‘Don’t alienate chaebol’

Regulator dubs `democratization of economy’ talks populist

The nation’s chief financial regulator has called on the three presidential candidates to stop bashing chaebol and find ways of addressing economic polarization from a broader perspective.

“We are mature enough to talk about the democratization of economy,” Financial Services Commission (FSC) head Kim Seok-dong said in an interview last week.

He added that such an effort to balance wealth distribution, a key issue in the ongoing presidential campaigns, should not come at the expense of criminalizing chaebol or alone making them sacrifices.

He said that ongoing talks over democratization of economy among Park Geun-hye of the ruling Saenuri Party, Moon Jae-in of the main opposition Democratic United Party and independent Ahn Cheol-soo seem to short-sighted to find fundamental solutions.

“I think the discussion should not be limited to conglomerates or particular practices by chaebol. This issue should be discussed from a broader viewpoint related to the development of the global economy,” he said.

He emphasized that the world has been talking about the fourth generation of capitalism, which has emerged to rebalance the role of the government and the market and presidential candidates should discuss the “democratization of economy” in context of the global economy.

Capitalism in Kim’s words has caused many crises and accelerated the polarization of wealth. So he claimed that presidential candidates should discuss this matter from a bigger perspective, not just focusing on too specific issues such as chaebol.

“I think the focus should be placed on how the government and markets, as well as large companies, should recognize their roles in the process of resolving pending issues, such as economic polarization.”

“Democratization of economy” has become a buzz-phrase in the presidential election race. Candidates from the left and the right have all pledged to tame chaebol, or the country’s family-owned conglomerates, under its name.

The lifetime bureaucrat also suggested that capitalism should be reformed for sustainable growth.

“Quarterly capitalism has caused many problems as it drives the industry to focus on short-term performance and returns on investment,” he said. “But capitalism 4.0 discusses sustainable development, which involves green growth and long-term performance, and it cannot be achieved by the market itself.”

As the head of the financial authorities, Kim has long emphasized the importance of the reform of financial companies, which have long been criticized for their opaque corporate governance and lax management.

The FSC has recently submitted a bill to the National Assembly, which can better regulate financial firms.

“We have proposed a bill about corporate governance that encompasses all financial institutes. We have long allowed financial firms to follow their internal rules for corporate governance, but by systemizing it in a uniform law, we will make corporate governance more transparent and effective,” he said.

But he doesn’t seem to believe that stricter regulation is the only way to reform the financial sector, as he promises full support for them to advance into overseas markets.

“It is inevitable for them to go global in order to survive. In the past, European investment banks used to played an important role in global projects, but many of them have been slow in that business now, and local firms should apply for overseas mega-sized protects. For this goal, state-run financial institutes should increase their size and the government should support the function of financial firms’ investment banking business through reform of the financial market here,” he said. <The Korea Times/Kim Tae-jong>