Bloomberg News

Park Wins S. Korean Presidency, First Female Leader

December 19, 2012

Park Wins S. Korean Presidency to Become First Female Leader

Supporters of Park Geun Hye, the president-elect from the ruling New Frontier Party, celebrate in Seoul, South Korea, on Dec. 20, 2012. Photographer: Jean Chung/Bloomberg

Park Geun Hye was elected president of South Korea, becoming the first woman to lead Asia’s fourth- biggest economy more than 30 years after her father’s rule as dictator ended with his assassination.

Park, 60, of the ruling New Frontier Party, defeated main opposition nominee Moon Jae In, 51.6 percent to 48 percent, the biggest margin of victory in 25 years. Stocks and the won were little changed in morning trading.

The never-married daughter of the nation’s longest-serving dictator will lead a country with one of the world’s most entrenched gender gaps. She must confront a slowing economy, widening income disparity and re-engagement with North Korea after the totalitarian state’s rocket launch last week.

“Park’s victory is historically symbolic,” said Lee Nae Young, a political science professor at Korea University in Seoul. “Voters decided she will offer the most stable leadership to navigate the country through a global recession, and mounting internal and external uncertainties, especially in foreign affairs and national security.”

Park will take office on Feb. 25, when President Lee Myung Bak’s single five-year term ends.

“As the first woman president, I promise to fulfill new change and reforms with you,” she said today at a press conference in Seoul. “South Korea’s economy is still difficult. I will create a country where nobody worries about putting food on the table.”

‘Regional Peace’

Incoming Japanese Prime Minster Shinzo Abe, whose party won a landslide victory on Dec. 16, congratulated Park on her election. While the two countries are mired in a territorial dispute over islets that canceled the extension of a currency swap agreement, Abe stressed the need for close ties.

“In light of the present situation in East Asia, it is vital that we cooperate closely in order to ensure regional peace and stability,” he said in a statement.

Park’s win may be “positive” for South Korea’s consumer and construction companies, HSBC Holdings Plc analysts led by Herald van der Linde said in a report today. The government is likely to support the economy through the expansion of public housing, while Park has pledged less strict regulation against supermarkets and hypermarkets, the report said.

South Korean stocks erased earlier gains on signs the U.S. budget negotiations are stalled. The benchmark Kospi index was up 0.1 percent at 10:43 a.m in Seoul, and has climbed 9.3 percent this year.

Overcoming Dissatisfaction

The result means the New Frontier Party retains the presidential Blue House, overcoming widespread dissatisfaction with Lee. The outgoing leader’s popularity plummeted as he failed to live up to pledges to set the economy on a path to the 7 percent annual growth needed to increase per-capita income to $40,000 by 2017.

South Korea’s economy is forecast to grow 2.4 percent this year, the slowest pace since 2009. Park pledged to raise wages, increase welfare spending and rein in the influence of the family-owned conglomerates such as Samsung Group and Hyundai Motor Co. known as chaebol.

While pledging to restrict their power, she stopped short of Moon’s recommendations to ban existing and new cross- shareholding to reduce the risk of monopolies.

Her win may boost equities in the short- to medium-term as market uncertainty over “hawkish” anti-chaebol policies has been removed, Macquarie Group Ltd. analysts Chan Hwang and Joe Huh wrote in a report today.

‘Main Focus’

“Her main focus when she comes in is going to be on the domestic economy and getting it to grow and creating jobs,” said Victor Cha, who holds the Korea chair at the Center for Strategic and International Studies in Washington.

Park faced questions of whether as an unmarried childless woman she could relate to problems of working women. She appealed to the electorate by saying her family was the nation.

South Korea ranks 108th among 135 countries surveyed in the World Economic Forum’s annual Global Gender Gap Report, and is 116th in economic participation and opportunity for women.

The election had historical resonance as Moon was imprisoned in 1975 for leading student protests against Park’s father. Park Chung Hee led South Korea for 18 years, spurring growth in steel, shipping and automobile manufacturing by sponsoring the chaebols. He also used torture, censorship and executions to crush dissent, and was assassinated by his intelligence chief in 1979.

Park Geun Hye apologized in September to the victims of her father’s rule. She served as first lady for five years starting at age 22 when her mother was slain by a North Korean agent attempting to assassinate her father.

Kim’s Rocket

On ties with North Korea, both Park and Moon called for resuming dialogue with Kim Jong Un’s regime, which last week ignored international calls to refrain from launching a long- range rocket. The North’s official Korean Central News Agency during the campaign accused Park of “kicking up hysteria for confrontation.”

Park said she was willing to hold summit talks with Kim, while emphasizing the importance of national security and “dialogue based on trust.” Mending fences may offer companies in the South expanded access to the Gaeseong joint industrial zone while bringing aid to Kim, whose economy is one-fortieth the size of his rival.

“There is broad consensus in Korea on the need to engage with North Korea, even when they engage in bad behavior, like rocket launches,” said Peter Beck, Korea representative for the Asia Foundation in Seoul.

To contact the reporter on this story: Sangwon Yoon in Seoul at syoon32@bloomberg.net

To contact the editor responsible for this story: Peter Hirschberg at phirschberg@bloomberg.net


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