S. Korea opposition seeks to limit ‘chaebol’


AFP

SEOUL — South Korea’s main opposition party Tuesday announced proposals to curb the country’s ever-expanding business conglomerates, ahead of next month’s parliamentary election. The Democratic United Party (DUP) said it was seeking to reduce the concentration of economic power in the hands of the family oriented conglomerates known as chaebol. The groups powered South Korea’s post-war economic miracle, but have faced growing calls to be reined in after moving into supermarkets, bakeries, the tofu business and restaurants, forcing many small businesses to go under. One of the most conspicuous DUP proposals is to revive a cap on equity investment by business groups, to stop them expanding their empires into every corner of the economy at the cost of small and medium-sized enterprises. The DUP also proposed reinstating restrictions which prevent the chaebol investing sums in other companies greater than 30 percent of their own net worth.

The ceiling was introduced in 1987 to prevent reckless business expansion by chaebol. It was scrapped in 2009 as the conservative government of President Lee Myung-bak pursued business-friendly policies. Other pledges include a measure to prevent large shareholders in chaebol — mostly members of founding families — from controlling the entire group of affiliates through a web of cross-shareholdings. The ruling New Frontier Party, formerly known as the Grand National Party, last month announced its own pledges to protect small enterprises ahead of the April 11 election. The chaebol still spearhead South Korea’s export trade, although they now employ less than 10 percent of the workforce. But there is a widespread public perception that they have monopolized the benefits of economic growth.