Foreign business leaders residing in Korea say that President Park Geun-hye’s corporate policies to ensure “economic democratization” are a move in the right direction to upgrade Asia’s fourth-largest economy

2013-08-01 18:58

Foreigners like Park’s reforms

By Choi Kyong-ae
Foreign business leaders residing in Korea say that President Park Geun-hye’s corporate policies are a move in the right direction to upgrade Asia’s fourth-largest economy. They stress that her economic policies aimed at reforming chaebol and ensuring “economic democratization” will help the country’s economy become more transparent and sustainable. “The government is just enforcing the law and if you look at what the tax office is doing, it’s enforcing the law against big (companies), small (firms) and individuals. But the large companies are more sensational,” Jeffrey Jones, a lawyer at Kim & Chang, told The Korea Times in a telephone interview.Foreigners who have closely watched changes in power and business in Korea look on the bright side of President Park’s policy despite concerns in the market that such a “hard-line” approach against conglomerates, or chaebol, may delay economic recovery.
“To foreign eyes, Korea is moving toward a more transparent place,” Thilo Halter, president of the European Chamber of Commerce in Korea (ECCK), said in an email interview. “Now the country is in transition through which transparency and principle will have firmly taken root. Thus, we see it as a natural process of changing business practice to more professional dealing,” he said.
Unlike preceding governments, they say the Park Geun-hye administration has taken a “fair but strict” stance against wrongdoings of large conglomerates, which played a key role in spearheading rapid growth over the past decades.
CJ Group Chairman Lee Jay-hyun went to jail last month for embezzlement and offshore tax evasion and the food-and-entertainment conglomerate is being investigated by the prosecution for alleged illegal lobbying for tax evasion in 2006.
Jeffrey Jones who also served as chairman of the American Chamber of Commerce in Korea (AMCHAM) said conducting such investigations tends to improve the transparency and credibility of the Korean economy and creates a more favorable business environment.
“The enforcement must be fair and consistent to achieve a positive result,” said Jones.
In past governments, the punishment meted out to big conglomerates such as Samsung Group and Hyundai Motor Group for their illegal acts was just a slap on the wrist.
For example, Hyundai Motor Group Chairman Chung Mong-koo received a suspended sentence for embezzlement in 2007, while Samsung Electronics Chairman Lee Gun-hee got the same for illegal acts involving management transfer to his son in 2009. The courts said they took “their contribution to the economy” into account in their rulings.
The Park government has put fair competition its among top priorities as part of efforts to offer a level playing field for big and small-and medium-sized enterprises.
“I would say the Korean economy is going to need growth based on large corporations and growth from the small and medium sector. Focusing on one is a mistake,” said McKinsey Global Institute Director Richard Dobbs.