[Editorial] Investment ceilings

Both ruling and opposition parties are moving to restrict investments by large business groups. The purported goal is to prevent economic power from being concentrated in the hands of a select few.

But the proposed control, if written into law, will obstruct large corporations planning to venture into new technology-intensive business areas in pursuit of sustained growth. Moreover, the proposal to restrict investments will discourage corporations from providing young people fresh out of school with employment opportunities at a time when they find it extremely hard to land jobs.

Two weeks ago, Rep. Park Geun-hye, leader of the ruling Grand National Party, referred to a proposal to put ceilings on new investments by Samsung, LG, SK and other business groups. The remarks indicated her desire to resurrect an investment control scrapped in 2009 ― a regulation under which no corporation was allowed to invest 40 percent or more of its net assets in other companies if its total assets surpassed 2 trillion won and it belonged to a business group with 10 trillion won or more in total assets.

Not to be outdone, the opposition Democratic United Party has recently promised to reintroduce the investment regulations, adding that they would apply to affiliates of the 10 largest business groups in the nation. By doing so, the party is trying to curry favor with the electorate ahead of the April general elections.

Affiliates with large business groups have caused public outrage by running bakeries, eateries and other small-scale businesses at the expense of small corporations and the self-employed. Though they have promised to abandon those businesses under pressure from the administration, they are not likely to improve their tarnished image among the public anytime soon.

Even so, the political community is misguided if they continue to bash business. As President Lee Myung-bak noted, it will be of little help to anyone if corporations are discouraged from making investments. Instead, Lee said, they should be encouraged to contribute to generating growth and creating jobs by investing more.

Both the ruling and opposition parties will do well to abandon the idea of reinstating the investment ceilings. Should they still find it necessary to reintroduce them for their own political purposes, however, the least they could do would be to except new investments in areas marked for their capacities for value and job creation from the investment restrictions.