On April 4th, at the launch ceremony of the Corporate Growth Forum held in the luxurious Sapphire Ballroom of Lotte Hotel in Jung-gu, Seoul, Chey Tae-won, the chairman of the Korea Chamber of Commerce and Industry (KCCI) and SK Group, delivered a keynote speech that resonated deeply with the audience. He expressed a critical perspective on the current regulatory environment, stating emphatically that without the relaxation of regulations based on company size, further economic growth in South Korea would be stymied.
Chey highlighted the restrictive nature of existing laws, particularly the Commercial Act, which imposes significant hurdles for companies with assets exceeding 2 trillion won. This regulatory framework has inadvertently led to a phenomenon known as the ‘Peter Pan Syndrome,’ where medium and small enterprises opt to remain at their current size rather than risk crossing into the regulatory obligations that come with larger corporate status. By drawing attention to this issue, Chey underscored a growing concern that the current regulations are not only stifling growth but are also leading firms to intentionally limit their expansion efforts.
During his address, he elaborated on how these regulations create a psychological barrier that discourages companies from pursuing growth. “When regulations exist, there is a tendency for businesses to feel that remaining small is more advantageous, leading them to avoid actions that would increase their size,” Chey elaborated. He pointed to the stark reality faced by companies that hover just below the 2 trillion won threshold, noting that a firm with assets of 1.9 trillion won is likely to avoid growing further in order to evade the stringent regulatory framework that accompanies larger companies.
Chey’s comments were reinforced by a recent comprehensive survey conducted by the KCCI in collaboration with Professor Kim Young-joo’s research team at Pusan National University. This investigation revealed that there are 343 forms of differentiated regulations across 12 economic-related laws, with a staggering 6,000 clauses pertaining to economic penalties. He articulated a pressing need for reform, stating, “The tiered regulatory system in the Korean economy is fundamentally hindering growth, particularly stifling the vitality of the private sector. This structure may have made sense in the past, but it is outdated in today’s context.”
Furthermore, Chey called for a thorough assessment of the impact of tiered regulations on various industries and urged for exceptions to be made for high-tech sectors. His plea for reform echoed the sentiments of many leading companies in South Korea, who collectively criticized the restrictive nature of the country’s regulatory policies, particularly those that seem to disproportionately target large corporations. During a closed-door meeting following Chey’s speech, Park Seung-hee, the Chief Responsibility officer at Samsung Electronics, emphasized the necessity for support measures that do not discriminate based on company size, especially as large companies like Samsung compete on a global stage.
Park pointed out that approximately 80% of Samsung Electronics’ revenue is generated from international markets, highlighting the need for regulations that align with global standards rather than domestic perceptions. He remarked, “The current regulatory framework has largely been shaped by public sentiment, often framed in binary terms of large versus small businesses or large corporations versus labor. We should take cues from the regulatory policies of advanced economies like the United States and Europe.”
Echoing this sentiment, Lee Hyung-hee, Chairman of SK Supex Council, advocated for regulatory reforms that would make corporate activities more predictable and align them with global practices. The call for change was met with support from government officials, including Koo Yun-cheol, the Minister of Economy and Finance, who acknowledged the pressing challenges faced by both small and large enterprises. He assured that the government would mobilize all available resources to support businesses in navigating the fierce landscape of global competition.
In conclusion, the discussions at the Corporate Growth Forum not only shed light on the pressing need for regulatory reform in South Korea but also highlighted the collective urgency felt by the country’s business leaders. As the landscape of global commerce evolves, so too must the regulatory frameworks that govern corporate behavior, ensuring that they foster innovation and growth rather than hinder it. Without prompt and effective reforms, South Korea risks missing out on significant opportunities for economic advancement, potentially placing its businesses at a competitive disadvantage on the world stage.
[관련기사] https://n.news.naver.com/mnews/article/014/0005401930?sid=101
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