Elections and Yoon's future legacy President, PPP grapple with dismal approval ratings The National Assembly elections on April 10 will be a make or break moment for President Yoon Suk Yeol. A victory for the opposition means that Yoon will be reduced to lame duck status for the rest of his term, which ends in 2027. But if he manages to gain a plurality or majority of parliamentary seats, it would mean that he could finally get started on his domestic reforms, two years after his inauguration in May 2022. The current opposition-controlled National Assembly has so far blocked most of the president's proposals. The election outlook is uncertain due to the fracturing of the two main political parties - Yoon's People Power Party (PPP) and the opposition Democratic Party of Korea (DPK). Although PPP has had a narrow lead over the DPK in recent polls, the proliferation of third parties lowers the chances of a PPP victory. Another potential electoral factor is the public reaction to strikes by resident and trai nee doctors protesting government plans to increase enrollments at medical schools. The government proposal is part of a wider ambition by Yoon to overhaul the labor market, which has been a centerpiece of his policy agenda. Yoon believes that a more flexible labor market would boost economic growth. The government argues that more doctors are needed to serve Korea's rapidly aging population. Opinion polls suggest there is broad public support to nearly double the intake at medical schools since Korea has one of lowest doctor-to-patient ratios among advanced countries. But the Yoon administration has also been seen as mishandling the medical strike by threatening to withdraw the medical licenses of doctors unless they return to work. This could undermine support for future labor reform efforts. The government is also proposing a plan to promote corporate governance reforms, which is a potential vote winner since it is designed to boost share prices. The recent unveiling of the Corporate Value-up Program by the Financial Services Commission (FSC) appears aimed at winning election support among retail investors, who account for about 70 percent of trading in the stock market and are estimated to make up a third of the voting population. The plan calls for listed companies to improve their governance and capital efficiency by setting targets when it comes to such standard investment indicators such as price-to-book, return on equity and dividend ratios. The government is hoping to repeat the success of a similar plan by the Tokyo Stock Exchange, which has been cited as one reason why Japanese stocks recently hit a record high after 34 years. The Seoul stock market has long suffered from what is known as the "Korea discount," which means that investors have undervalued listed Korean companies due to their spotty corporate governance, low dividend payments and the dominance of the market by the leading chaebol. As a result, investors complain about poor shareholder returns. Most analysts believe the FSC plan will not be effective in addressing the Korea discount issue unless additional steps are taken. These would include overhauling some aspects of the tax system that now discourage investor returns. For example, dividends are taxed at a high rate which prevents companies from returning more capital to shareholders. The Yoon administration also wants to repeal a scheduled tax on capital gains. Yoon's tax reform proposals would only become reality if the PPP gains control of the National Assembly since the DPK opposes them because they are viewed as primarily benefiting the rich. While his domestic reforms have been constrained by the National Assembly, Yoon's has enjoyed much more freedom in setting foreign policy, which may become his most endearing legacy. He has focused on strengthening trilateral security cooperation with Japan and the United States to counter China and North Korea. Yoon's efforts to ease tensions with Japan have been particularly controversial. He sought to end a dispute with Tokyo over compen sation to Korean workers forced to work in Japanese factories during World War II. This was followed by the Camp David agreement last year that opened the way for large-scale joint military exercises involving Korea, Japan and the U.S. But this progress could be jeopardized in the future due to government changes in all three countries. Fumio Kishida could soon be ousted as Japanese prime minister due to a corruption scandal, while the possible return to the White House of Donald Trump would likely lead to a weaker U.S. commitment to the defense of Korea. Yoon's successor may also overturn his policy given the continued public hostility in Korea to forging closer ties with Japan. Even if Yoon gains a victory in the National Assembly elections, the next several years will be tough for him as his influence wanes toward the end of his term in 2027 unless he is able to recover from his dismal approval ratings. Source: Yonhap News Agency