Ceiling on Equity Investment to Be Lifted

The ceiling on equity investment restricting large corporations from acquiring or owning shares of their subsidiaries will be lifted under a self-regulatory system.

In a Saturday news conference held immediately after the work briefing by the Fair Trade Commission to the presidential transition committee, committee spokesman Lee Dong-gwan said, “Instead of imposing direct regulations on companies in advance, we will focus on post-supervision so that the market can be run by a self-regulatory system.”

Consider a prime example of a policy in regulating conglomerates, the equity investment ceiling system allows companies with assets exceeding two trillion won and belonging to a business group with a value surpassing ten trillion won to invest in other companies only if the investment amount is below 40 percent of the company’s net assets.

The regulation will end ten years after it was revived in December 1998, having been abolished once before in February that year.

Conglomerates can also turn into a holding company, as the committee will soften regulations applied on a holding company worth more than 100 billion won. The decision includes drastically reducing the requirements of a holding company such as achieving a debt ratio of 200 percent, and eliminating the ban on acquiring five percent or more of non-subsidiary stocks.

At the same time, the committee will announce details this month on reducing mobile phone charges by 20 percent, which was one of President-elect Lee’s pledges.

Committee member Choi Gyeong-hwan said after a briefing by the Information and Communication Ministry, “We asked the ministry to draw up plans to cut communication fees, including those for mobile phones, and report them by the end of the month. This is an area that directly affects the livelihood of Koreans.”

Spokesman Lee said that given the need to simulate competition among mobile service providers to cut communication fees, the committee will go over measures to reduce the cost of changing mobile handsets and encourage industrial improvement by easing requirements on mergers and acquisitions in the industry.

The committee will also come up with specific plans and a timeline for privatizing the postal service.

The Information and Communication Ministry said it can generate by 2010 500,000 IT jobs, including 10,000 in innovative small firms.

swpark@donga.com