A call for experienced officialsChief executives running small- and medium-sized companies have long been accustomed to finding their own solutions to their problems. Government policies, regardless of their good intentions, often do more harm than good because such ideas are concocted at desks rather than in the field. That’s why we need more civilians with real experience in government posts.
The small and medium industry sector cheered the appointment of Jusung Engineering CEO Hwang Chul-joo as the head of the government department in charge of promoting the corporate sector outside of chaebol and large firms. He was the best possible choice to guide policies and governance in addressing the real challenges smaller businesses struggle with every day.
Hwang is among the country’s first generation of venture entrepreneurs. He has survived the problems start-ups face as they deal with the unfair antitrust practices of large companies, and he has seen firsthand the failures and successes of technology developments.
But our hopes were dashed in a few days when Hwang suddenly resigned from the nomination. He said he wasn’t aware that upon taking office, a public official would have to either sell his stock or put all of it into a blind trust that would sell it for him within 60 days. After a brief period of excitement about serving as a public servant and promoting the small- and mid-sized business sector, Hwang packed up his dream because of government regulations.
Hwang is the founder of Jusung Engineering, a company that manufactures solar cells, semiconductors and display equipment and trades on the Kosdaq. He’s the largest shareholder, with a stake of 25.45 percent. If he sells his 70 billion won ($63 million) stake all at once, share prices would plunge, causing damages to the company and its shareholders. No corporate head would jeopardize his company and watch his life’s work crumble before his eyes. Any entrepreneur would understand his dilemma and his final choice.
The blind trust regulation in the public official ethics law is aimed at preventing conflicts of interest. It’s supposed to ensure that public officials won’t be able to use their position to acquire personal gain. Still, the regulation needs to be adjusted so that more experienced entrepreneurs can participate in governance and use their expertise to help the economy. Under the current system, even if you’re willing and able to contribute, you have to choose between your business and the government job.
The Constitutional Court in August last year ruled that the blind trust system is valid. But justices were divided in determining whether it infringes on basic civilian rights or not. The four justices of the eight-judge panel who were against the system deemed it unfair to force nominated and elected officials to sell all of their shares.
The government should come up with a solution that paves the way for more capable entrepreneurs to enter politics and government without undermining the public service ethics code. Bureaucrats are used to taking orders with a static mind-set and a passive attitude. But businessmen are trained to be responsive and adapt in order to cope with the quickly changing business environment. If more corporate executives take part in government, they will help lead changes in bureaucracy and foster the innovative economy the government envisions as a new growth engine. Corporate executives also know exactly which jobs are needed to achieve that goal.
The government is mulling a revision of the regulation that would allow entrepreneurs or main shareholders who get government posts to place their equity holdings in the hands of trustees and have them return the profits exceeding the average stock gains to society.
One venture company executive lamented that if someone like Hwang is prevented from entering the government, the Korean bureaucracy will forever remain a closed club.
*The author is vice chairman of the Federation of Small and Medium Business and chief executive of KwangMyung Electric.
By Lee Jae-kwang