Pay attention to the businessmen’s outcries

We must build a vibrant habitat where innovative companies can grow, survive and venture onwards.

Enterprises lead innovation, create jobs and drive the economy. Corporate competitiveness can be synonymous with national competitiveness. Our corporate players must become stronger to stay competitive in the ever-intensifying global battleground. But they are often handicapped from heavy regulatory chains at home. Ryu Jin, chairman of the Federation of Korean Industries (FKI), said during the FKI-sponsored CEO Summer Forum in Jeju that Korean companies are running with sandbags strapped around their ankles, making them fall behind their lighter competitors.

Korean companies are at war with the ever-growing army of regulations. A survey about improving stifling regulations conducted by the Ministry of Economy and Finance and other ministries related to the economy and justice listed 5,886 “punitive” regulations from 414 economy-related laws. Most are double or multiple punishments for the same offense. It is not an exaggeration to say that a Korean CEO is under greater risk of criminal persecution than CEOs in other countries. More regulations are in the making — such as a revision in the Commercial Code to demand loyalty from board directors to shareholders and amendments in the Trade Union and Labor Relations Adjustment Act to make it more difficult for employers to file charges against illegal strikes, as well as reinforce the accountability of original contractors, or large companies.

The squeeze on companies and corporate activities is deepening with decades-old regulations hamstringing them from responding to fast changes in the world. Procrastination in long-term investments, research and development (R&D) and mergers and acquisitions not only hurt the competitiveness of companies, but also that of the country. Like Chairman Ryu pointed out, the competitiveness of the system translates into national competitiveness.

Korea’s industrial structure has been fixated for decades. The list of the country’s 10 mainstay export items has not changed much since 2000. Only three items newly joined the list over the last 23 years — auto parts, flat panel display sensors and precision chemical materials. This means that Korea has maintained its strength in chips and petrochemicals, but also implies complacency without trying to find new growth engines. Moreover, the country is struggling to defend its lead in chips and petrochemicals due to a fast ascension by competitors.

Ryu stressed the need to open a new renaissance on entrepreneurship to sustain Korea’s supremacy in traditional industries and find new strengths in the AI-led revolution period. We must build a vibrant habitat where innovative companies can grow, survive and venture onwards.