Chaebol asked to invest more in new biz
President vows to revamp regulations to help diversify revenue
President Moon Jae-in asked the heads of the country’s top conglomerates to invest more Tuesday, vowing to revamp regulations to help them diversify their revenue sources.
“I want firms to invest more in strategic and innovative sectors to transform our economy. The government will revamp regulations to help this transformation,” Moon said dur- ing a meeting with the executives at Cheong Wa Dae.
Moon said he felt “sorry” to see a steady decrease in facility investment by top conglomerates. “Big businesses are reviewing their investment plans, which I believe will be heavy and sizable. The government will create a special team to help make that happen,” Moon said.
The President said enthusiasm for fuel cells, electric vehicles, biotechnology, energy, non-memory semiconductors and fifth-generation (5G) technology and materials continues unabated with domestic and international providers prospering in their markets here.
“The government will be very active in cutting regulations. Hiring and investment are the core basis to guarantee the future of companies and secure new growth engines. Taking those paths boldly is the way to improve the economy and the people’s quality of life,” said the President.
Moon added that the country requires a new industrial policy to take on its structural limitations and give more economic benefits to more citizens through innovation, Cheong Wa Dae officials said.
The President thanked the leaders for expanding programs for co-growth with small- and medium-sized enterprises (SMEs). “An entire industrial ecosystem that includes large companies and suppli- ers should be developed for South Korea to remain competitive, globally,” he said.
KT Chairman Hwang Chang-gyu asked the government to relax regulations on data privacy as wider access to personal data would help the country’s dominant fixed-line operator develop its big data-driven and artificial intelligence-focused businesses.
“Korea is ideally positioned over rival countries to develop AI and big data businesses. If the government relaxes regulations over data privacy, then this will be a huge boost to the telecom industry,” Hwang said.
Cheong Wa Dae said Moon directly handled questions from those attending the meeting which were moderated by Korea Chamber of Commerce and Industry (KCCI) Chairman Park Yong-maan.
Those participating included Samsung Vice Chairman Lee Jae-yong, Hyundai Motor Group Executive Vice Chairman Chung Eui-sun, LG Chairman Koo Kwang-mo, SK Chairman Chey Tae-won, Lotte Chairman Shin Dong-bin, GS Chairman Huh Chang-soo and Hanwha Chairman Kim Seung-youn.
Presidential chief of staff Noh Young-min, presidential chief of policy Kim Soo-hyun, presidential chief of economic policy Yoon Jong-won, Finance Minister Hong Nam-ki, Trade Minister Sung Yoon-mo, Fair Trade Commission Chairman Kim Sang-jo and ruling Democratic Party of Korea (DPK) floor leader Rep. Hong Young-pyo represented the government.
The meeting, which came weeks after one with local SMEs, drew much attention from the business circle as the event was recognized as a “goodwill gesture” to conglomerates in terms of reintroducing economic momentum.
The President is apparently rethinking his relationship with the country’s leading conglomerates due to slowing economic growth and worsening employment data.
After Moon took power in May 2017, he distanced himself from conglomerates as the tight-knit relationship between family-owned businesses and the government fostered a culture of corruption, in which bribery, embezzlement and tax evasion had become standard.
Moon vowed to end the practice of pardoning convicted top-profile company executives and said he would apply antitrust laws, ban all cross-shareholding among subsidiaries and give an even greater voice to minority shareholders. These measures were viewed as a detailed but ambitious action plan to break chaebol dominance in South Korean society.
While Moon’s key support base is largely comprised of citizens dissatisfied with the decades-long cozy relationship between politics and businesses, chaebol are still the most powerful driving force in the country’s investment into research and development, and hiring.
The top 31 conglomerates were responsible for 66.3 percent of the country’s total export volume in 2017, up from 62.1 percent the previous year, data from the Korea Economic Research Institute (KERI) showed. Out of the total 189.8 trillion won invested by South Korean companies throughout 2017, they collectively invested 135.5 trillion won in facilities (71.4 percent).
“Cheong Wa Dae thinks changing the web-like chaebol system’s deeply entrenched culture will not happen overnight. Moon will continue pur- suing his people-driven economic policy in terms of achieving a balance between SMEs and conglomerates. Senior presidential secretaries will meet company executives from time to time and on a needs basis as Moon ordered them to boost communication with businesses,” a Cheong Wa Dae official said.
The Moon administration raised the minimum wage and introduced the 52-hour workweek system in accordance with his signature “income-driven” growth strategy. But such efforts aimed at spurring local consumption have fallen flat as employers cut back their hiring due to the rising fixed costs.
Last week, Prime Minister Lee Nak-yon visited a key Samsung research center in Suwon, Gyeonggi Province, and asked de facto company head Lee to increase hiring and investment.