Lee vows Kospi 5000 while tightening the noose on businesses

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Lee vows Kospi 5000 while tightening the noose on businesses

Published: 22 Apr. 2025, 00:00

Audio report: written by reporters, read by AI

Lee Jae-myung, the front-runner in the Democratic Party’s race for the presidency, gives a thumbs up before a speech at Cheongju Gymnasium in North Chungcheong on April 19, when a regional primary to select the final nominee to run for presidency from the party was held in the Chungcheong region. [NEWS1]

Lee Jae-myung, the Democratic Party’s leading presidential candidate, pledged Wednesday to revive a bill to amend Korea’s Commercial Act if elected. Speaking to financial industry representatives in Yeouido in western Seoul, Lee vowed to again push for legislation that would expand corporate directors’ fiduciary duties to include not only the company but its shareholders. The bill, initially passed by the National Assembly last month, was vetoed by Acting President Han Duck-soo earlier this month.

Lee dismissed opposition to the bill as “resistance from a selfish minority.” That claim misrepresents broader concerns. Is the government itself, along with Korea’s six major business associations, part of that minority? While many support the overarching goal of improving corporate governance, the administration’s more incremental approach — starting with reforms to the Capital Market Act targeting listed firms — has merit.

Critics warn that the bill could trigger a wave of shareholder lawsuits and deter firms from taking proactive business decisions. Directors may face growing uncertainty over whether their actions serve all shareholders equally, which could lead to overly cautious management and stagnant growth. It is hard to reconcile Lee’s promise of business-led economic expansion with his push for legislation that may weigh down corporate decision-making.

Lee also reiterated an ambitious market pledge, writing on social media that he would “eliminate the 'Korea discount' and open the era of the Kospi 5000.” He made similar promises during the last presidential race. Stronger enforcement against stock manipulation and unfair trading practices would indeed help build a more reliable capital market. But more aggressive shareholder rights provisions — such as cumulative voting and the separate election of audit committee members — require careful consideration. These measures, if misapplied, could increase foreign activist funds’ influence and expose domestic firms to short-term pressures.

Trying to push an even tougher version of a bill already vetoed under the guise of reform risks undermining its own justification.

Last week, Lee’s policy group “Growth and Integration” unveiled its “3-4-5 strategy,” aiming for 3 percent potential growth, top-four status in global exports, and $50,000 in per capita income by 2030. The focus on growth is welcome. But it must be backed by a willingness to pursue structural reforms, including in labor and pensions, and to ease excessive regulation.

Without reassessing its past approach — such as the party’s opposition to flexible work hours and the ban on services like Tada — Lee’s growth narrative may fail to convince.

Translated from the JoongAng Ilbo using generative AI and edited by Korea JoongAng Daily staff.