Korean Peninsula

Chaebol Reform Tops Public Interest in Economic Plan

South Koreans are eager to see the new government take on the impenetrable mega-conglomerates.

By Gordon LaForge

August 01, 2017
Chaebol Flag

On Tuesday, newly-elected President Moon Jae-in released a five-year economic plan. It promised a "complete paradigm shift" that includes expanding the social safety net, increasing economic opportunity, and combating unfair business practices. That last point means reforming the chaebol, South Korea's family-run, politically-wired conglomerates. They include Korea's most lucrative brands: Samsung, LG, Hyundai, and Lotte. 

Chaebol reform was a central pledge of Moon's campaign. His predecessor, Park Geun-hye, was removed from office in part over a bribery scheme involving Samsung. Anger over the murky nexus of politics and big business continues to drive street protests and public anger.

Little wonder that in the days following the release of Moon's economic plan the piece that drew the most attention online was big business reform. On July 28 the Korean-language Wikipedia page for chaebol received the most views in its history. 

Chaebol chatter

Though public interest in big business reform is strong, actually taking on the chaebol would be difficult and risky. The conglomerates are well-connected in parliament, where Moon needs support to implement his economic agenda. 

Markets rose on the release of the government's economic plan. Predata's Economy signal, an index that captures volatility in online conversations related to the country's economy, also spiked -- a further positive sign for investors, as historically the KOSPI tends to rise in the days after the Economy signal does. 

South Korea Economy

Though investors also favorably view an effort to bring greater transparency to the chaebol, overly-aggressive reform could threaten short-term economic growth and generate destabilizing political fallout. Moon will have to balance those risks with the public expectation that he make good on his campaign pledge.