By Kim Tae-gyu
Knowledge Economy Minister Hong Suk-woo is opposed to the opposition parties’ attempt to once more implement limitations on conglomerates’ cross-affiliate investments.
The 58-year-old minister told reporters Wednesday that bringing back the cap is an act of political populism and fears it would undermine business activities.
``When the regulation was eliminated in 2009, it was a decision from a consensus of the parties concerned,” Hong said. “
``Those who asked for its revival are trying to trade it for political convenience. We are required to improve the environments for businesspeople.’’
The unusually strong comments by Hong, who is noted for his trademark low-key and soft-spoken attitude, seem to be in line with remarks by President Lee Myung-bak, who earlier took a similar critical tone.
The main opposition Democratic United Party repeated that it will make efforts to restore the investment caps, one of the hottest topics among politicians over the past few decades.
Under the previous Fair Trade Act, units of large-sized groups with assets of more than 10 trillion won were barred from buying stakes of other subsidiaries or nonaffiliated firms in excess of 40 percent of their net worth.
Originally, the standards were much stricter as the restrictions were applied to business groups with assets of more than 6 trillion won and the investment ceiling was 25 percent of the net value.
The limitations were introduced in 1986 to prevent the excessive expansion of big groups but were scrapped in 1997 to boost hostile mergers and exits of marginal companies.
It was reinstated in 1999 because conglomerates were found to increase their stakes in their subsidiaries instead of proactively seeking opportunities in the hostile merger and acquisition market.
The regulation was jettisoned once again in early 2009 under the incumbent Lee Myung-bak administration, which claimed it was business friendly.
Hong also warned of excessive demand for electricity that could cause blackouts.
He asked people to cut down on power consumption despite the cold wave so that the country will be able to deal with potential energy shortages during the winter.
``Up until now this winter, people have followed the requests of the government in impressive ways so as to greatly reduce concerns on the energy supply,’’ the minister said.
``But we are set to face another difficult period this week as a cold wave is expected to hit the country. Sincere cooperation of the people will help us continue to deal with the concerns.”
This stems from a rolling blackout that was imposed last September due to an unseasonable heat wave.