SEOUL - South Korea's big
business community is ramping up its opposition to a
controversial revision of fair trade laws ahead of the
National Assembly's vote on it next month. The
Federation of Korean Industries (FKI), a lobby for South
Korean family-run conglomerates, known as chaebol, is
mobilizing all available means to oppose it.
The
federation and four other big business associations held
a meeting Wednesday to discuss how to have the bill
watered down, saying the legislation runs counter to
market principles. Under the revised bill, the Fair
Trade Commission (FTC) aims to maintain restrictions on
conglomerates' equity investments in affiliates, reduce
financial affiliates' voting rights and restore the
government's right to search and seizure in
investigations into suspected monopolistic practices by
conglomerates.
The month-long regular session of
the parliament has served as a lightning rod for debate
on the issue, pitting the pro-chaebol Grand National
Party (GNP) against the reform-minded ruling Uri Party.
The big business community and the GNP are calling for
the repeal of the rule limiting chaebol's equity
investments in sibling or non-affiliated companies,
claiming it inhibits corporate investment.
The
FKI recently recruited Lee Sang-mook, managing director
of Samsung Financial Research Center, and Professor An
Jae-wook of Kyung Hee University to lobby against the
revision at the final parliamentary hearing on the
matter next Monday. "It seems almost impossible to have
the equity investment ceiling abolished this year
because of the determination of the president's office,
but we believe that we can get some concessions in other
areas," said a business official on condition of
anonymity.
Subsidiaries of South Korea's
sprawling conglomerates are banned from making equity
investments in other companies if the investments are
greater than 25% of their net assets. Chaebol leaders
insist the restraint is a stumbling block to fresh
investments at a time when the country is in dire need
of corporate investment to boost the sagging economy.
Spending by the Samsung, LG and Hyundai Motor
groups and 12 other top South Korean conglomerates
accounts for 77% of the country's total corporate
investment, according to the FKI. Analysts attribute the
1997-98 economic crisis partly to cross-shareholding
practices by chaebol that allowed stronger affiliates to
prop up weaker ones.
"If we clearly explain the
government's sincere determination for market reform and
its policy direction, the revision bill will not meet
with much opposition in the parliament, except for over
a few controversial issues," a Fair Trade Commission
official said.
If the bill is passed without
amendment, the voting rights of chaebol's financial
affiliates will be restricted to 15% from April 2008.
Samsung and other conglomerates want to raise the limit
to 20% in the hope of relieving the burden of increasing
stakes through other affiliates.
Optimism,
however, is rising over the restoration of the FTC's
rights to search and seizure in probes into suspected
monopolistic practice by conglomerates. "If bank account
search and confiscation rights are restricted strictly,
there won't be much problem with the issue," the
business official said.
In an attempt to thwart
passage of the bill, the big business community is now
hectically lobbying individual lawmakers and holding
policy meetings with political parties.
