[Column] Can politics save the business federation?

Koh Hyun-kohn

The author is the executive editor of the JoongAng Ilbo.

The Federation of Korean Industries (FKI) has stepped forward to mend ties between South Korea and Japan. FKI, the oldest business group in Korea, lost its former prestige as the most powerful business association after four major conglomerates — Samsung, SK, Hyundai Motor and LG — bolted out for its controversial middleman role of collecting bribes for a friend of former impeached president Park Geun-hye in 2016.

The FKI has recovered its public role by launching a future partnership fund with its Japanese counterpart, Keidanren, or the Japan Business Federation, to help normalize the frozen bilateral relations of the two countries beyond past issues such as disputes over the wartime forced labor compensations. Although the FKI has moved onto the central stage, its standing can be more uncomfortable. While Keidanren is represented by Tokura Masakazu — chairman of Sumitomo Chemical and a career entrepreneur who started working at the company in 1974 and is respected in the business community — his Korean counterpart is Kim Byong-joon, the acting head of the FKI, with a political background.

The head seat of the FKI has been vacant due to corporate heads’ reluctance to take it. Still, Kim hardly fits the chair. He is a politician, not a businessman. He lurked around the Roh Moo-hyun administration for five years and jumped the boat to the conservative party after Park Geun-hye was elected president. Kim served as interim head of the Liberal Korea Party (now the People Power Party) and became the campaign chief for Yoon Suk Yeol. He ran for a legislative seat from Sejong City in the 2020 election but lost. He defined himself as “a scholar who had served in a university for 34 years, not a typical politician.” But that description is disputable. What is clear is that he is not a businessman.

His field of study was regional autonomy. He is behind Roh Moo-hyun’s campaign pledge to move the capital to Chungcheong. He was credited for Roh’s win in 2002. Thanks to Kim, hundreds of government employees and civilians must move back and forth from Sejong to Seoul to work, which is a sheer waste of time. Civil servants in Sejong City are designing policies after being isolated far away from the bustles of the capital.

Kim Byong-joon, left, acting chairman of the Federation of Korean Industries (FKI), announces a plan to set up a Korea-Japan future partnership fund with the Japan Business Federation (Keidanren) in Tokyo, Mar. 16. [FKI]

Kim claims to be the champion of the free market economy. Joining the FKI last month, he assured the business members that he is well versed in economic affairs as he had dealt with economic and industrial policies as policy chief for Roh. But he spearheaded the Roh administration’s real estate policies which ignored the market and triggered spikes in housing prices. He even defended the comprehensive property tax, which increased the tax burden for multi-property owners by as many as eight times. “It is not enough, he said.

He has been tainted with collusive ties between politics and business. Kim said he accepted the acting chairmanship to cut that connection. But seating a very political person in an organization ruined by politics is ridiculous. The FKI could feel safe with someone close to the president for now. The FKI’s integrity seems to be restored after heads of the four top business groups joined the Korean business delegation to Japan, accompanying President Yoon Suk Yeol. But they joined the entourage at the request of the presidential office, not the FKI. An artificial makeshift does not benefit anyone. The FKI should know better.

Moreover, Kim could be seen as clinging to job titles. He resigned as education minister after accepting the post without any relevant experience in 2006. He first turned down the offer for the FKI job. He said he would play the role for three months and then lengthened the period to six months. He has been in the office for over a month, but he is busy chasing the presidential schedule. A Korea-U.S. summit comes around next month. But his chairmanship will not likely help the Yoon administration, as it gives the impression that the government wants to round up top businesspeople through FKI. A senior presidential office official said the office does not meddle with the FKI affairs. If so, the office should have kept Kim from taking the job.

The business community is most uncomfortable. It has tried hard to distance itself from politics. However, now that Kim has taken the helm of the FKI, the business lobby group could be associated with the conservative government. At the same time, it can hardly say no to the governing power. It has become harder to hire the next chairman from active business chiefs. Kim claims the four conglomerates will return to the FKI in the near future. But they are reluctant. A source said, “Please leave us alone.”

Keidanren also had been stigmatized as a lobby group for large companies. Still, it never recruited non-businesspeople as its head, even during crises. It has kept the principle that business affairs should be done by businesspeople. It has since cut off political donations and is committed to social responsibility.

On the other hand, the FKI still has a negative image as the advocate for chaebol and vested interests. It has been two decades since it was unable to find a responsible chair. The FKI must be reborn as a group earning public confidence by divorcing itself with political influence. Only then can it speak frankly toward the government like Keidanren and the American Chamber of Commerce and Industry. Only then will corporate heads vie to represent the business association, and four major groups will happily return. But that may not be possible with a political figure seated to the six-month chairmanship.