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Let companies work in earnest

Posted May. 23, 2013 08:14,   


Soon after the April general elections were over in 2004, former Deputy Prime Minister and Finance and Economy Minister Lee Hun-jai visited then main opposition Grand National Party chief Park Geun-hye to ask for cooperation in pursuing his economic policies.

Park saved words at first but later began speaking with these words, “Though (President Roh Moo-hyun) promised to make a business-nurturing environment, people still have doubts about it,” adding, “Unable to trust the government’s stance on enterprises, businesses are reluctant to create jobs, which causes a slow recovery of the economy. During the general election period, people gave me a round of applause whenever I said, ‘The problem is the president’s view on the enterprise.’”

Lee claimed that the president’s belief and principles in the market economy were steadfast and there was no need to worry, but Park responded, “Aside from minimal regulations such as those on the environment, all other regulations must be lifted.” Unable to reach an agreement, Lee left the venue, saying, “It’s really hot today.”

Now as the president, however, Park’s view on the same matter has changed. Though it might be too early to judge whether the president’s perspective on enterprises has changed, her messages have grown somewhat vague. Park has used a variety of ambiguous rhetorical expressions, such as a “principle-centered market order,” “economic democratization that does not press either conglomerates or small businesses,” and “non-excessive regulations concerning conglomerates’ practice of placing orders to their subsidiaries.”

At a presidential luncheon meeting with media editors-in-chief and news directors last month, attendees said, “Companies have hard time understanding the messages from the presidential office.” To this, President Park answered, “The government will not get in the way of hard-working businesses, but unfair business practices that hinder grand social unification will have to be corrected. I promise I’ll be cautious in implementing policies.”

Against this backdrop, the National Assembly has taken the leading role in driving the “economic democratization.” Since the 19th National Assembly kicked off, more than 5,000 bills have been submitted to the National Assembly, and many of them are expected to gravely hinder business activities if they are passed.

To help companies focus on their businesses to revive the Korean economy mired in the unprecedented low-growth in the zero percent range for eight consecutive quarters, the Dong-A Ilbo has published a serial article titled “Give Wings Back to the Businesses” since Monday. Many of business leaders said they are struggling to run companies amid major negative developments such as the legislation of economic democratization, excessive regulations, sluggish domestic demand, and global economic recession. These can hardly be out-of-the-blue kind of responses, but unexpected answers were heard as well, which were about the president’s vague stance on the enterprise.

President Park might not be happy to hear these responses because she had government agencies provide land for companies to build plants at the May 1 meeting to promote trade and investment. The meeting was to support small businesses’ export and lift regulations that hinder investment by conglomerates.

To help companies trust the president’s message, however, more fundamental deregulation must be put in place. President Park said, “Deregulation is the most effective means of fostering business investment without budget spending.” Money, of course, is unnecessary. But it takes courage. Most regulations exist with the backing of supporters, and those supporters will do their best to preserve the regulations that they favor. For example, the government issued a legislative notice to revise some of the Enforcement Decree of the Seoul Metropolitan Area Readjustment Planning Act, which puts a strain on the development of Seoul, Incheon and Gyeonggi areas. But the move was recently scrapped due to a strong opposition from non-metropolitan regions upholding a cause of a balanced regional development across the country.

Today marks the 4th anniversary of the death of former President Roh Moo-hyun. Nine years ago, President Park said she could not believe the former president’s view on the economy. President Roh originally pursued dismantling of the conglomerates, but he gave up on his philosophy to revive the tumbling economy and allowed the LG Phillips LCD (the current “LG Display”) to build a large plant in Paju, Gyeonggi Province. He did so despite his comrades’ accusing him of being a turncoat. The enforcement of the Industrial Cluster Development and Factory Establishment Act, which was designed to push ahead with this plan, was the first bill that President Roh signed since taking office. Now is the time for President Park to stir up her courage.