Korea Fair Trade Commission Reviews the Deregulation Policy

The government and the business sector agreed to form a `Joint task forces`, which will draw up a plan to soften the current regulations. This `Joint task forces` will discuss various items of Fair Trade Act in order to lessen or abolish the regulations that has reduced the competitiveness edge of companies.

The government will maintain the basic principles of Chaebol policy, but it will widen the scope of exceptions to the regulations such as the equity investment limit and the designation of 30 top-conglomerates.

The concession of the government and the business sector has been made at a meeting of economic ministers including Jin Nyum, Deputy Prime Minister, and the representatives of the business sector including Kim Gak-Joong, Chairman of the Federation of Korean Industries (FKI), and the 30 conglomerates restructuring coordination chiefs.

The government and the business sector agreed to relax excessive regulations in order to accelerate the restructuring process under the basic framework of `5+3 major corporate reform principles.` And they decided to consult with the Tripartite Commission on matters of labor-management relations.

Deregulation measures that do not require the revision of related laws will be executed instantly. And the government will submit, at a special session of the National Assembly, the measures which require the revision.

Ministry of Finance and Economy is reviewing the measures in order to contribute to the revitalization of investments and exports, such as the tax reduction to the investment within the capital region, guarantee of finance to subsidiaries, export credit guarantee, and an exemption of registration fee during the establishment of subsidiary.

In this meeting, the FKI made a recommendation to the government `The policy tasks to boost up the investments,` such as easing the unilateral application of 200 percent debt-to-equity ratio and the capital adequacy ratio set by the Bank for International Settlements (BIS).

The FKI called for the government to provide the measures that can help companies raise the investment funds. And it also demanded to permit a three-year grace period on the deadline for 30 conglomerates to eliminate excess equity investments, and to exclude new investment for restructuring and strengthening of core competency from the regulation of the equity investment limit.

The Fair Trade Commission (FTC) is to lay the basic line to maintain the equity investment limit (25 percent of equity) at the same time making room for more exceptions.

Cho Hak-Gook, Secretary General of FTC, said that ``the government will administer flexibly the corporate policy, maintaining the basic framework of the corporate regulations. And the government will accept the demands of the business sector within the scope of structural reform principles.``

FTC is reviewing such measures as the extension of a grace period on the excessive equity investment for the restructure, the exception to the investment for strengthening new core competency, and the enlargement of the exception to the foreign investor.

Kwon Soon-Hwal shkwon@donga.com