South Korean President Lee Myung-bak is turning up the heat on business conglomerates whose reluctance in investing and caring for smaller firms hinder his key policies for a broader well-being of ordinary people.
His accusations toward big businesses are not new but the tone and severity are perplexing many who painted him as a staunchly business-friendly leader.
Last week, Lee lashed out at big firms for remaining hesitant to invest despite their massive cash piles. He also accused large businesses of operating high-interest loan-services, burdening the poor.
On another front, the nation’s antitrust regulator has launched a probe into large businesses on charges that they used their dominant positions to force unfair deals with SMEs.
Large firms logged record profits in the second quarter, leading the country to post one of the fastest economic growth rates among advanced nations. But their fat profits have not translated into benefits for SMEs and ordinary citizens, the president said, calling on large firms to take “social responsibility”.
His remarks come as the ruling Grand National Party is struggling to shore up voter support following its crushing defeat on the June 2 local elections.
The GNP threw its support behind Lee on Monday.
“In the case of Samsung Electronics, it has reported a record-profit, and it has increased exports. But SMEs and ordinary citizens are living really tough lives,” GNP lawmaker Hong Joon-pyo was quoted as saying in a meeting.
“The effects of economic growth should be distributed equally to SMEs and ordinary citizens,” he said.
The latest remarks by Lee and GNP lawmakers have sparked a backlash from business and political circles, which accused the government of political meddling and populist policies.
“Pressuring large companies to invest aggressively would backfire and endanger the economy ... should their investment fail to pay off, will the government take responsible for that?” Lee Hahn-koo, a GNP lawmaker, said in a radio interview on Monday (July 26).
The Federation of Korean Industries, South Korea's biggest business lobby group, said on Monday it is “sorry” for the latest remarks by Lee.
“Large companies played the biggest roles in the country’s overcoming the economic crisis. But the government is trying to sway public opinion against large companies,” an FKI official said.
He also noted that large businesses kept jobs despite the harsh economic environment, while their overseas peers carried out massive layoffs.
Big business are expected to gradually increase investments and jobs, after posting stellar results in the first half of this year, he added. Lee, former chief executive of Hyundai Construction and Engineering, has pushed pro-business polices such as tax cuts and deregulations, in a bid to spur investments, job creation and boost the economy.
However, the government has criticised the businesses for falling short of living up to their social expectations.
The administration has also stepped up policies to support SMEs and ordinary citizens following the dismal election results.
Financial authorities on Monday launched a loan programme for those with low-credit ratings, while Lee ordered his Cabinet to come up with plans to foster “mutual growth” between big firms and SMEs.
Under the “sunshine” loan programme, savings banks nationwide will provide loans at interest rates of early 10 per cent, where the rates at non-bank financial firms and illegal lenders are more than 30 per cent.
In December last year, the government also began to provide microfinance loans for self- employed people earning low incomes. Samsung Group, Hyundai-Kia Automotive Group and other large businesses participate in the “smile micro-credit bank” scheme.
