Friday, January 2, 2015

WSJ: Seoul’s Chaebol Fixation

In a sense, this article symbolizes one of the challenges President Park Geun-hye faces in 2015 which would be the last year for her to actualize her promise to reconstruct the Korean economy through the promotion of SMEs and entrepreneurship.

One wouldn't ignore the contribution of his father - the former President Park Chung-hee - to the rapid economic growth of Korea.  And yet, he designed the so-called Korea Inc. which persists even today, stifling creativity and entrepreneurship.  Unless she recognize this fundamental issue, her initiatives to revive the economy wouldn't succeed.

From the Wall Street Journal:

Weeks after a scandal caused public resentment toward the chaebol to bubble over, South Korea’s leaders are floating the idea of paroles and pardons for imprisoned leaders of the dynastic conglomerates. Their odd reasoning: The economy needs it.


In the ensuing uproar, Ms. Cho resigned and was arrested on Dec. 30 for possible violation of aviation safety. To many South Koreans, nut gate indicates a systemic problem. The country’s reliance on the chaebol has led to a culture of impunity among its owner-managers. Many founders treat their publicly listed companies as personal fiefdoms, and many of the proposed parolees were convicted of embezzlement and fraud.
High-profile paroles in the past have shaken trust in the rule of law. Even President Park Geun-hye sensed this when she took office in early 2013. Responding to unpopular presidential pardons at the end of her predecessor’s term, Ms. Park said they were “extremely regrettable” and illustrative of how pardons “ignore the will of the people and are an abuse of presidential power.”

Ms. Park seems to have now fallen under the chaebol spell, even as the political cost of springing patriarchs from the slammer will continue to rise. Democratic pressure will inevitably curtail the feudal culture that protects the chaebol.

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