Publisher Note
The Moon Jae-in administration defined conglomerates, which represent a very large portion of the South Korean economy, as deep-rooted evils and has put pressure on them with a variety of regulations. However, it suddenly came up with ‘Korea New Deal’ projects after COVID-19 drove them to a precipice.
Ruling party leader Lee Nak-yon stressed at the National Assembly on Sep. 7 that innovation is necessary for the success of the projects and the growth of new industries alike. “The ruling party and the government will work on aggressive deregulation for freer enterprise activities,” he declared.
A few days later, however, the ruling party lawmakers began to discuss amendments to the Commercial Act, the Monopoly Regulation and Fair Trade Act, and the Financial Group Supervision Act in the National Assembly, which may threaten the autonomy of enterprises. The government and the ruling party are pulling a knife on them yet again under the guise of fair competition, amid companies groaning under the weight of the pandemic.
The business community is dead set against the amendments because those contain unprecedentedly radical regulations. Meanwhile, those in power are claiming that the regulations are necessary because conglomerates are unique to South Korea.
Enterprises are expressing concerns that the amended laws will allow aggressive management intervention by foreign capitalists and competitors in the form of separate audit committee member appointment and so on. In fact, even Samsung and Hyundai Motor Groups have already suffered from interference by U.S. hedge fund Elliott Management. They may have to increase their shareholdings by investing tens of trillions of won and prepare for many more lawsuits, and yet their voice is not reflected at all in the ongoing discussions.
Under the circumstances, Korea Chamber of Commerce and Industry Chairman Park Yong-man held a press conference and criticized the bills on Sep. 21. “The bills are nothing but populism forcing the sacrifice of the economy,” he remarked.
The bills are related to the very survival of enterprises. What they are asking for now is not preferential treatment but protection from reverse discrimination attributable to excessive and nonsensical regulations unique to South Korea. The law makers, whether they belong to the ruling party or the opposition party, are would be well advised to listen to them and look into how each of the provisions of the bills will affect the viability of South Korean enterprises and the future of the South Korean economy.