finance, Lee expressed disappointment over South Korea's recent failure to win inclusion in the MSCI Developed Market Index. He then asked Deputy Prime Minister Koo Yun-cheol, who also heads the Ministry of Finance and Economy, to explain the specific reasons.

Koo said that inclusion all at once, before adequate preparations were in place, risked unintended consequences, and that many systemic improvements would likely be completed by early next year.

Lee pressed back, asking whether the problem would simply resolve itself over time. Koo replied that, if things proceeded on schedule, a substantial set of countermeasures and systems could be in place by early next year.

Lee also ordered rigorous oversight of shareholder meeting practices after public participants raised concerns about how general meetings are run. During the Financial Services Commission briefing, he called out cases in which vote tallies from shareholder meetings were not announced immediately but disclosed only after a delay — and shareholders were then told to file suit to challenge the results. "That is violence," he said.

"What I hear from the field is that after a shareholder meeting, the vote results are not announced right away — they are held for a long time, then released differently from what was decided on the floor, and shareholders are told to file a lawsuit to nullify the resolution," Lee said. "That cannot happen. That is violence."

He went on to say that such conduct was unthinkable in 21st-century South Korea and especially intolerable under his administration, urging officials to "supervise this carefully."

Key ministries presented their second-half priorities, centering on national asset management reform, fiscal restructuring, fair taxation and AI-driven data administration.

The Ministry of Finance and Economy said it would push to enact a framework law on national assets to shift the management of more than 1,400 trillion won ($938 billion) in state assets from simple preservation to value creation. Plans include annual surveys of state-owned property, the addition of new asset categories such as intellectual property and virtual assets, and sharing investment returns with the public through the securitization of state-owned real estate. The ministry also plans to introduce an offshore won settlement system in January next year to advance the internationalization of the won, overhaul tax expenditures, and reform inheritance and real estate tax regimes. Additional priorities include creating a new productive-finance individual savings account, introducing a K-development finance scheme, and driving AI-based innovation across public institutions.

The Ministry of Planning and Budget outlined sweeping expenditure restructuring, including reforms to mandatory spending such as education grants and basic pensions. The ministry said it would review all fiscal programs, targeting a 15 percent cut in discretionary spending and a 10 percent cut in mandatory spending, while streamlining support for small and medium-sized enterprises and policy funds. It plans to link a "2045 National Development Strategy" — aimed at the centenary of Korea's liberation — to national fiscal planning, and to concentrate spending on three mega-projects: semiconductors, physical AI and AI data centers, as well as on future industries. Additional tax revenue generated by a semiconductor boom and other windfalls would be set aside in a future-response fund for investment in youth, regional development and growth engines.

The National Tax Service said it would expand its role starting next year to become an integrated fiscal revenue agency, collecting non-tax national income in addition to taxes. It plans to crack down on real estate tax evasion — including the misuse of business loans — and the private misappropriation of corporate funds, while strengthening fair taxation through a delinquency management unit and an AI-based tax evasion detection system. At the same time, it said it would expand tax support for companies relocating to regional areas and for small business owners to underpin balanced growth.

The Ministry of Statistics said it would build an AI-powered early-warning system to monitor price fluctuations in 21 key items, including eggs and processed foods. It also plans to establish an ontology-based data framework to enable AI to use national statistics accurately, and to build a national data platform for the secure integration of data across ministries.

The briefing was the second since Lee took office last year and was organized to assess how well each ministry had followed through on commitments made at the first briefing, held at the end of last year. Wednesday's session covered the Ministry of Finance and Economy, the Ministry of Statistics, the Financial Services Commission and the Ministry of Planning and Budget.

About 200 members of the public attended across all sessions, with roughly 20 joining each round. Cheong Wa Dae recruited participants through social media, drawing 1,295 applicants for a competition ratio of about 6.3 to 1. By policy area, applicants for the Ministry of Education session were the most numerous at 209, or 16.1 percent of the total, followed by the Ministry of Land, Infrastructure and Transport with 108 and the Ministry of Health and Welfare with 107.