President to push forward deregulation
President Moon Jae-in, right, is briefed about details on the process for opening a new Kakao Bank account using a smartphone on the sidelines of his participation in a special meeting held Aug. 7 at Seoul City Hall, aimed at easing regulations for internet-only banks. Yonhap
By Kim Yoo-chul
President Moon Jae-in and his economic team are pushing forward a drive to implement business-friendly policies to boost the country's potential growth rate.
While Moon's support base is heavily comprised of citizens dissatisfied with the longstanding cozy ties between politicians and conglomerates, Cheong Wa Dae said reducing or eliminating some regulations on industries will be beneficial to companies in emerging industries, as they will be free to create innovative products and services.
“The President's economic team led by presidential chief policy adviser Jang Ha-sung plans to expand communication channels with relevant government agencies and lawmakers of the ruling Democratic Party of Korea (DPK), to find out the consequences of deregulation and how eased regulations can increase the country's economic growth,” a Cheong Wa Dae official said, Wednesday.
Moon's economic team plans to ask the ruling DPK to gather a consensus in the National Assembly to pass a bill for easing rules that limit non-financial companies from owning large stakes in local banks. President Moon earlier hinted at possible deregulation of the internet-only bank industry as the industry has been stalled due to heavy regulations despite its growth potential.
“The top goal set by the Moon administration in the second half of this year is to create a more innovation-friendly environment for businesses because this will clearly help big companies boost their investment and jobs to accelerate growth,” the official said.
It remains to be seen whether President Moon and his economic team have abruptly shifted their economic principles away from “income-led growth” toward “innovative growth” after the original policy apparently failed to win a majority backing from the public. It's still unknown whether the government still has a plan to raise the minimum wage to 10,000 won by 2020 as originally planned.
Minimum pay for workers is set to rise by 10.9 percent to 8,350 won per hour in 2019, slower than the 16 percent jump to 7,530 won for this year, the Minimum Wage Commission said last month.
Economists and market analysts in Seoul remain positive about the President's understanding of how regulation generates various impacts on innovation and affects innovation-driven investments.
“South Korea's economy is coated by a lot of regulations that are stifling growth; therefore, unwinding them can fuel an expansion exceeding growth levels previously presented by the government,” said Park Seong-wook, head of the macroeconomic bureau at the Korea Institute of Finance.
But the government's economic shift, which seems to be most favorable to conglomerates as they operate diversified business groups, may run the risk of alienating the President's longtime supporters.
President Moon once branded conglomerates as “deep-rooted evils” and vowed to root out the “evils.” Since the President took office, he has spent more of his time on improving inter-Korean relations. Meanwhile, conglomerates have been asked to change their opaque business structures for transparency.
Cheong Wa Dae spokesman Kim Eui-kyeom said the government's move for deregulation doesn't necessarily mean businesses and industries will get sizable benefits, but stressed the new initiative is in accordance with President Moon's agenda of seeking income-driven economic growth through job creation and wage rises.