DUP leader presses ahead with chaebol reform bills

Representative Lee Hae-chan, head of the main opposition Democratic United Party, said yesterday the party will stake its fate on putting forward chaebol reform proposals.

“There can be no economic democratization without reforming the chaebols,” Lee said yesterday, in a press conference marking one month since he became party chief. “Lowering taxes for the rich and favoring the chaebols were part of MB-nomics.”

Lee proposed nine bills yesterday to reform business practices done by chaebols, a widely used term in Korea referring to family-owned conglomerates, including corporate governance and enforcement of stricter separation of industrial and financial capital.

On corporate governance, the DUP proposes bringing back the equity investment ceiling system, which bans the top 10 business groups from investing more than 30 percent of net assets in other companies, and forbids circular shareholding. The ceiling was introduced in the 1980s to prevent chaebols from expanding recklessly, but it was scrapped in 2009 under President Lee Myung-bak’s business-friendly policies.

The introduction of the bills comes at a time when both the ruling Saenuri Party and opposition party are having intense debates on the democratization of the economy, including chaebol reform, ahead of the December presidential election.

The DUP is seeking a different approach from the ruling party while pushing for economic democratization. The Saenuri Party is relatively passive about chaebol reform, but the DUP argues that more regulation is needed to limit commercial industry investment in the financial sector.

Lee Hahn-koo, floor leader of the Saenuri Party, who was previously an economic adviser and chief of staff to presidential hopeful Park Geun-hye, and other ruling party representatives have been cautious, saying chaebol reform “shouldn’t be seen as hitting large companies.”

“We don’t know what will happen in the future but it isn’t an issue the DUP should speak conclusively about,” said Kim Jong-in, of the Saenuri leadership council. “We will discuss further about this in more detail and announce policy measures later.”

The DUP, however, has criticized such rhetoric as lip service.

By Lee Eun-joo, Kang In-sik [angie@joongang.co.kr]