'Chaebol face growth, governance crises'
Panelists speak during the second session of The Korea Forum 2019, co-hosted by The Korea Times and its sister paper the Hankook Ilbo at the Shilla Seoul, Thursday. From left are moderator Seoul National University Professor Lee Keun, Fair Trade Commission Chairman Kim Sang-jo, Keio University Professor Isao Yanagimachi, Rep. Kim Jong-seok of the Liberty Korea Party and National University of Singapore Professor Shin Jang-sup. Korea Times photo by Koh Young-kwon
By Nam Hyun-woo
Fair Trade Commission Chairman Kim Sang-jo speaks during The Korea Forum 2019 co-hosted by The Korea Times and its sister paper the Hankook Ilbo at the Shilla Seoul, Thursday. Korea Times photo by Koh Young-kwon
Korea's regulatory measures on chaebol should be focused on disciplining companies after their misdeeds, not on setting up preventative hurdles, Fair Trade Commission (FTC) Chairman Kim Sang-jo said Thursday.
During The Korea Forum 2019 co-hosted by The Korea Times and its sister paper the Hankook Ilbo at the Shilla Seoul, Kim and his rival panelists participated in the forum's second session, highlighting Korea's policies on conglomerates and agreeing that the government's regulation on large firms “should not be preventative.”
“There's always a bright side and a dark side on the chaebol issue,” said Kim, a well-known hardliner against conglomerates. “Chaebol played a huge role in the advancement of the Korean economy, but at the same time they have two problems in terms of growth and ownership structure.”
Kim said the country has been making efforts to address such problems and draw out “economic democratization” for the past 30 years, but are yet to reach a point of success. Thus, he said, the FTC and the laws should be focused on “ex-post disciplines” punishing companies for their misdeeds if and when they happen, not restricting them with regulations.
“For the past 30 years, Korea tried to change the structure and base of chaebol's behavior, and this isn't working these days,” Kim said. “Rather, we should change our regulatory measures and focus on disciplining wrongdoing. A structural approach should come after that.”
Kim's remark drew agreement from other panelists including Rep. Kim Jong-seok of the main opposition Liberty Korea Party, National University of Singapore Professor Shin Jang-sup and Keio University Professor Isao Yanagimachi.
However, the panelists criticized the Moon Jae-in government for not carrying out ex-post regulation.
“The reason why chaebol policy should be regulatory is because some of them abuse their power, exploit smaller firms and commit unfair business practices,” said Rep. Kim, who earned Ph.D. in Economics at Princeton University.
“If so, the government's policy should be about disciplining them for those activities and fixing those malpractices. However, the Moon government's chaebol policy seems to be focusing on attacking and depriving companies' managing rights and weakening their economic power,” Kim said, adding excessive influence on chaebol's managing rights has side effects.
Shin also stressed that he cannot sense that the Moon administration is moving toward the ex-post discipline scheme.
“Korea is not the only country in which family-controlled businesses are dominating the economy,” Shin said. “There are many successful companies with ownership structures which are taboo in Korea. Many renowned firms are doing so well with family-centric or even dictatorial ownership structures.”
Yanagimachi also said Korea should keep the chaebol issue within the frame of economics, and prevent politics from being involved.
FTC Chairman Kim wrapped up the discussion, concluding that conglomerates have played key roles in Korea's export-centric growth strategy in the past, but the strategy has met its limit. He added that large firms are required with different roles and policies surrounding them and he believes they should be coordinated harmoniously.