President-elect Yoon Suk-yeol has vowed to remove unnecessary regulations to promote business activities, boost investment, and ramp up economic growth. He has also promised to shift the focus of the economy from government-led growth to private-sector-led growth to improve the workings of a free-market economy.
Yoon made such pledges during a lunch meeting with the heads of six business lobbies Monday. The attendants included Korea Chamber of Commerce and Industry (KCCI) Chairman Chey Tae-won, Federation of Korean Industries (FKI) Chairman Huh Chang-soo, Korea International Trade Association (KITA) President Koo Ja-yeol, and Korea Federation of Small, Medium Enterprises Chairman Kim Ki-moon.
It marked the first time that a president-elect has held such a meeting with chiefs of the business organizations. This shows how much weight Yoon puts on relations with the business community. He must have felt that speeding up economic recovery is crucial to create more jobs and improve people’s livelihoods. He needs to put top priority on reinvigorating the economy which is reeling from the resurgent COVID-19 pandemic, the fallout from Russia’s invasion of Ukraine, mounting inflationary pressure, and the U.S.’ interest rate hikes.
“The government’s job is to remove institutional obstacles so that businesses can decide more freely, invest freely and grow,” Yoon said 12 days after he won the presidential election on the ticket of the conservative opposition People Power Party (PPP). He also stressed the need for the private sector, not the government, to lead the economy. His hands-off stance represents a turnaround from outgoing President Moon Jae-in’s focus on the government’s bigger role in the economy.
Moon and his liberal ruling Democratic Party of Korea (DPK) has pushed for an income-led growth policy which is aimed at making higher income available for employers, particularly low-income workers. They believe that the policy will create a virtuous cycle of more income, increased consumption and production, and more investment. The policy, however, has so far failed to produce the desired result. The Moon administration has come under fire for taking labor-friendly measures and putting restrictions on businesses, especially conglomerates.
Against his backdrop, it seems natural for the conservative President-elect to shift to a business-friendly stance. He is expected to press ahead with regulatory reform to enable entrepreneurs to do business more freely and easily here. Many cumbersome and excessive regulations will be scrapped soon.
Nevertheless, it is necessary to enforce prudent regulations more strictly to ensure fair competition. In fact, family-controlled conglomerates, or chaebol, have continued to exploit subcontractors and workers. The have invited criticism for unduly concentrating economic power on a small number of owner families by taking advantage of their monopolistic market position.
Therefore, Yoon needs to strike a balance between regulatory reform and fair competition. After taking office on May 10, he should keep his promise to lift unnecessary regulations to encourage innovation, creativity and entrepreneurship. At the same time he must strengthen fair trade rules and enforce the revised industrial accident law faithfully to prevent safety-related workplace deaths.