By Kim Yoo-chul
President Moon Jae-in reaffirmed his commitment to reforming conglomerates by introducing a stewardship code.
"In order to improve corporate transparency, Korea will expand voting rights and introduce a stewardship code," Moon told reporters at his New Year's press conference, Wednesday.
Moon said the path to unwinding the tangled web of chaebol ownership will lead the way to true reform with greater transparency.
A stewardship code is a series of common principles designed to push for greater transparency and accountability. Major conglomerates derive their power from complex cross-ownership structures woven across multiple businesses.
But this insular structure has been under criticism for its lack of transparency. Critics also claim the old system is against the benefit of many shareholders, especially minority ones.
Indeed, large-sized Korean groups tend to pay smaller dividends while hardly buying back their own shares.
Against this backdrop, Moon has promised to bring major changes to the chaebol governance structure controlled by a few founding family members despite their small direct holdings.
Toward that end, he appointed Prof. Kim Sang-jo of Hansung University to lead the anti-trust watchdog. Kim has the nickname "chaebol sniper" as he has been a civic activist who strongly blasted the governance structure of big companies.
On Wednesday, the President said such reform efforts are aimed at helping conglomerates remain competitive in international markets.
"The most significant meaning of chaebol reform is that public and small enterprises should be able to share economic benefits. The reform will help the economy be more transparent," Moon said.
"The country will enforce relevant laws strictly and the government will also block efforts by owner families of chaebol to tighten their grip on the group illegally."
Small firms, which supply their products to conglomerates, tended to accept unreasonable demands of the latter including excessively low prices for their products or services.
Moon also said the government will ease regulations to lower the entry barrier for firms, which have plans to enter new industries.
"In finance, the industry should develop in a way to support the development of industries," he said. "The government will boost measures which are favorable to low-income households and small companies."
Regarding the widening gap in economic growth with developed countries, he said, "As Korea has achieved sizable economic growth, I think it will be tough for the country to grow faster. It's acceptable to have between 2 and 3 percent in the annual economic growth."
President Moon Jae-in reaffirmed his commitment to reforming conglomerates by introducing a stewardship code.
"In order to improve corporate transparency, Korea will expand voting rights and introduce a stewardship code," Moon told reporters at his New Year's press conference, Wednesday.
Moon said the path to unwinding the tangled web of chaebol ownership will lead the way to true reform with greater transparency.
A stewardship code is a series of common principles designed to push for greater transparency and accountability. Major conglomerates derive their power from complex cross-ownership structures woven across multiple businesses.
But this insular structure has been under criticism for its lack of transparency. Critics also claim the old system is against the benefit of many shareholders, especially minority ones.
Indeed, large-sized Korean groups tend to pay smaller dividends while hardly buying back their own shares.
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Against this backdrop, Moon has promised to bring major changes to the chaebol governance structure controlled by a few founding family members despite their small direct holdings.
Toward that end, he appointed Prof. Kim Sang-jo of Hansung University to lead the anti-trust watchdog. Kim has the nickname "chaebol sniper" as he has been a civic activist who strongly blasted the governance structure of big companies.
On Wednesday, the President said such reform efforts are aimed at helping conglomerates remain competitive in international markets.
"The most significant meaning of chaebol reform is that public and small enterprises should be able to share economic benefits. The reform will help the economy be more transparent," Moon said.
"The country will enforce relevant laws strictly and the government will also block efforts by owner families of chaebol to tighten their grip on the group illegally."
Small firms, which supply their products to conglomerates, tended to accept unreasonable demands of the latter including excessively low prices for their products or services.
Moon also said the government will ease regulations to lower the entry barrier for firms, which have plans to enter new industries.
"In finance, the industry should develop in a way to support the development of industries," he said. "The government will boost measures which are favorable to low-income households and small companies."
Regarding the widening gap in economic growth with developed countries, he said, "As Korea has achieved sizable economic growth, I think it will be tough for the country to grow faster. It's acceptable to have between 2 and 3 percent in the annual economic growth."
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