August 8, 2010 / 7:11 AM / in 8 years

South Korea's Lee picks reformist as PM; reshuffles cabinet

SEOUL (Reuters) - South Korean President Lee Myung-bak named a young reformist as prime minister on Sunday and replaced half his cabinet in a mid-term reshuffle aimed at pushing through his pro-business reform agenda.

New South Korean Prime Minister designate Kim Tae-ho, 47, waves his hand to the media upon his arrival at his Seoul office August 8, 2010. REUTERS/Hong Chan-Sun/Newsis

In an apparent vote of confidence in his government’s handling of the torpedoing of a South Korean warship in March, which Seoul blames on North Korea, the defence, foreign and unification ministers retained their portfolios.

Lee, 68, whose political momentum was recently revitalised when his ruling Grand National Party (GNP) won a surprising victory in parliamentary by-elections, named a 47-year-old former governor of a rural province, Kim Tae-ho, as prime minister.

Prime ministers in South Korea traditionally take on a more bureaucratic and administrative role. Cabinet reshuffles occur frequently and often involve the prime minister.

If Kim is successful he could emerge as a leading candidate in a 2012 presidential election.

“We expect to expand the culture of change and reform with the youth and vigour meeting the expertise and experience of the existing cabinet,” presidential spokesman Hong Sang-pyo told reporters.

Lee also appointed a close political confidant and a veteran lawmaker, Lee Jae-oh, 65, as minister without portfolio charged with pushing through the president’s stalled domestic agenda.

Despite the president’s own party having an overwhelming majority in parliament, Lee has failed to convince local and national politicians of the need to revitalise South Korea’s four major rivers in a multi-billion dollar public works project.

In June, parliament voted in favour of relocating government ministries and agencies to a yet-to-be-built city south of Seoul despite pleas from the president’s office not to do so.

That forced the resignation of the previous Prime Minister Chung Un-chan.

“Generally speaking Lee Myung-bak’s policies are market-oriented ... the cabinet members are very close to him and they will make a good team,” said Yun Chang-hyun, of the University of Seoul.

“I think that they are very loyal, and will follow the rules.”

BOOMING ECONOMY

Lee also appointed a close ally of a political rival as agriculture minister in a move to reach out to opponents in his own party who had objected to his policy initiatives and slowed legislative agenda.

Lee had made it a top priority for his government to create 200,000 jobs this year and vowed to clean up bureaucracy, cut taxes and reform the country’s rigid labour market.

South Korea has pulled out of the global financial crisis ahead of most others and has already been tipped to enjoy the fastest growth next to Turkey this year among members of the Organisation for Economic Co-operation and Development.

Asia’s fourth-largest economy grew 7.6 percent in the first half of this year over a year earlier — the fastest in a decade — but growth is still led mostly by big exporting firms and the job market has yet to fully recover.

The government is under pressure from critics and opposition lawmakers to persuade large companies to invest and hire more domestically and share more of their increased profits with their smaller domestic partners.

Additional reporting by Yoo Choonsik, Suh Kyung-min, Brett Cole and Jeremy Laurence; Editing by Jeremy Laurence

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