South Korea’s new president Moon Jae-in has named an outspoken critic of the country’s big conglomerates to act as a regulator and reformer for the companies that still form the foundation of South Korea’s economy.
CGTN’s Jack Barton takes a look at the government’s reform agenda and whether or not it will have any real impact.
South Korea eyes reform of country's conglomeratesSouth Korea's new president Moon Jae-in has named an outspoken critic of the country's big conglomerates to act as a regulator and reformer for the companies that still form the foundation of South Korea's economy. CGTN’s Jack Barton takes a look at the government’s reform agenda and whether or not it will have any real impact.
Big conglomerates like Samsung and Hyundai power the engine of South Korea’s economic growth. But alleged collusion between the companies and politicians led to the current criminal trials of former president Park Geun-hye as well as Samsung’s heir apparent.
Now South Korea’s new president Moon Jae-in wants to reform what are known as chaebols.
“Small business or consumers are not taken into consideration they are growing alone and they don’t give a big enough share of the pie to the workers,” Yoon Ho-jung, Minjoo Party chief policy strategist said. “In the case of the recent Samsung merger the problem was it was related to the succession of the business administration, the process of inheritance. They are using the national pension fund for private company business. It’s a collision between politicians and business people”.
Chaebols have transformed the south from one of the world’s poorest countries to one of the richest in just a few decades. Reforming the big Chaebols is seen as crucial to revitalizing the economy as the they account for about 80 percent of South Korea’s GDP.
“They have too much economic power through these close holdings or pyramid investment structures so they are over diversified that is one criticism the other is the not so transparent control of governance structures,” Lee Byungtae, CEO of KAIST Venture Investment Holdings said.
Without a majority in the parliament it will difficult for Moon to pass the reforms and not all analysts believe they will make a big difference anyway.
But the government has made it clear it will soon try to make the country’s most iconic firms dance to a different tune.
June Park discusses the future of Chaebols in South Korea
CGTN’s Rachelle Akuffo spoke to June Park, postdoctoral fellow with National University of Singapore, on the future of Chaebols in South Korea.