Don’t choke the corporate sectorThe government is reiterating its call for large corporations to increase investment and hiring to help accelerate economic recovery. In a meeting with presidents of the country’s 30 biggest conglomerates, Yoon Sang-jick, the minister of trade, industry and energy, urged them to meet their pledge to make a combined capital investment of 155 trillion won ($146 billion) and to hire 140,000 people this year. In an economy-related cabinet meeting, Finance Minister Hyun Oh-seok said that the government should do everything it can to encourage companies to invest and hire aggressively in order to provide traction to the economic recovery.
Their words of encouragement and pleas are unlikely to inspire the corporate sector. The government is taking contradictory positions by demanding more aggressive corporate activities while slapping on more regulations and tax audits that dampen enterprise and the investment spirit.
The biggest stumbling block for big business is the endless layers of red tape. In 2002, there were 7,500 corporate regulations, but today that has nearly doubled to 14,700. Since the launch of the Park Geun-hye administration earlier this year, 1,300 regulations have been created. Companies struggling to comply with the increase in regulations cannot be encouraged to spend more and seek new investment.
Under the campaign cry of economic democratization and pledges to combat the underground economy and find new sources of tax revenues to fund campaign pledges on welfare programs, the government has been toughening anti-trust regulations as well as tax audits. The government has been choking the corporate sector and damping the spirits of the business sector and investors while demanding a greater corporate role in the economic recovery.
This week, the government hosted the sixth annual Entrepreneurship Week to encourage the corporate sector. In her opening speech, President Park promised to radically remove unnecessary red tape. In a meeting with the 30 largest business groups, however, the government failed to deliver details on those plans to remove the barriers to liberalization and investment.
When there is money to be made, companies are bound to increase their investment and hiring. That is how entrepreneurship works. But various regulations and anti-business policies are scaring away entrepreneurship. Instead of ceremonious words and gestures, the government should show real actions to boost the corporate sector.