[Editorial] Is the government yielding to the firms?

The debate about restrictions on investments by the country's large conglomerates is coming to an end. Looking at the government's final proposal, you see that the restrictions are going to be eased as planned, but meanwhile the ban on circular investment the Fair Trade Commission had wanted is being scrapped completely. It looks like the investment cap is going to be lifted from the current 25 percent to as much as 40 percent of an affiliate's net worth, which would mean the "cap" on the large firms will exist in name only. Still, the conglomerates and a considerable number of members of the ruling Uri Party are calling for it to be done away with unconditionally, so you wonder if it will even exist in name. This is a victory for the conglomerates and thorough defeat for the Fair Trade Commission.

Restrictions on investment are a key part of policy on conglomerates, adopted to prevent these firms from having excessive control over the economy and the ability to pervert ownership structures. Those who call for the restrictions to be abolished say they hinder investment, but this argument is weak in the way of demonstrative proof.

Indeed, when all such restrictions were lifted immediately after the foreign currency crisis of 1997 and kept off the books between 1998 and 2001, there was actually less investment than there was after after the restrictions were reinstated in April 2001. The conglomerates still exaggerate and make a big fuss about how they are being kept from being able to invest for the future, so let's understand for a moment the move to ease the investment cap.

The investment cap at minimum prevented circular investment, so at the very least something needs to be done to prevent this practice. All circular investment does is better guarantee a tycoon's control over everything. It has nothing to do with real investment. The plan to create a new format for preventing circular investment has been left out of the government's proposal. Its "Three Year Roadmap for Market Reform" is embarrassing to even think about. It is sad to see a repeat performance of the behavior in which each government raises high the flag of conglomerate reform only to lower it even further than its original level as the administration's term comes to an end.

The problem is that economy-related ministries like the Ministry of Finance and Economy and the Ministry of Commerce, Industry, and Energy, as well as policy committees in the ruling party, are filled with people who are prejudiced towards big business. That is because the government and ruling party share the shortsighted thinking that says we need to beg the conglomerates to make investments, whether or not that means an eventual over-concentration of the country's economic capabilities, leading to the ill effects of big business behavior. No wonder the head of the Fair Trade Commission said he is ready to make his agency stand alone if he has to. It is also no surprise that, at a recent meeting, he read to those in attendance a poem by Yun Dong-ju. It is not commission officials, but rather the bureaucrats and ruling party members who tilt towards the conglomerates, however, that need to remember the poem's line: "That I may look high upon the heavens until the day I die and have nothing to be ashamed of..."