President Moon Jae-in has recently tried to craft a pro-business approach. Earlier this month, he met heads of major Korean business organizations to listen to their suggestions on how to boost corporate activity.
Presiding over a Cabinet meeting days later, he called on government officials to pay closer attention to what they hear from companies. Last week, he visited a Samsung Display factory to praise the company’s decision to invest 13.1 trillion won ($11 billion) in the next-generation display sector.
In a video call with workers at the factory, Moon went so far as to thank Samsung, the country’s largest conglomerate, for its key role in shoring up the economy. “I always appreciate it,” Moon said, noting the group has spearheaded Korea’s economy by going ahead of competitors in the semiconductor, mobile phone and display sectors.
Critics say Moon’s recent pro-corporate gestures appear intended to extricate his government from the ballooning fraud and corruption scandal involving family members of Justice Minister Cho Kuk.
It may be partly so. Still, his moves to get closer to the business community are welcome, as local companies have lost vitality due mainly to the Moon administration’s anti-corporate policies, at a time when economic conditions are deteriorating at home and abroad.
It is now important for Moon to go beyond demonstrative gestures and take concrete steps to ease or settle complaints from businesses.
The business community remains skeptical that there will be significant changes in the government’s stance.
Such skepticism is understandable, given Moon’s previous promises to make it easier to do business in the country have yet to be matched by substantial actions. For instance, his repeated calls for swift and sweeping deregulation have not been heeded by government regulators. Moon himself may not have been prepared to overcome objections to lifting regulatory barriers from vested interest groups and many ruling party lawmakers.
The presidential office seems to be arranging for more events to demonstrate Moon’s business-friendly approach. But such events are not needed. Instead, the Moon government should now put forward concrete and comprehensive action plans that could help corporate leaders have confidence in its readiness to change policies that have dampened business sentiment.
Above all, it should make it clear that unreasonable and unnecessary regulations will be eliminated.
During his visit to Samsung Display’s factory last week, Moon asked its employees whether he should be worried about the impact of Japan’s restrictions on exports to Korea of key materials used in making displays and semiconductors. The answer was “no,” but the company’s efforts to rely less on Japanese suppliers are likely to be held back by the planned introduction of toughened laws on registering and managing chemical materials.
Complex regulations also hamper companies in declining industrial sectors from entering new sectors.
Domestic firms are concerned about a set of proposed bills that could threaten their managerial stability. In particular, a proposal to revise the enforcement ordinance of the capital market law has raised concerns that the government is attempting to influence the management of private firms through the national pension fund operator that hold stakes in them.
Pushing for such changes would be inconsistent with Moon’s pro-corporate moves.
The government also needs to readjust its labor friendly measures that have imposed a heavier burden on companies and favored trade unions.
In a rare move to ease employers’ burden under the Moon administration, a presidential advisory panel last week approved a proposal to extend the period of flexible implementation of the 52-hour workweek to six months from the current three months. The proposal, which has yet to be enacted into law by the parliament, still falls short of demands from the business community that the period be extended to a year.
In contrast to Moon’s recent pro-business steps, his government is pushing for the ratification of the International Labor Organization’s key conventions, which would further strengthen labor rights in the country without leveling the playing field with management.
Moon and his aides have insisted the economy on the whole is heading in the right direction, saying sliding indicators will improve next year. Such views detached from reality have raised doubts about the sincerity of Moon’s recent business friendly signals.
To boost business confidence, the government should make it clear that it takes the current economic downturn seriously and will do all it can to reverse it.