Following is the 10th in a series of articles on President-elect Park Geun-hye’s key policies. ― Ed.
President-elect Park Geun-hye rubbed shoulders with the nation’s corporate sector last week, in a crucial meeting which many said was held in a tense atmosphere due to her economic democratization pledges.
For the corporate world, especially the big-scale conglomerates, it is good news that Park will be the next president rather than her liberal rival Moon Jae-in, who pledged tighter reins on chaebol.
The incoming Park administration is looking forward to promoting “economic democratization” in a bid to realize a fair-competition economy that protects the market and smaller firms as well as consumers from strong economic forces like Samsung and Hyundai Motor Group.
The measures are also focused on fostering the growth of small and mid-sized enterprises and checking the monopolistic position of large family-owned businesses.
While pledging to end discrimination between regular and irregular workers, Park also said stricter penalties ― such as jail sentences ― would be introduced for chaebol owners for embezzlement or business malpractices.
With such measures announced, Park’s economic democratization drive will most likely have an impact on her relationship with the country’s large businesses as was shown during her visit to the Federation of Korean Industries last Wednesday.
A total of 17 business leaders gathered to greet the soon-to-be first female president.
Unlike current President Lee Myung-bak, who visited the FKI ahead of other economic organizations, Park had already paid a visit to the Korean Federation of Small and Medium Businesses earlier in the day.
Another factor that differentiated the two conservative presidents was that President Lee stresses economic-friendly measures such easing of regulations and more investments for the big companies.
President-elect Park also said the government will not hold back investments to make future growth engines and more jobs, but she requested that the conglomerates refrain from layoffs and restructuring.
“There was a lot of support and sacrifice of the people and the government for the firms to scale up to today’s size, which indicates that the conglomerates should represent the people at large,” she told the business leaders. “I therefore believe that large conglomerates should not be fixated on maximizing company profits but further seek co-prosperity in the entire community.”
Park also asked them to guarantee employment until retirement age, take a step back from injecting excessive investments in real estate, and also protect the neighborhood mom-and-pop shops for shared growth.
The business representatives actively voiced their opinions in response to the president-elect’s request to the organization, with 12 of the 17 attendees speaking up on issues like cross-shareholding, government support of financially-struggling firms, more workplaces and the protection of mom-and-pop stores.
“The cross-shareholding policy may have adverse effects, but it also contains positive aspects like encouraging restructuring as well as merger and acquisitions between firms, along with cutting of financial costs. Please reconsider your election pledge (involving the issue),” said Kumho-Asiana Group chairman Park Sam-koo.
President-elect Park had promised to ban future cross-shareholdings while reinforcing the separation of industrial and financial capital by restricting their influence and limiting the allowed shares.
Samsung Group, which is the country’s No.1 conglomerate, is another chaebol interested in Park’s future action on cross-shareholding due to its current investment structure.
STX Group chairman Kang Duk-soo also said that a new system that financially supports firms struggling from fund shortage needs to be established for better economic competitiveness.
STX recently announced it would sell its 35.19 percent stake of its core unit ― STX Pan Ocean ― following liquidity shortage.
Shin Dong-bin, chairman of Lotte Group, asked Park to find another measure for shared growth between smaller and big retailers other than their two-days-a-month mandatory shutdowns.
“We’re concerned about what effect the shutdown measure will have on our suppliers like farmers, fishers and smaller companies,” he said.
In the meantime, SK’s Chey Tae-won also suggested that fresh measures should be drafted to encourage investments that could be felt by the people like nurturing social enterprises.
Chey, who will be attending a court session later this month for embezzlement, stepped down as the chairman of SK Group last month with former SK Chemical vice chairman Kim Chang-keun replacing him.
“It must have been confusing for the conglomerates since President-elect Park asked them to change from their old style of running businesses, while also stating that investments will be offered by the state for more development at the meeting,” said an industry source.
By Cho Ji-hyun (
sharon@heraldcorp.com)
