FTC pledges to push for chaebol reform
By Yoon Ja-young
The country’s antitrust agency will focus on reforming chaebol and rooting out their unfair practices against suppliers, its chief stressed at a policy briefing before President Moon Jae-in Friday.
FTC Chairman Kim Sang-jo briefed Moon on its key policies along with Finance Minister Kim Dong-yeon and Financial Services Commission (FSC) Chairman Choi Jong-ku in Sejong City, an administrative town 130 kilometers south of Seoul.
The FTC affirmed it will block chaebol owner families from using their businesses to fatten their own wallets.
“Profiteering by chaebol owner families not only leads to illegal transfers of wealth but also destroys the corporate ecosystem,” it noted.
It has been examining internal trading of conglomerates since April, and added that those suspected of violating the law face investigation. It also plans to introduce a reward system for whistleblowers.
The FTC plans to toughen regulations on profiteering, applying the rules to more conglomerates.
Guaranteeing fair competition for small businesses and small merchants is also high on its agenda. Conglomerates have been forcing their suppliers to do business with whomever they designate, but this practice will be banned. Labor costs such as the minimum wage hike will also be taken into account when determining supply prices.
The finance ministry, meanwhile, emphasized fiscal reform and setting up a foundation for innovative growth.
It plans to reform the tax support system to focus on jobs, on top of strengthening the tax on high-income earners and conglomerates. The government raised the corporate tax rate on top conglomerates to 25 percent from 22 percent on top of raising the tax on high-income earners.
The ministry said it will secure the foundation for over three percent economic growth through reforming the business ecosystem to focus on innovation. It plans to present strategies for service industry innovation, which includes promoting new services such as the sharing economy and adding value to the service sector.
The government’s support in terms of budget and taxation will shift to the whole ecosystem instead of focusing on each business.
The FSC, meanwhile, reported that it will reform the financial system to encourage job creation.
A joint surety system will be abolished to encourage startups, and businesses related to the Fourth Industrial Revolution will receive more state-backed financing. The FSC expects around 60,000 additional jobs will be created in the sector.
It also plans to reform regulations as well as conservative business practices in financial companies, so the funds will head to productive sectors such as innovative small businesses instead of mortgages.
By lowering down entry barriers into the finance industry and promoting fintech, it expects to create more quality jobs that young people prefer. It estimates the two internet banks hired 900 on top of creating 4,000 jobs in related sectors like IT.
Other proposals to help the working class include lowering credit card processing fees on small merchants and writing off insolvent debts.