SEOUL - South Koreans on Wednesday elected Lee Myung-bak, a conservative former CEO vowing to back business and stand up to the North, as president of the world's 13th largest economy, TV exit polls showed.

The projected margin of victory would be the largest to secure the single five-year term since democratic elections began 20 years ago, and comes despite fresh allegations of fraud in the last days of the campaign that threaten his authority.

Lee, who had been far ahead in opinion polls throughout the campaign, won 50.3 percent of the vote, according to the exit poll and projections by state-owned KBS TV and private MBC TV.

His closest rival Chung Dong-young, heir to the liberal policies of unpopular, outgoing President Roh Moo-hyun, had just 26 percent.

"The people have chosen the person who has the ability to revive the economy," a senior MP with Lee's Grand National Party (GNP), Ahn Sang-soo, told reporters after the exit poll.

If the poll numbers stand up, it would mark the first time a candidate has won more than 50 percent of the vote since elections under long-time dictator Park Chung-hee in the early 1970s.

It was also one of the lowest turnouts in South Korea's presidential elections at around 60 percent, compared with around 70 percent in the 2002 poll.

Former Hyundai Group executive and ex-Seoul mayor Lee will take over the presidential Blue House after 10 years of liberal leaders.

Hundreds of supporters dressed in the campaign's blue colour, and several sporting red Santa hats, danced in front of GNP headquarters after the exit polls were released.

"The issue was the economy. Nothing else really mattered this time," said office worker Han Jae-kwang.

Lee's victory is tempered by him facing the prospect of being the first-president elect under criminal investigation.

On Monday, parliament voted to appoint a special investigator to look into charges that Lee, who denies any wrongdoing, was linked to an investment firm suspected of swindling millions of dollars from investors.

Even if he is implicated, the outcome of the probe is unlikely to be resolved before the inauguration on February 25. A sitting president cannot be prosecuted for such crimes.

Voters put the economy first in this race, pollsters said, and were ready to make Lee the first former top executive to run the country. They had previously sent an ex-general, two dissidents who fought decades of dictatorship and a human rights lawyer to the Blue House.

LESS GENEROUS TO NORTH

Lee is likely to be less generous to North Korea, which has seen a strong flow of aid under the Roh government. He wants Seoul's largesse tied more closely to progress the North makes in ending its nuclear arms programme.

Financial markets have been encouraged by Lee's pledges to make life easier for foreign investors and cut through the red tape he sees as stifling local business, especially the giant conglomerates that were behind South Korea's economic rise.

Lee, nicknamed "the bulldozer" for his hard-charging style and who turned 66 on election day, says he wants to bring 7 percent growth. That compares with an average of a little over 4 percent during Roh's rule.

But economists say Lee's target is a tall order for a country that is coming under increasing competitive pressure from neighbouring China and Japan while one of its biggest export markets, the United States, is looking at an economically tough 2008.

Economists want Lee to put in painful reforms to help South Korea transform from a manufacturing and export-based economy and better develop the finance and other services sectors.