Anchor: During his budget speech Tuesday at the parliament, President Moon Jae-in also revealed the direction of his North Korea policy for the second half of his term. As his administration is struggling to maintain momentum for improving cross-border ties, Moon said the government will invest in what he called the peace economy while beefing up the nation's defense readiness against North Korea in the meantime. 
Kim Bum-soo has more. 

Report: President Moon Jae-in says the two Koreas are facing the last remaining hurdle before establishing permanent peace. 

[Sound bite: President Moon Jae-in (Korean)]
"The Korean Peninsula is facing the last hurdle on its way towards permanent peace, the barrier of denuclearization, which we must overcome together. Only dialogue can break that barrier. Though we can’t go as quickly as we’d like as there’s a counterpart to the dialogue and we must proceed with the international community, compared with just two years ago, when the nuclear and missile threat had escalated into war anxieties, the path we must take is clear." 

With the nuclear talks between Washington and Pyongyang locked in a stalemate, Pyongyang is unhappy with Seoul for failing to relieve sanctions pressure from Washington.

As the two Koreas fail to enhance cross-border ties further, Moon said the government will nonetheless pave the way for what he called the “peace economy” on the Korean Peninsula. 

[Sound bite: President Moon Jae-in (Korean)]
"When peace is settled on the Korean Peninsula, our economy will receive new opportunities. We will work to establish grounds upon which to build the 'peace economy' to connect railways and roads and boost economic, cultural and personnel exchanges between the South and the North. Only based on that is a brighter future for North Korea possible. I call on North Korea to respond positively." 

In the meantime, Moon sought parliamentary approval of a record high defense budget while attempting to minimize the threat Pyongyang might perceive. 

[Sound bite:President Moon Jae-in (Korean)] 
"Strong security is essential to carving our own path instead of leaving our fate in the hands of others. Though we currently focus on deterring the North Korean threat, strong national defense is essential even after unification in order to stand as a sovereign state among the world powers."

The 2020 budget proposal includes over 50-trillion won, or nearly 43 billion dollars, for national defense. That's seven-point-four percent more than last year's budget.

Some of the funds will be used to acquire next-generation submarines, surveillance satellites and other key defense systems.
Kim Bum-soo, KBS World Radio News.