FKI in crisis
FKI Chairman Huh Chang-soo
By Lee Hyo-sik
The Federation of Korean Industries (FKI) is facing the biggest crisis in its 50-year history with small business-friendly President-elect Park Geun-hye putting increasing pressure on the chaebol lobbying group to change itself.
The organization, which lobbies for the interests of large business groups, will likely see its status weaken over the next five years as the incoming administration has pledged to prioritize the growth of small-and medium-sized enterprises (SMEs) for economic growth, according to multiple industry watchers.
Founded in 1961, the FKI has been criticized for its ``inability’’ to properly reflect the interests of its members and cope with rapidly changing political and business environments.
The situation was quite different five years ago when President Lee Myung-bak took the nation’s highest office.
At that time, the FKI was regarded by the Lee government as a primary partner, among other business interest groups, for his ambitious ``747’’ campaign ― achieving 7 percent economic growth, $40,000 per capita income and making Korea the seventh largest industrialized economy in the world.
Lee sought full cooperation from the FKI and family-controlled conglomerates to spur growth by offering tax cuts and pushing forward deregulation.
In contrast, however, President-elect Park has pledged to correct unfair business practices perpetrated by large companies against small ones, and improve the corporate governance of chaebol to prevent their monopolistic behavior and illegal wealth transfer to owners.
Park also promised to extend more support to SMEs, providing larger research & development funds and helping them secure talented workers.
Park’s intended policy direction is expected to diminish the status of the FKI as the most powerful corporate lobbying body.
For instance, the President-elect visited the Korea Federation of Small and Medium Business, and the Korea Small Business Association, ahead of the FKI, following her election victory.
Even in meetings with FKI Chairman Huh Chang-soo and other business leaders, Park vowed to eradicate the culture of unfairness, irrationality and imbalance that has been meted out against small businesses by conglomerates. It signals a determination by her administration to adopt a tough stance against conglomerates engaging in unfair practices against their subcontractors and other small business partners.
Park also received her first official policy briefing from the Small & Medium Business Administration Friday, ahead of the Ministry of Strategy and Finance and other high-profile ministries, hinting at where her top priorities lie.
However, the FKI does not seem to be concerned about the President-elect’s SME-friendly stance, saying it will continue to promote market economy principles.
``Even though Park has pledged to become President for small businesses, we think her top policy priority is to stimulate the stagnant domestic economy,’’ an FKI spokesman said. ``Many are misinformed that the FKI was a lobbying group for conglomerates. But we are the organization promoting and defending the principles of market economy.’’
The spokesman then stressed the status of the FKI has not weakened, saying it will fully cooperate with the next administration.
``Like in the past, we will continue to express our opposition if the Park administration introduces market-unfriendly policies. But we will do everything we can to help the nation overcome the current economic difficulties,’’ he said.