[EDITORIALS]Heed warnings from business“Reform should be for the revival of the economy, not just reform for the sake of reform.” These words from Hyun Myung-kwan, vice president of the Federation of Korean Industries, demonstrate how anxious financial circles are these days.
There were hopes that companies would begin investing once the elections were over. But the general uncertainty has only increased. The Fair Trade Commission is saying it will tighten the reins on corporations. And demands that labor participate in management increase, as the union at Daewoo Heavy Industries and Machinery claims its precedence in the company’s sale. It is not surprising that the leaders of the country’s top five business associations criticize the government policy as restraining business activities.
As we have said repeatedly, ideological disputes over growth or distribution are irrelevant to the current situation. We must foster an environment where companies can actively invest and create jobs. No task is more urgent than increasing the growth potential.
The Fair Trade Commission must accept the finance industry’s assertion that the restriction on companies’ investment in other companies and the revival of the commission’s right to trace account records will discourage corporate activity. We must also consider whether our companies will be able to defend their management rights, if conglomerates’ financial affiliates are deprived of decision-making rights at a time when more than half the shares of major companies are held by foreign investors. It is incorrect to say that business associations intend to revive the reckless business expansion of the past.
Huh Chan-guk, an economist at Korea Economic Research Institute, predicted that demanding improvements in corporate management only, while flexibility of labor is neglected, will mean that only self-supporting businesses and large companies that employ few Koreans will remain in the country. With unions seeking to participate in management, a flexible labor market seems unlikely at best. Mr. Huh’s comments may well be a frightening forecast of our future. The government should seriously think about why companies are not making investments, even as they sit on 6.5 trillion won ($5.6 billion).