“Future, or profit?”
The presidential office at Cheong Wa Dae.
Kim Sangcheol was deep in thought, looking back and forth between the reports Lee Chanho had brought him.
“Future, or profit...”
He had been repeating the same words for an hour already.
And for good reason. What he ought to choose was obvious. Looking at past government funds, if the rate of return was negative, they were cursed to hell and back; even if the returns were good, they could not avoid criticism. Then wasn’t the option that drew even slightly less abuse the better one?
He could not rest easy just because the market outlook was bright. If anything, that meant the public’s standards would have risen all the higher.
“Prime Minister, what do you think I should choose?”
“If you’re thinking about after you leave office, then the rate of return. No matter what anyone says, the solid approval rating our administration has maintained these past four years is thanks to the KOSPI’s rise. The Growth Fund’s returns will protect you even after retirement.”
It was a realistic assessment.
Kim Sangcheol, who would soon have to vacate his room at Cheong Wa Dae, had a high chance of moving to the Dongbu Detention Center.
There was no helping it. In Korea, there was a law that said presidents had to go to prison once they left office.
But there was exactly one way to avoid it.
The crime of presidential retirement could be judged guilty or innocent depending on the Law of Public Sentiment. If the Growth Fund’s returns remained high even after he left office, and if he maintained high popularity as a result, he might be found innocent.
“And yet the fact that you brought me these two options means your thoughts are different, Prime Minister?”
At the question that struck the mark, Lee Chanho hesitated for a moment.
“It is anything but easy. Haha...”
“Tell me. What do you think?”
“After hearing from Director Park Seongcheol, who heads the task force, he said it should be future growth engines rather than returns. Especially from bio, whose popularity has faded, to new materials... He says Korea needs a great deal of R&D funding.”
“If we choose this growth-engine plan, how much difference will there be in returns?”
“They say at least ten percent, and at most nearly half.”
“Because we won’t be able to invest more money into semiconductors?”
“The opportunity cost is a problem too, but this growth-engine plan doesn’t even have a good outlook. There’s a strong chance the returns from semiconductors will be eaten away on this side.”
Kim Sangcheol let out a faint sigh.
It looked that way at a glance. The growth-engine portfolio had even been loaded by the truckful with steel stocks, which were currently said to have the bleakest outlook.
They said those businesses could not make money, yet the funds they needed were astronomical. Take hydrogen steelmaking, for example, into which the major powers were now throwing themselves as if their lives depended on it. Even the technologically advanced United States had yet to succeed, so naturally the R&D costs involved were unfathomable.
“...”
And it was not just that.
Korean solar power, which was being battered by China’s waves of attacks in the renewable energy market; bio; and all sorts of sectors with unfamiliar names... The growth-engine plan was full of stocks that, never mind opportunity costs, might not even earn back the principal if invested in.
“Every single one is troublesome. Even to my eyes, they’re all companies with no vision. But why is Director Park Seongcheol, who is more of an expert than I am, recommending these?”
“It seems he sees this as an opportunity instead. An opportunity for semiconductor returns to offset the losses in other industries.”
“Good grief. Did I announce the purpose of the Growth Fund too grandly?”
“Haha...”
“Then if we invest in these fields, can they produce results?”
“Strictly speaking, I can’t guarantee it. But thirty years ago, semiconductors were the same.”
It had become a given at some point, but in truth, Korea’s semiconductor supremacy had not been like this from the start.
They first had to overcome the mountain that was Japan, which held fifty percent of the global market share. In the process, the IMF crisis broke out, recessions periodically struck and battered the industry, and when it came time to jump to HBM, there had even been failures.
All that history of twists and turns had been the boxed-in KOSPI of the past ten years.
The Korean retail investors who had gone through that hell still had not returned from the Nasdaq. Yet why was that place now becoming a boxed-in Nasdaq as well...
Those very semiconductors had now become core components that even Big Tech companies lined up to buy, so it was no exaggeration to say that prediction in the stock market was meaningless.
“Who would have known our defense industry, which was nearly dead, would revive like that? The same goes for shipbuilding, which had been losing all its market share to China.”
“Even so, I find it hard to imagine. Will such a day come for our steel and bio industries too?”
“It isn’t impossible. Before you took office, anyone who said the KOSPI would reach six thousand would have been treated like a fool. Haha.”
After a long discussion, Kim Sangcheol made up his mind.
“Then let’s go with the growth-engine plan. The Growth Fund is a long-term fund looking ten, twenty years ahead anyway. Even if we give up some profit, focus on Korea’s next-generation growth engines.”
“It is the right decision. I will convey it as such.”
And so the portfolio of the eventful Growth Fund was decided.
Sixty percent semiconductors, forty percent other themes.
“By the way, Prime Minister. What is going on with the party these days?”
Once the talk of money was over, Kim Sangcheol’s face darkened considerably.
“Are you referring to the party leader?”
“Yes. It’s very strange. Even with this matter, the Growth Fund portfolio isn’t something for them to get involved in, so why are they interfering? Tsk, tsk.”
“Well, it must be out of loyal concern, hoping our administration ends well...”
“I’m saying this because it doesn’t seem to be that.”
“...Pardon?”
