President Lee Jae-myung on the 5th said he would actively use the "price adjustment order" system to break through the high inflation situation. Citing the situation in which prices are not falling due to distribution structure issues for fruit and livestock products, he called it "a problem of the national system," and ordered the formation of a task force (TF) to intensively manage prices by ministry ahead of the Lunar New Year holiday.
Presiding over a senior secretaries' meeting at Cheong Wa Dae that afternoon, Lee said, "They used to hold brief discount events and then look the other way, but this time I want you to manage prices thoroughly to the end so that does not happen," adding, "I hear there is a price adjustment order system, and we need to make good use of it." He also said, "To raise policy credibility, we must make sure people can never think 'they are doing it halfway and moving on,' and make them think 'what is said is always kept, they do not make empty promises.'"
Lee said, "There are materials showing that even if the international wheat price plunges by dozens of percent, the domestic wheat price actually rose. It is highly likely due to collusion," adding, "I want the state to mobilize all public authority to correct cases on the ground where monopolistic and oligopolistic situations are abused to force high inflation on the public."
A price adjustment order is a system in which the government forcibly lowers prices when it determines there is a risk that the price of a particular good or service will be set unfairly. In 2014 under the Park Geun-hye administration, the Ministry of Education issued price adjustment orders for 34 types of third- and fourth-grade elementary school textbooks nationwide and 99 types of high school textbooks.
This is not the first time Lee has mentioned price adjustment orders as a solution to food prices. At a Cabinet meeting in October last year discussing Chuseok price measures, he asked Korea Fair Trade Commission (FTC) Chairperson Ju Biung-ghi, "Prices of food items mainly used by ordinary people, such as flour and sugar, are too high," and whether a price adjustment order was possible, to which Ju replied, "As far as I know, it is possible." Under Article 7 of the Monopoly Regulation and Fair Trade Act, when monopolistic or oligopolistic corporations raise product prices to reap excessive profits, the FTC can conduct an investigation and order price cuts.
◇ "It would be good to implement 'regional preference' in national procurement as well"
He also reiterated his commitment to stabilizing real estate prices and the need for region-led growth. Lee said, "We can no longer leave unattended, nor should we, the unipolar system in which the greater Seoul area, which accounts for only 12% of the national territory, sucks in population and resources like a vortex," adding, "Shifting from growth centered on the greater Seoul area, which has reached its limits, to region-led growth, and balanced use of national space through this, is the most certain way to reopen the growth plates of the economy and lay the foundation for sustainable national development."
He went on to say that "the fundamental solution to the ruinous real estate problem also depends on breaking the unipolar system of the greater Seoul area," and said that in addition to fiscal, tax, and financial measures, items such as "regional production bonus points" are needed in the procurement field. Lee said, "All else being equal, it would be good to implement measures such as using goods produced outside the greater Seoul area or giving regional bonus points in bidding." He also said the government should provide incentives to expand corporations' regional investment, adding, "We must also speed up improvements to infrastructure such as transportation and preparations for the transfer of public institutions."