Will Moon really make chaebol reform happen?
Skepticism grows over South Korean president's campaign promise
SEOUL -- Reforming South Korea's family owned conglomerates was front and center in President Moon Jae-in's election campaign, yet some in the business community are already questioning the new leader's resolve to tackle such a daunting task.
Clad in a navy suit and a blue tie, Moon promised in his inauguration speech on May 10 to take the lead in reforming the conglomerates, also known as chaebol.
There needs to be a change in the culture of opaque corporate management perpetuated by companies' founding families, as well as in the economic structure that favors chaebol, according to Hansung University professor Kim Sang-jo, Moon's pick to head the South's Fair Trade Commission.
The South Korean economy has grown by less than 3% annually in the last two years. Moon wants the government to lead economic reforms, instead of relying on corporations that have been battered by global competition.
The new president is also extremely critical of the cozy ties between South Korea's political and business spheres. In a televised debate during the campaign, Moon said he had never considered pardoning Samsung Electronics Vice Chairman Lee Jae-yong or impeached President Park Geun-hye, who have both been charged with bribery.
Yet Moon has done little on such reform in his first week in office. In contrast, he promised just two days after inauguration to eliminate all temporary jobs in the public sector during his term, and ordered government agencies to create a road map for turning those positions into permanent ones.
"We will wait and see how things go for the next six months or so," one chaebol executive said. While working under then-President Roh Moo-hyun, Moon himself was accused of pulling punches for Samsung in an investigation into the group's finances. Many major conglomerates question how serious he really is.
Every new president in South Korea seems to call for chaebol reform, only to do nothing. And forcing change in the very engines of the country's economy is easier said than done. "The new administration must understand that economic growth is impossible without our cooperation," said an executive from another chaebol.
One idea Moon is considering is to ban conglomerates from doing business exclusively with group members, a lawmaker close to the president said. But a chaebol executive waved the idea aside, claiming companies cannot work with affiliates incapable of doing the part anyway, if they want to remain competitive in the global market.
One Japanese corporate executive with close business ties with the conglomerates says Moon's priorities are mixed up. "Instead of time-consuming chaebol reform, he should first pursue globalizing corporate management," this executive said.