South Korea’s business community breathed a sigh of relief as the general elections ended with a victory for the ruling Saenuri Party. The result led to expectations that there won’t be any drastic change in key economic polices.
But local business organizations expressed concerns about intensifying political clashes ahead of the presidential election, a host of “populist” welfare pledges and bipartisan moves in favor of more regulations for conglomerates.
The Korea Employers Federation, an organization representing local businesses, welcomed the election results in a statement on Thursday: “The general elections reflected the public opinion that continued economic growth and stability should help improve the quality of life.”
The KEF said it expects political circles to make further efforts to implement what the public wants.
The Federation of Korean Industries, the country’s biggest business lobby, similarly stressed that politicians should “accept the election results and work for harmony and co-prosperity to revitalize the national economy.”
The Korea Chamber of Commerce & Industry said that newly elected lawmakers at the National Assembly should work together for deregulation, tax cuts and a more flexible labor market in order to inject fresh energy into the market economy.
In a similar note, the Korea International Trade Association called for more pro-business policies. “More policies should be implemented to deal with the difficulties facing companies in the trade sector,” it said.
Business associations, however, cautioned that all the welfare pledges should be reviewed carefully as some of them are feared to undermine labor-management relations and hamper corporate competitiveness.
The business community remains cautious about some sensitive economic policy issues as the ruling Saenuri Party has moved to the center on economic issues and vowed to push for more job and welfare legislation in a bid to transform its image and lure more votes ahead of the crucial elections.
Prior to the elections, the main opposition Democratic United Party pledged to revive the ceiling on equity investment by family-controlled conglomerates and to restrict cross-investment between chaebol affiliates.
The possibility that the DUP would bring back the equity investment ceiling is now slim as it failed to secure a majority position even in partnership with its ally United Progressive Party.
In addition, the risks of increased corporate taxes and further negotiations of the Korea-U.S. Free Trade Agreement are virtually gone as a result of the election defeat on the part of the opposition parties.
But Korean companies remain nervous about the outlook that lawmakers from both ruling and opposition parties would put more pressure on conglomerates in a show of their resolve to bridge the widening gap between rich and poor and help out small and medium-sized enterprises, especially targeting the presidential elections in the following months.
By Yang Sung-jin (email@example.com