[EDITORIALS]Chaebol Plan Needs Some ChangesThe government and the Millennium Democratic Party are discussing a plan to improve the regulation of large business groups. The Ministry of Finance and Economy and the Fair Trade Commission reportedly agreed with the government plan despite their previous disagreements about the strictness and limits of the regulations. The government plan shows some improvements over the current strict control.
According to the revision proposal, the existing regulation of the top 30 business groups based on assets will be changed to regulation of only those with more than 5 trillion won ($3.8 billion) of assets. Although the new controls are still based on assets, the number of companies under controls would be reduced to 17, and that is a positive change.
However, we have to criticize some points of the plan. Seoul plans to prevent all business groups with more than 2 trillion won in assets from investing in their affiliates and guaranteeing affiliates' debts. That would affect 38 groups. The government also plans to curtail the voting rights of shares that exceed 25 percent of net assets. That can infringe on property rights.
Companies with sound financial structures － a debt-equity ratio of less than one － can be removed from the list of large business groups controlled by investment ceilings.
The plan also frees groups from the limit when they invest in firms that are under restructuring or in competitive major industries. Those eased controls on some investments are a valuable move that can revive the sagging investment drive.
But the plan is still too government-centered. It tries to meet conflicting demands, such as the need for globalization and relaxation of regulations versus further concentration of economic power.
The proposal still gives the impression that Seoul has no confidence in the market economy and corporate transparency. Corporate competitiveness and good management are not the government's jobs; they are the responsibility of management, shareholders and creditors. The plan still has to be reviewed by the Assembly.
We urge that controls be further eased.