MarketLine Blog

President Park Impeached: Relations with chaebols could change forever

Legislation designed to curtail the strength of chaebols has traditionally failed to discover parliamentary approval; now amendments to several acts have found new impetus following the impeachment of the president. Whilst voters await the coming election, prospective candidates are seeking to assert their case for a change in how chaebols operate in the South Korean economy. However, despite the rise in support, problems will need to be overcome for lasting change to occur. Previous efforts have fallen flat; this time there is a far greater chance of success.

Moon Jae-in, currently leading the polls for the Democratic Party nomination for the presidential race, has been making vocal noises about the need to reform how chaebols are governed after the end of the Park premiership. In targeting only the biggest four chaebols, Moon is adopting different tactics to those previous politicians have advocated. Even though reform to chaebols is a common subject raised during election periods, the impeachment of a president has granted those seeking change an advantageous hand.

The impeachment of the president has been made worse by the announcement of a trial which accuses the heir to Samsung, Mr. Lee, of tax evasion, embezzlement and bribery. Collusion with the now departed president transforms the case from a conventional instance of corruption inside the exclusive chaebol club into one which threatens to change how relations are managed between business and government for the long-term future. Park Geun-hye was, as many of her predecessors were too, far too close to chaebols to be beyond suspicion. With a possible prosecution looming, the return of business as usual is hard to imagine.

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