Economic reform to gain momentum after S Korea's ruling party wins parliamentary election

SEOUL, April 10 (Xinhua) -- The administration of South Korean President Lee Myung-bak is expected to accelerate economic reforms after the ruling Grand National Party (GNP) won a majority in the 299-seat parliament.

According to the National Election Commission, the conservative GNP won 153 seats in the National Assembly while the major opposition United Democratic Party (UDP) only achieved 81 seats in Wednesday's parliamentary elections nationwide. It was the first time that the conservative party reclaims majority in the parliament since 1998, paving the way for the president to have a smooth-running of his administration.

With the majority in parliament, the ruling party will have fewer obstacles in legislating, while providing strong support in parliament for the president and his reform agenda.

Local analysts predicted that Lee Myung-bak will accelerate his reforms to spur economic growth, including corporate deregulation, privatization of state-owned companies and tax cuts, on the back of a strong ruling party.

The stalled free trade agreement between South Korea and the United States is also a priority for Lee to push ahead. The South Korean and U.S. governments reached a draft FTA last year, but the FTA has failed to get approval in both parliaments due to strong oppositions. With the majority in the incoming Assembly, the GNP, which has kept on supporting the adoption of South Korea-U.S. FTA, is expected to give a quick ratification of the pact.

According to a survey conducted by the Korea Chamber of Commerce and Industry (KCCI) with 600 South Korean enterprises on Thursday, 50.2 percent of the respondents said the most urgent task for the government is to prompt realization of deregulation agenda.

The business community on the whole welcomed the GNP's victory in elections as they believe it will help to push ahead President Lee's business-friendly economic policy.

"Boosting the economy is the core mission of the new government, and the key to realize this is regulatory reforms," said KCCI Vice Chairman Kim Sang-yeol to local press.

Lee Myung-bak pledged in the presidential election campaign last year that he will lead the country to achieve a 7-percent economic growth every year, to raise South Koreans' annual per capita income to 40,000 U.S. dollars within 10 years and make South Korea's rank into the biggest seven economies in the world.

However, the latest inflation in South Korea and rising prices of energy and raw materials in the world market add worries that the South Korean economy might see a slowdown amid a worldwide recession.

How to keep a balance between the stimulus policy and measures against inflation will be a challenge to Lee and his administration.