Conceding Climate Different, Seoul Reviewing Regulations

Recognizing changes in the economic environment since the economy went into a tailspin nearly four years ago, the government announced Friday a review of policies regulating business activities.

Deputy Prime Minister Jin Nyum said, "We will conduct a comprehensive review of the regulations that were introduced following the financial crisis."

He said that some restrictions on large business groups would be kept intact to assure fair business practices. "Some of the measures, including the ceiling on how much companies can invest in other companies, were introduced to curb uncontrolled expansion of conglomerates," he said. The current regulation limits the total investment in affiliates by the top 30 business group companies to 25 percent of their owners' equity.

Mr. Jin said some of the regulations introduced since 1998 can hinder business activities and the government will remove or relax them. "The limit on how much a company can guarantee obligations of wholly-owned subsidiaries operating overseas will be applied flexibly," he said. Currently, companies are restricted from extending guarantees exceeding the amount that was committed at the end of 1998.

Any changes to business regulations will be kept in line with the guideline on corporate reform laid out in 1999, he said. Those include improving management transparency and reducing mutual guarantees of debts by corporations.

Mr. Jin also said the government would draw more foreign capital to domestic businesses. "The Korea Development Bank will be bringing up to $1 billion in foreign investment and funnel the funds primarily to biotechnology and longer-term capital investment," he said.

Mr. Jin reiterated careful optimism about the economy. "Current indications on prices and employment show that the economy will grow at more than 4 percent," he said. "Corporate restructuring will continue in the meantime, as the Financial Supervisory Service will have the commercial banks review companies currently under receivership or debt restructuring." Those deemed unable to survive, he added, will be reorganized by the creditor banks as soon as possible.

by Song Sang-hoon