The Democratic United Party (DUP), South Korea’s main opposition party, has pledged to rein in the country’s huge business conglomerates, in some of its most explicit policy comments ahead of parliamentary elections scheduled for April that opinion polls suggest the party could win.
Lee Yong-sup, head of the party’s policy committee said in an interview that it also planned to boost spending on the poor an increase taxes on the rich.
The DUP leads the governing New Frontier Party by about 38 percentage points to 33, according to the most recent opinion polls, and looks set to retake parliament and reverse five years of deregulation.
The top 30 chaebol or business conglomerates such as Samsung Group or Hyundai, had net profits equivalent to 40 percent of government spending in 2010, and critics charge that they stifle competition in Asia’s fourth-largest economy.
“The chaebol must be reformed,” Lee said.
“We aim to achieve economic democratization by which large and small companies, the rich and the poor can pursue co--prosperity,” he added.
South Korean President Lee Myung-bak, whose mandatory single term will end after presidential polls in December, scrapped rules that limited the amount chaebol subsidiaries could invest in each other, something the DUP will re-impose, capping investment at 40 percent of assets.
At the same time as limiting the role of the chaebol, the opposition also plans to reverse widening income gaps that have prompted growing social discontent and helped hand the governing party a string of electoral losses, including in the recent Seoul mayoral election.
The party plans to increase taxes on the top 1 percent of income-earners to fund its plan to boost spending on the poor by about 33 trillion won (US$29.23 billion) in each of the next five years.
“The tax hike on the 1 percent super-rich will give us money to raise welfare spending without raising tax on the 99 percent,” said Lee Yong-sup, 60, who twice served as a Cabinet minister in the previous government that was in power until early 2008.
The party also wants to unravel a “weak won policy” that has helped keep South Korea’s export engine growing at full throttle, but hit poorer people because of higher imported inflation.
“The Lee Myung-bak government has carried out intervention [to keep the won down] quite a lot, but that helped only the big exporters while hurting the small businesses and consumers,” Lee Yong-sup said.
Data from the Bank for International Settlements shows the won has weakened by 40 percent against the yen over the past four years on an inflation-adjusted basis and by 17 percent against the New Taiwan dollar.
Japan and Taiwan are South Korea’s main export competitors across a range of products.
However, Lee Yong-sup said the party was not all “anti-business” and would not arbitrarily scrap a controversial free trade agreement with the US, but would seek to renegotiate some aspects of it.