SEOUL, South Korea (AP) — The South Korean ruling party’s presidential candidate softened her campaign’s stance on reforming industrial conglomerates that dominate the economy, saying their existing ownership would be left intact.
Candidates in the December presidential election have pledged to curb the power of the family-controlled industrial groups known as chaebol. They include companies such as Samsung and Hyundai Motor which are among the world’s top exporters and are credited with driving South Korea’s rapid economic development.
Critics say the massive conglomerates crush competition and small businesses in South Korea. The combined annual revenue of the top 10 conglomerates was equivalent to 83 percent of South Korea’s gross domestic product last year.
Saenuri Party’s Park Geun-hye said Friday that if elected president, she would prevent the individual companies that make up each conglomerate from adding to their shareholdings in each other.
But she would not force changes to existing ownership, which would allow founding families to retain control even with a minority stake.
Compelling conglomerates to unwind their intricate cross shareholdings would “expose companies to hostile foreign takeovers,” Park told reporters.
Park’s campaign previously had a tougher stance on chaebol. Her top economic adviser had argued that South Korea’s next president should end crossholdings and implement measures to reform the mighty companies.
Two other leading candidates, Moon Jae-in of the opposition Democratic United Party and independent candidate Ahn Cheol-soo, have made plans to reform conglomerates their key policy goals.
Park also said she would end the Fair Trade Commission’s exclusive right to lodge criminal charges against companies that violate fair trade law. Other government agencies would be able to sue price-fixing companies and anti-trust law violators, she said.
Park, a daughter of former dictator Park Chung-hee, is campaigning to be the first female president of South Korea. Her late father introduced the government-led economic development plans that gave favorable treatment to chaebol such as easy credit during the 1960s and 1970s.
Economist Wi Pyoung-ryang of the Economic Reform Research Institute said Park’s economic policy is far from reformist and will not reduce South Korea’s reliance on chaebol.
“Its focus is on implementing fair trade and fair market practices,” Wi said.
“It defines economic democratization very narrowly,” he said referring to a catchphrase that means a level playing field for every economic player.
Business groups, while expressing relief at Park’s pledge to leave chaebol ownership intact, still expressed concerns.
“Her policy is based on the premise that companies are law breakers,” said Lee Cheol-haeng, head of corporate policy at the Federation of Korean Industries, a business lobby group. “Companies will face rising lawsuits.”
In 2012, South Korea’s Fair Trade Commission designated 63 business groups that each have more than $4.6 billion in assets as chaebol.