Moon should push for chaebol reform as promised
President Moon Jae-in has been promising to reform family-run conglomerates, or chaebol, since he took office in May 2017. Needless to say, chaebol reform is more than necessary to reduce the concentration of economic power on a small number of large business groups.
Koreans still have high expectations for Moon's promise, not least because they have already been fed up with chaebol's bad business practices. This is all the more so following the impeachment of former President Park Geun-hye who was accused of forming corrupt ties with chaebol such as Samsung Electronics, SK Group and Lotte Group.
Thus, Moon should double down on chaebol reform. However, concerns are growing that chaebol reform may fizzle out in the face of the prolonged economic slowdown. For this reason, the President now runs the risk of repeating the same mistake committed by his predecessors ― liberal and conservative.
Over the past three decades, almost all presidents vowed to reform family-controlled conglomerates immediately after their inauguration. But simply put, they lost their fight against chaebol. More exactly, each president with a five-year single term waged a battle they could not win from the start.
The ousted President Park also pressed ahead with chaebol reform under the name of "economic democratization" ― at least ostensibly. But she reneged on her reform drive which ended up with the massive corruption and power abuse scandal. She was found guilty of pressuring Samsung and several other conglomerates to provide huge sums for her confidant Choi Soon-sil in return for business favors, including the hereditary transfer of managerial rights, although she appealed to the Supreme Court.
Given that Moon took power in the wake of the corruption scandal and the subsequent ouster of his predecessor, the liberal President had no choice but to declare war on chaebol. He appointed economics professor and civic activist Kim Sang-jo, better known as the "chaebol sniper," as the chairman of the Fair Trade Commission.
Yet, Kim's appointment alone has yet to produce any progress in chaebol reform. He has so far focused on improving the shady governance structures of conglomerates and cracking down on their unfair practices exploiting small- and medium-sized companies. However, little has changed to transform the business landscape which has long been dominated by chaebol.
Making matters worse, the aggravating economic conditions are putting greater pressure on the Moon government to retreat from chaebol reform. So there is the strong possibility of Moon compromising his reform policy. If he backpedals on this, the country may risk losing out to chaebol and their owner families forever.
We urge the Moon administration to make unwavering efforts to reform chaebol which have deepened economic and social polarization. Although they have contributed to the development of the export-oriented Korean economy, conglomerates now become a hurdle to fair competition. President Moon cannot realize his policy of inclusive growth without chaebol reform.
President Moon Jae-in has been promising to reform family-run conglomerates, or chaebol, since he took office in May 2017. Needless to say, chaebol reform is more than necessary to reduce the concentration of economic power on a small number of large business groups.
Koreans still have high expectations for Moon's promise, not least because they have already been fed up with chaebol's bad business practices. This is all the more so following the impeachment of former President Park Geun-hye who was accused of forming corrupt ties with chaebol such as Samsung Electronics, SK Group and Lotte Group.
Thus, Moon should double down on chaebol reform. However, concerns are growing that chaebol reform may fizzle out in the face of the prolonged economic slowdown. For this reason, the President now runs the risk of repeating the same mistake committed by his predecessors ― liberal and conservative.
Over the past three decades, almost all presidents vowed to reform family-controlled conglomerates immediately after their inauguration. But simply put, they lost their fight against chaebol. More exactly, each president with a five-year single term waged a battle they could not win from the start.
The ousted President Park also pressed ahead with chaebol reform under the name of "economic democratization" ― at least ostensibly. But she reneged on her reform drive which ended up with the massive corruption and power abuse scandal. She was found guilty of pressuring Samsung and several other conglomerates to provide huge sums for her confidant Choi Soon-sil in return for business favors, including the hereditary transfer of managerial rights, although she appealed to the Supreme Court.
Given that Moon took power in the wake of the corruption scandal and the subsequent ouster of his predecessor, the liberal President had no choice but to declare war on chaebol. He appointed economics professor and civic activist Kim Sang-jo, better known as the "chaebol sniper," as the chairman of the Fair Trade Commission.
Yet, Kim's appointment alone has yet to produce any progress in chaebol reform. He has so far focused on improving the shady governance structures of conglomerates and cracking down on their unfair practices exploiting small- and medium-sized companies. However, little has changed to transform the business landscape which has long been dominated by chaebol.
Making matters worse, the aggravating economic conditions are putting greater pressure on the Moon government to retreat from chaebol reform. So there is the strong possibility of Moon compromising his reform policy. If he backpedals on this, the country may risk losing out to chaebol and their owner families forever.
We urge the Moon administration to make unwavering efforts to reform chaebol which have deepened economic and social polarization. Although they have contributed to the development of the export-oriented Korean economy, conglomerates now become a hurdle to fair competition. President Moon cannot realize his policy of inclusive growth without chaebol reform.
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