Ruling party expands regional governorships from 5 to 12; real estate tax reform, prosecution overhaul expected to accelerate; Seoul result delivers a rebuke

President Lee Jae Myung listens to remarks from attendees. [Yonhap]
President Lee Jae Myung listens to remarks from attendees. [Yonhap]

The ruling party's numerical victory in Wednesday's nationwide local elections has broadly reaffirmed public confidence in President Lee Jae Myung's governance, analysts say. The results are expected to accelerate key policy priorities — including real estate tax reform and labor and financial sector overhauls — that the administration had been pursuing cautiously.

However, the results are far from an unqualified triumph for Lee. People Power Party winner Oh Se-hoon claimed Seoul, the most closely watched battleground, and several candidates backed by Lee who had served as presidential aides were defeated in competitive races — confirming that a check-and-balance instinct among voters remains very much alive.

The prevailing read in political circles is that the local elections handed Lee both a boost to his governing momentum and a warning from the public. While he has secured a foundation to push harder on reform in his second year in office, the results signal that a more careful approach is needed on issues such as Greater Seoul public sentiment and housing policy.

Cheong Wa Dae had not issued any official statement on the election outcome as of Thursday morning, maintaining a cautious posture.

With questions of accountability already surfacing over some administrative confusion during the vote, observers say the presidential office is choosing to watch the situation calmly rather than rush to characterize the results.

Fabricated-indictment special prosecutor, prosecution reform, six-sector overhaul set to move forward

The local elections carried the weight of a midterm assessment, being the first nationwide vote held since the Lee Jae Myung administration took office roughly a year ago.

With the ruling party already holding a majority in the National Assembly, the Democratic Party's expansion of regional governorships — from five to 12 — gives Lee a significantly stronger mandate to govern.

The results are expected to inject fresh momentum into the administration's so-called six-sector reform agenda — covering regulation, finance, public services, pensions, education and labor — with a second round of ministerial briefings to the president anticipated soon.

Some in political circles predict that follow-up legislation on prosecution reform — including whether to grant supplementary investigative powers to prosecutors under the new Public Prosecution Office — will now advance in earnest, alongside a push for a special prosecutor to investigate allegations of fabricated indictments.

At a Cabinet meeting Tuesday, Lee directed acting Prosecutor General Gu Ja-hyeon to match authority with accountability, saying, "Anyone can make a mistake. When you do, you apologize and reverse it" — remarks widely interpreted as signaling his intent to press ahead with prosecution reform and the fabricated-indictment special prosecutor bill.

The Democratic Party leadership had originally sought to pass the fabricated-indictment special prosecutor bill before the local elections but delayed it out of concern it could hurt the party at the polls. Cheong Wa Dae had also asked the party to gather public opinion before proceeding.

Real estate policy is another area where significant changes are expected. With housing prices in Seoul resuming an upward trend, the government is likely to roll out additional measures to expand supply while curbing speculative demand. A Cheong Wa Dae official said a number of real estate policies would be announced after the election.

Markets are particularly watching for the possibility of stronger stabilization measures, including a restructuring of property holding and transaction taxes.

A personnel reshuffle to sharpen the administration's governing structure is also drawing attention. Cheong Wa Dae is said to be reviewing changes to some senior staff positions as well as a Cabinet reshuffle, including the prime minister's post. Lee is reportedly in the final stages of deciding among Justice Minister Jeong Seong-ho, Ministry of SMEs and Startups Minister Han Seong-suk and Chief of Staff Kang Hoon-sik as his next prime minister.

Seoul mayor outcome complicates Lee's housing agenda

Still, analysts caution that the election did not deliver an unqualified victory for the president.

Ha Jung-woo and Kim Byeong-uk, both former Cheong Wa Dae aides who ran for office, lost in Busan and Seongnam respectively, while Jeong Won-o — a candidate Lee had publicly championed — fell short in the Seoul mayoral race, leaving a sting on an otherwise positive night for the ruling camp.

Oh Se-hoon's victory in Seoul is expected to create considerable friction for one of Lee's central governing priorities: stabilizing the Greater Seoul housing market.

The Seoul mayor effectively controls the pace and direction of reconstruction and redevelopment projects, which are the backbone of the capital's housing supply policy.

Analysts warn that even if the central government moves to stabilize the market through tax reform and tighter financial regulation, the policy impact could be significantly diluted if Seoul City pursues a different approach to urban renewal and housing supply.


sang@heraldcorp.com