By Jon Herskovitz
SEOUL, Nov 27 (Reuters) - South Korea's president met leaders of his conservative Grand National Party on Thursday to heal an internal rift that has delayed reforms partly intended to help Asia's fourth largest economy through the financial crisis.
President Lee Myung-bak has proposed more than 2,000 reform measures, including tax cuts and bailing out debtors, but only a handful have been passed through a parliament -- in spite of the GNP's solid majority -- after a bloc of lawmakers threw their support behind one of Lee's rivals.
The presidential Blue House said Lee told lawmakers that international investors were closely watching the progress of reform bills through parliament.
The rift has increased the risks that Lee will not be able to win back failing public support and increases the chances his reform agenda will be delayed or blocked.
"The president repeatedly asked us to make special efforts," GNP leader Park Hee-tae said.
The lawmakers said they would approve reform bills and Lee's tax cut proposal as soon as they can pass the budget now pending in parliament, Blue House spokesman Lee Dong-kwan said.
FUNDAMENTAL CHANGE
One of Lee's top planned reforms was to revamp labour rules that would make it easier for companies to hire and fire workers, and cut personnel costs for big employers. Many international firms maintain minimal staffing in South Korea because of its labour laws, which have dented foreign direct investment.
Lee came to office in February looking to fundamentally change the world's 13th largest economy by modernising industry, expanding consumption and making the services industry more efficient so that South Korea could better stand up to the challenges posed by rivals such as Japan and China.
But Lee, who frittered away his political honeymoon due to criticism that started with his transition team, has seen his support rate fall faster than any other South Korean leader due to stumbles in leadership, which has delayed his reform agenda.
Lee has not been able to muster the full support of GNP lawmakers because a large block has rallied behind Park Geun-hye, the daughter of an assassinated president who last year challenged Lee as the party's nominee for president.
Leading conservative voices have called on Lee to mend the rift and said he should learn from U.S. President-elect Barack Obama, who appears close to naming rival Hillary Clinton to his cabinet.
"If Lee is not capable of embracing a rival faction within the ruling party, how can he lead the nation," the prominent conservative daily Dong-a Ilbo said in an editorial this week. (Additional reporting by Kim Junghyun and Jack Kim; )