[EDITORIALS]Erase investment rule limitThe scope of application of the regulation on conglomerates’ total shareholdings limit in other companies has been narrowed from those with assets over 5 trillion won ($4.8 billion) to over 6 trillion won in assets. And firms with a debt-equity ratio of under 100 percent will be awarded with a one-year grace period. The government and the ruling party said that they tried to prevent additional companies from being affected by the regulation without harming the original purpose of the Fair Trade Act.
But getting straight to the conclusion, the correct decision would be to abolish the restriction all together. Uri Party’s chief policymaker Won Hye-young said that the regulation on total shareholdings of big businesses should be abolished one day.
In spite of this, there are quite a few legislators within the ruling party that are against such opinions, insisting that the economic policy would be lacking consistency if the restriction were abolished. When the restriction on conglomerates was introduced in October 2001, however, the then-finance minister stated that it would be in effect for a limited period of three years. The promised three years have already passed and class-action lawsuits is enacted at the beginning of this year. If the politicians really wanted to enforce consistency, it would only be natural to get rid of the restrictions on the investments by now.
The decision to maintain the restriction can only be viewed as an attempt by politicians to break in the conglomerates according to their interests.
It was only a few days ago that the International Monetary Fund asked Seoul to get rid of its “ubiquitous hand” in its report on Korea’s economy this year. It means that the government must fix its bad habits of intervening in the market whenever and wherever it feels is necessary. One of the best examples of a “ubiquitous hand” is the investment restrictions placed on big businesses. It is only a restriction for its own sake.
Recent corporate investments have taken place through newly-established business bodies. A shortcut to Korea’s economic recovery would be to have companies convert the excess reserve funds they possess into productive investments. A good start to it would be to abolish the current investment regulations. There is no other country in the world that restricts investments with laws.