Lawmakers voted to impeach Yoon following 10 days of political turmoil triggered by his short-lived declaration of martial law last week. Yoon's powers were suspended, with Prime Minister Han Duck-soo taking over as acting president.
The suspension threatens his signature projects, notably efforts to revive the nuclear industry, develop an offshore gas field, and bolster the semiconductor sector.
The government's nuclear power expansion plans, which include constructing three large reactors by 2038, may face reconsideration. The Democratic Party, which opposed Yoon's nuclear policies, has called for a complete review of the energy plan, emphasizing renewable energy instead.
A government official noted that while presenting the plan to the National Assembly is mandatory, "all discussions are currently at a standstill."
The political upheaval could also affect South Korea's bid to export nuclear technology to the Czech Republic. While Czech authorities maintain their interest in Korean reactors, industry observers say the political uncertainty might complicate ongoing intellectual property negotiations with Westinghouse, crucial for finalizing the deal by March 2024.
The "King Whale" gas field project in the East Sea, announced as Yoon's signature achievement, faces immediate challenges after parliament eliminated its entire 49.7 billion won ($38 million) budget for initial drilling. Korea National Oil Corporation (KNOC) must now seek alternative funding.
While exploratory drilling will proceed using KNOC's limited resources, the company's ability to fund subsequent operations could depend on early results, expected in mid-2024.
"While we can find ways to secure the 50 billion won, everything depends on the results of our first drilling," a KNOC official said.
The semiconductor industry, a cornerstone of South Korea's economy, is also feeling the impact of the political deadlock. The much-anticipated Semiconductor Special Act, aimed at relaxing labor regulations and increasing subsidies, failed to pass during the recent legislative session.
Similarly, efforts to expand tax credits for R&D and strategic investments in semiconductors have been postponed, raising concerns that South Korea could lose its competitive edge in a rapidly evolving global market.
The chemical sector, another vital industry, is closely monitoring the situation. Plans to unveil new government measures, including policy financing and merger incentives, have been delayed.
"Timely government support makes a significant difference," said an industry official. "The current uncertainty threatens regional economies reliant on these sectors."
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