“No matter how I look at it, there seems to be another intention.”
Kim Sangcheol folded his arms with an displeased look.
He might not look it, but he was a political master of the tenth degree. Even among Korean politicians, it was hard to find a career filled with such adversity.
From an intra-party minority, from a faction that had been all but dead, he had barely managed to become party leader and take power. At the crossroads between Cheong Wa Dae and Cheongsong Prison, he had entered Cheong Wa Dae in an extremely dramatic fashion.
But it seemed his origins would follow him for life.
As his term neared its end, the activist faction that had originally been the mainstream of the Minguk Party began raising its head again. The factional conflict within the party, which had been proceeding in secret, was gradually starting to surface.
“It seems the party leader has already decided to line up behind the next presidential candidate, hasn’t he?”
“Mr. President...”
“It is not as if I am unaware of the factional struggle currently unfolding in the party. I hear they’re fighting fiercely over the nomination rights for the next election?”
“...”
“Still, having seen what happens when a president interferes in party affairs from my predecessors, I’ve been holding back. But lately, doesn’t the party leader keep crossing the line?”
“I’m deeply sorry...”
“Let’s stop this meaningless fight. I truly want to do my best until the very end. The Growth Fund will go with the growth-engine plan, so please tell the party I hope they will cooperate properly as well.”
“Yes, understood. I will make sure to emphasize it.”
Lee Chanho bowed his head and left.
His face was darker than ever.
He had pretended not to know in front of the president, but in truth, he had already been feeling it firsthand. The party was increasingly treating Cheong Wa Dae as a scarecrow. And at some point, it had become a more uncomfortable presence than the opposition party.
“Phew...”
But division was the one thing they could not allow.
He had no choice but to try persuading them properly.
*
“Oh my, Prime Minister. Have you been well?”
“Thanks to you. Haha. And you, Leader?”
“As for me, I am always well thanks to the president and the prime minister. But why did you call me out separately today?”
“I wanted to discuss something we couldn’t talk about at a party-government meeting. I invited you privately, also to share some memories for the first time in a while. Please, have a seat.”
A hotel dining room in Seoul.
Lee Chanho met separately with the party leader.
The two exchanged smiles and pleasantries, but the atmosphere was cold enough to be murderous. A private conversation they could not have at a party-government meeting... both men knew very well just how uncomfortable this discussion would be.
After they clinked glasses once, the party leader spoke first.
“Prime Minister, please speak first. Have I made some sort of mistake...?”
“A mistake? Not at all. The portfolio for the National Growth Fund has come out. The president told me to find out how prepared the party is.”
“Ah, it has finally come out. Don’t worry. We have decided to double various tax benefits, including income deductions, from their current level. In particular, for long-term investors of one year or more, we’ve decided to give the same benefits as our ISA accounts.”
“Are you referring to tax exemption?”
“Yes. All dividend income generated from the Growth Fund will be tax-free. Of course, there may be controversy over fairness, so the party is discussing the cap amount. This is also an area where coordination with the opposition is going well.”
“Excellent. I think that is a very good idea.”
As expected, the harmonious atmosphere did not last long.
“Leader, this is the portfolio that will be included in the Growth Fund this time. The president has all but finalized it.”
The party leader’s face changed subtly as he took the documents.
“Hmm...”
It was different.
The party leader had recently emphasized returns to every reporter he met, but in this portfolio, the semiconductor allocation was only sixty percent.
“Prime Minister, is this truly the finalized plan?”
“It is, but is there some problem?”
“It differs greatly from what I expected. Aren’t themes like steel and bio currently the businesses with the worst outlook in Korea? Their weighting is larger than I thought.”
“That is precisely why it is a Growth Fund. Their outlook may be dark, but they are still businesses Korea must absolutely not give up on. Since our semiconductors are currently doing well in the global market, the purpose of this fund is to let the benefits of that growth reach other industries as well.”
The party leader clicked his tongue.
“Yes, the purpose may be good. But then the Growth Fund’s returns will decline. Opportunity cost is one issue, but at this rate, other industries may eat up all the semiconductor returns.”
“The returns will still be high. Please understand this on the party’s end.”
“Even if we understand it, how are we supposed to make the public, whose standards have risen, understand? I thought Cheong Wa Dae would also place emphasis on returns, so this is quite unexpected.”
“Leader, are you asking us to reconsider?”
“No, well. If that is Cheong Wa Dae’s policy, then we have no choice but to follow.”
“Thank you—”
“However, one thing. Since we will take a step back as well, I ask that Cheong Wa Dae also take one step back.”
“Take a step back...?”
The party leader emptied his glass and said,
“New wine must be put into new wineskins. The party must now prepare for the era after the president. We need new talent and a new agenda.”
Lee Chanho’s face grew troubled.
Because he could well guess what would come next.
“As much as we have yielded, we would like Cheong Wa Dae not to involve itself in the matter of nominations.”
“Now, Leader Jeong—”
“We helped a great deal too, didn’t we? When the president had fallen to rock bottom, we united as one and succeeded in getting him into Cheong Wa Dae. So this time, please help us.”
Lee Chanho smiled bitterly.
It seemed the intra-party factional struggle he had worked so hard to suppress could no longer be stopped.