Remove Regulations Contracting Investment, Export: FKI

The government and business circles collide head-to-head on the economic reform and solutions of various pending economic issues.

A high-ranking official of the Federation of Korean Industries (FKI) declared yesterday a plan to demand the government to abolish the government`s unilateral corporate policy, after collecting business circles` opinion at a regular council meeting of chairman and deputy chairman to be held Thursday, saying ``Such a policy is throwing down corporate motivation and to contract exports.``

The business circles also decided to request the elimination of various regulations hampering investment and export in a government-business joint meeting next Wednesday. This meeting included the invitations of Jin Nyum, Deputy Prime Minister, Minister of Finance and Economy, and and other economic ministers to the council meeting for heads of corporate restructuring divisions of 30 largest companies.

FKI pointed out that ``Korea’s economy is in crisis where export as well as domestic consumption is shrinking. Companies are reluctant to make investments because they could not trust the government`s policy. Therefore, a corporate policy should be shifted to motivate for companies to invest.``

An FKI includes an appeasement of the limited equity investment, the abolition of collective system of largest companies, flexible application of 200 percent debt-to-equity ratio, postponing the execution of class action system, and shortening the notification deadline for dismissal.

But Lee Nam-Ki, chairman of the Fair Trade Commission (FTC), rejected the business sector’s demands, saying ``Since policies such as limited equity investment, was established for corporate reform, the abolishment of or shift in the regulations is not to be seriously considered as for now.``

``The Chaebols have recently begun to divert into other business areas without focusing on their own core areas while augmenting the number of affiliates to 80,`` said Lee in a press meeting, ``the crisis of major Chaebol companies may spread into the whole national economy because they are fused with unfair connections,`` he added.

Lee also emphasized that ``a considerable number of regulations designated as tough regulations by the business sector are related to owners’ interests. But FKI is misleading as if such regulations are excessive to hinder corporate management and the national economy.``

FTC made it clear that it would sanction largest companies that do not resolve excessive equity investment up to next year, which is a legal deadline.

An official of FKI said, “Business circles will maintain the position that regulations should be relaxed in order to revive the economy, even though we would not officially refute Chairman Lee’s remarks.``

Park Won-Jae parkwj@donga.com