Korean biz groups launch new forum on revamping regulations
Headquarters of the Korea Chamber of Commerce & Industry in central Seoul / Yonhap
A group of Korean business lobbies on Thursday launched a joint forum aimed at revamping the country's corporate regulations and revitalizing growth engines.
The Korea Chamber of Commerce & Industry (KCCI), the Federation of Korean Industries and the Federation of Middle Market Enterprises of Korea launched the Business Growth Forum aimed at reducing excessive regulations and punishments for the corporate community.
The move came amid criticism that excessive regulations can hinder companies' business expansions.
"Unless regulations differentiated by company size are abolished, we cannot achieve economic growth," SK Group Chairman Chey Tae-won, who also heads the KCCI, said in opening remarks.
"Businesses should make a bet by bearing risks and seeking growth, but they are becoming reluctant without incentives to do so," Chey said. "As long as such regulations exist, businesses will opt to remain as small and medium-sized firms, or even split divisions."
Chey added the government should encourage small companies to grow into conglomerates, as an increase in the number of large firms will eventually lead to economic growth.
Citing data from the government and market watcher FnGuide Inc., only 0.04 percent of small-sized businesses grew to become mid-sized firms from 2020 to 2023. Over the period, only 1.4 percent of mid-sized companies became conglomerates.
The KCCI also said the average annual sales growth of conglomerates was estimated at 10 percent from 2004 to 2014, but the figure plunged to just 2.6 percent from 2014 to 2023.
"The biggest challenge in South Korea's business environment is that it hinders entrepreneurship," Song Seung-heon, who heads McKinsey & Company's Seoul office, said, noting business managements are more likely to avoid risks due to the structural issue.
Song added Korea needs to make efforts to provide more safety nets and incentives for companies.
The forum, meanwhile, plans to hold regular gatherings and carry out research on how existing regulations hinder business expansion and economic growth.