A policy of confusionAn advisory board at the Fair Trade Commission (FTC) came up with an outline to make the antitrust act tougher on large companies. The outline proposes banning inter-affiliate trading at businesses that chaebol families have stakes of more than 20 percent in. Current law bans inter-affiliate trading in companies where the owner family holds a stake of 30 percent or more for listed companies and 20 percent in unlisted firms. The change would double the number of companies that would fall under FTC scrutiny. The board also proposes restricting chaebol owners’ voting rights in nonprofit and financial companies to 5 percent.
The outline requires approval from the FTC and a vote from the legislature to take effect. The proposal itself unnerves the business sector, as it is in line with the liberal Moon administration’s anti-chaebol policy. The business sector complains that the government is stigmatizing Korean chaebol as evil and outdated.
The FTC board’s outline also underscores confusion over the government’s economic policy. The government has signaled changes to its progressive agenda due to worsening economic conditions. It replaced its “income-led growth” slogan with an “inclusive growth” policy, and placed more focus on innovation and deregulation. Moon vowed to visit business sites later this year. Deputy Prime Minister Kim Dong-yeon and Trade and Industry Minister Paik Un-gyu have been visiting more businesses to encourage hiring and investment. The government is courting businesses on one side and seeking tougher regulations on the other.
Korean entrepreneurs are most sensitive about security in management. Companies are using more cash for stock buyouts and dividend rewards, rather than investing in the future to protect management. Large conglomerates keeping work to themselves should be regulated. But chaebol owners are partly forced to seek abnormal ways to build up personal wealth to sustain the family business because Korea levies the world’s heaviest inheritance tax. Companies cannot invest in the future if they must spend resources to protect management.
The government has been zigzagging on the economic policy front. The party and government offices exposed disagreement over key policies, such as shorter legal working hours and wage system. It is hard to tell who is in charge of economic policy, or whether there is a policy at all. Politician-turned-ministers talk out of concern for their voting base rather than national interests. These cabinet members should be first to go. The policy mix-up and confusion may continue if the Blue House is feigning a revision to its policy direction to avoid criticism.
JoongAng Ilbo, July 31, Page 30