A private think tank Wednesday urged the government to lift restrictions on big business groups, saying such limits undermine the competitiveness of South Korean business conglomerates competing fiercely abroad.
A total of 57 business groups with over 5 trillion won (US$4.45 billion) in assets and their 1,980 affiliates are subject to tough surveillance by the government and are barred from making equity investments among themselves or from offering loan guarantees to each other.
In the latest report, the Korea Economic Research Institute (KERI) cited the declining proportion of sales of the country's 21 biggest conglomerates, or chaebol, to total domestic sales as one of the reasons to ease restrictions.
The ratio dropped to 28.3 percent in 2016 from 29.6 percent in 2015, 31.4 percent in 2014 and 33.0 percent in 2013, according to the report by the think tank, which was set up by the Federation of Korean Industries.
The comparable figure for the country's 10 largest chaebol fell to 24.3 percent in 2016 from 28.0 percent in 2013.
The ratio for the 21 biggest conglomerates in 2016 further dropped to 20.3 percent once sales abroad are excluded, according to the report.
"The restrictions on big businesses are not suitable for South Korea as our big businesses are growing as global corporations, and we have an open economy which is dependent heavily on exports," KERI said. "We need to reconsider such restrictions just like Japan, which abolished them in 2002."
Hwi Won firstname.lastname@example.org
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