The head of South Korea’s leading business lobby group called for additional legislative measures to minimize the side effects of the so-called fair economy laws, which have caused concern among business operators here.
He added that Asia’s fourth-largest economy should refrain from relying too much on a fast-paced recovery, as the effects of the pandemic are likely to be enduring, and extraordinary measures entail fiscal repercussions later on.
“Thanks to the health authorities’ swift response and the people’s cooperation, (Korea) has remained economically active throughout the epidemic crisis, despite various restrictions,” Park Yong-maan, chairman of the Korea Chamber of Commerce and Industry, said in a year-end press interview.
“Back in March, I once feared that our economy may collapse. The situation, of course, was not precisely the end of the world, but it is the conservative nature of companies to perceive uncertainty as risk.”
After reporting the first confirmed case of COVID-19 in January, the country was hit by a serious outbreak in March, with most cases occurring in the southeastern city of Daegu and nearby North Gyeongsang Province.
“There is little doubt that the market will face some recovery next year, with the combined effect of vaccine distribution and pump-priming policies,” said Park, who also leads engineering company Doosan Infracore.
That recovery, however, may be short-lived, while the scars from the pandemic will last longer, he added.
“Vaccines may provide the solution to the coronavirus itself and many of the related problems, but can do little to counter the aftermaths caused by the extraordinary measures,” he said, pointing to the massive fiscal packages unrolled this year to cushion the market fallout.
“(These emergency actions) may lead to bigger consequences in 2022, unless they are properly reviewed and dealt with at this point in time.”
Korea has introduced four supplementary budgets worth a combined 66.8 trillion won ($60.56 billion) and initiated a number of special market relief measures, including the creation of a special-purpose vehicle to purchase bonds and commercial paper from low-credit companies.
Discussing potential risk factors that could weigh upon the economy next year and beyond, Park cited the increased sovereign debt level, record-high household debt, and the imbalance between the real economy and the capital market.
Another variable for Korea is its midterm political schedule, which includes the mayoral by-elections in Seoul and Busan next year and the presidential election slated for March 2022.
Speaking for the KCCI and its member firms, Park also urged policymakers to prolong the supportive actions, especially for smaller companies that are likely to face increased pressure in the corporate bond market.
The KCCI chief also expressed regret over the recent passage in parliament of three bills on a fair economic order -- the revised Commercial Act, the revised Fair Trade Act and the new Financial Conglomerate Supervision Act.
“I felt upset when (the parliament) rushed to pass the economic bills en bloc with other political agendas, without properly gathering feedback from companies,” he said.
“But now that the bills have moved past the parliamentary approval stage, we should focus on preventing the possible side effects within the given legal frame.”
Taking the example of the Act on Registration, Evaluation, Etc. of Chemicals -- which has for years triggered backlash from related market players who say it imposes excessive regulations -- Park said enforcement ordinances and regulations should be added to the fair economy act trio for flexibility’s sake.
Park, who has served in his current post as KCCI chief for more than seven years, is to step down in March.
While he refrained from mentioning his potential successor, a number of business leaders have been mooted. The list includes SK Group Chairman Chey Tae-won, LS Group Chairman Koo Ja-yeol and Celltrion Chairman Seo Jung-jin. The head of the KCCI has traditionally been selected by nomination, not through a competition.
By Bae Hyun-jung (email@example.com