Chaebol-SME partnership key to sustainable growth

Entertainment & Arts

Sports

Qatar 2022

World

SCMP
Asia

Video

Photos

Entertainment & Arts

Sports

Qatar 2022

World

SCMP
Asia

Video

Photos

National

Mon, November 28, 2022 | 11:02

Business

Chaebol-SME partnership key to sustainable growth

Posted : 2015-05-13 18:36

Updated : 2015-05-13 19:18

Korea Institute for Shared Growth Chairman Chung Un-chan speaks at the Korea Forum 2015 hosted by The Hankook Ilbo at the Hotel Shilla in Seoul, Wednesday. The former prime minister said the country should reform chaebol and control its excessive economic power. / Korea Times photo by Hong In-ki

By Kim Jae-won

Former Prime Minister Chung Un-chan said Wednesday that partnerships between small and big companies were key to pulling Korea out of low growth and halting the widening income gap.

He said the government's policy should be shifted toward supporting small and medium-sized enterprises (SMES) from a chaebol-oriented one if the economy is to recover sustained growth.

The renowned economist, who now leads the Korea Institute for Shared Growth, said that chaebol need to be checked to remove their economic dominance.

"We need to make corporate governance of conglomerates transparent, and prevent them from having excessive economic resources," said Chung in a forum hosted by The Hankook Ilbo, a sister paper of The Korea Times.

Chung's remarks came as Asia's fourth-largest economy is suffering from low growth with little momentum to increase its gross domestic product (GDP).

The Korean economy grew 0.8 percent in the first quarter from the previous one due to sluggish private consumption and low investment in facilities, according to government data.

The former Seoul National University (SNU) president recognized the Park Geun-hye administration's policies to boost household income, but said the government needs to change its direction from increasing income of big conglomerates and rich people to boosting the livelihoods of small suppliers and non-regular workers.

"From the mid- to long-term viewpoint, we should change conglomerate-focused economic policies to SME-centered new business policies."

Chung said that SMEs need human resources the most, so it will be effective to give incentives in student loans and military service to college students who join SMEs.

Lim Hyun-chin, an honorary professor at SNU, said Korea should benchmark the French and German models in welfare policies, which impose mid-level burdens on taxpayers and pay them mid-level welfare benefits.

He said that these models were more fit to the country than that of the U.S., which guarantees less welfare aid. Lim also argued it was time to discuss ways to increase taxes to adopt such welfare models.

The acclaimed sociologist said Korea lags behind on welfare policies. The ratio of the nation's spending on welfare to GDP reached 10.5 percent in 2014, far below than the OECD average of 23.7 percent, he said.

"You may know where Korea is in welfare spending, considering the ratios of Sweden and Denmark which are about 40 percent and those of Germany and France which are some 30 percent. Welfare spending in the U.K. and the U.S. also account for 20 percent of their GDPs," said Lim.

Meanwhile, a number of special guests joined the event, including Seoul Mayor Park Won-soon. They congratulated the daily for hosting the forum, and encouraged it to give more insights into Korean society.

shosta@koreatimes.co.kr Article List