Check Out Each Candidate's 'Financial Pledges' Before the Presidential Election Vote [Seungseop Song's Financial Light]

March 9 Presidential Election for 20s
Lee Jae-myung's Basic Series...State-Backed Finance
Yoon Seok-yeol's Youth Leap Account...Easier Loans
Sim Sang-jung's Three Rights Laws...Strengthening Financial Consumer Rights

Finance is difficult. It is filled with confusing terms and complicated backstories intertwined. Sometimes, you need to learn dozens of concepts just to understand a single word. Yet, finance is important. To understand the philosophy of fund management and consistently follow the flow of money, a foundation of financial knowledge is essential. Therefore, Asia Economy selects one financial issue each week and explains it in very simple terms. Even those who know nothing about finance can immediately understand these ‘light’ stories that illuminate the ‘fire’ of finance.

From the left, Lee Jae-myung, the Democratic Party presidential candidate; Yoon Seok-youl, the People Power Party presidential candidate; Shim Sang-jung, the Justice Party presidential candidate.

[Asia Economy Reporter Song Seungseop] Today, March 9, is the day to elect the president. It is a crucial election to choose the leader who will guide the Republic of Korea for the next five years. Therefore, it is important to carefully examine each candidate’s pledges. For those who have not yet reviewed the financial pledges, and for those who want to review them again, here is a simple and concise summary.

Lee Jae-myung’s Basic Series…Finance Guaranteed by the State

Lee Jae-myung, the Democratic Party presidential candidate, is appealing for support at the "The People's Dream is Lee Jae-myung's Dream" Seoul rally held around Cheonggye Plaza in Seoul on the 8th. Photo by the National Assembly Press Photographers Group

Lee Jae-myung, the Democratic Party candidate, proposed Basic Finance. It is the third ‘basic’ pledge series following Basic Income and Basic Housing. Basic Finance includes Basic Loans and Basic Savings. Basic Loans are a policy to lend up to 10 million KRW at an interest rate slightly higher than preferential rates (about 3%) for a long term (up to 20 years). The loan type is similar to a negative balance account. It works like a deposit-withdrawal account where money can be taken out and deposited at any time.

Basic Savings is a savings financial product that any citizen can join with a certain amount (5 million to 10 million KRW). The interest rate is planned to be set lower than Basic Loans but higher than regular deposit rates. It was also explained that the funds accumulated in Basic Savings will be used as resources for Basic Loans. These policies will start with the most financially vulnerable and effective group, the 20s and 30s youth, and gradually expand.

Although there are concerns about the enormous financial resources required, Lee stated that there is no problem. In a non-face-to-face press conference last August, Lee said, “Financial institutions estimate the loss rate of Basic Loans at about 2% of the principal. Even if 50 million people use Basic Loans and the total loan amount reaches 500 trillion KRW, the government’s loss amount would be 10 trillion KRW,” adding, “If this is borne over 10 to 20 years, it would be 500 billion to 1 trillion KRW, which is not a large amount.”

He also announced plans to eradicate illegal private loans and illegal lending businesses. The pledge book includes that illegal loan contracts violating the Interest Rate Restriction Act will be nullified, and if the interest rate exceeds three times the permitted rate, even the principal contract will be invalidated. There are also plans to strengthen punishment for malicious crimes targeting financially vulnerable people.

Yoon Seok-yeol’s Youth Leap Account…Easier Loans

Yoon Seok-yeol, the People Power Party's presidential candidate, appeals for support while performing an uppercut ceremony at the final campaign rally held at Seoul Plaza on the 8th. Photo by National Assembly Press Photographers Group

Yoon Seok-yeol, the People Power Party candidate, attracted attention by proposing the Youth Leap Account. It aims to give youth the opportunity to build assets worth 100 million KRW. The Youth Leap Account sets four income brackets and provides monthly government subsidies to subscribers according to their income. For annual income under 24 million KRW, 400,000 KRW is given; for 24 million to 36 million KRW, 200,000 KRW; for 36 million to 48 million KRW, 100,000 KRW; and for income above that, tax-exempt benefits are provided.

For first-time homebuyers and newlyweds, affordable mortgage loans will be offered. If purchasing a home for the first time, low-interest loans up to 300 million KRW for 3 years will be available; for newlyweds, up to 400 million KRW for 3 years. If they have children, this period will be extended to 5 years.

For jeonse (key money deposit) rental deposit loans, newlyweds’ loan limits will be raised to 80% of the deposit, with up to 300 million KRW in the metropolitan area and 200 million KRW in other regions. Youth with median income below 120% will also receive up to 200 million KRW for rental deposits. Both newlyweds and youth can borrow at an annual interest rate of 2% for 2 years, with the option to extend up to 4 times for a maximum of 10 years.

He also pledged to expand the target of the post-employment repayment loan system. Originally, this system was only available to university students. Now, job seekers in their 20s with income in the 8th decile or below can borrow up to 5 million KRW annually, with a maximum limit of 10 million KRW for tuition or living expenses. The borrowed money can be repaid in long-term installments after employment.

Sim Sang-jung’s Three Rights Laws…Strengthening Financial Consumer Rights

Sim Sang-jung, the Justice Party presidential candidate, is appealing for support at the finale rally held on the 8th in front of Sangsangmadang in Hongdae, Mapo-gu, Seoul. Photo by the National Assembly Press Photographers Group

Sim Sang-jung, the Justice Party candidate, has said that the state should actively intervene in debt forgiveness for small business owners and self-employed people who suffered losses due to COVID-19. At an economic debate hosted by the National Election Commission on the 21st of last month, Sim said, “Small business debt has increased by 240 trillion KRW, and it will be difficult to return to the original state,” adding, “At least the interest should be forgiven.” She also said, “For debtors on the brink of bankruptcy, a special track for debt adjustment should be created.”

Her financial pledges also include the expansion of punitive damages and class action lawsuits, and the shift of the burden of proof for damages. These are called the ‘Three Rights Laws’ from the perspective of financial consumers. All these laws strengthen the responsibility of companies that cause accidents or commit illegal acts and enhance consumer rights protection. Among the three candidates, she was the only one to mention the bill banning the chairman of a holding company from serving three consecutive terms and the pledge to exclude indicted CEOs from their duties.

In addition, she emphasized policies to reduce debt burdens, such as forgiving 50% of the principal and interest on student loans.

This content was produced with the assistance of AI translation services.