February Extraordinary National Assembly Session Opens... Financial Sector on High Alert Over Major Financial Bills (Comprehensive)

Start of Full-Scale Discussion on Profit-Sharing System Bill
Main Focus on Passage of Win-Win 3 Laws

[Image source=Yonhap News]

Heated Debate Expected Over Profit-Sharing System Bills Including the Social Solidarity Fund Act

[Asia Economy Reporter Seong Giho] With the February extraordinary session of the National Assembly convened, the financial sector's attention is turning to the legislature. This is because bills related to the recently hot topic of the 'profit-sharing system' are entering full-scale discussions. Previously, bills that imposed burdens on the economy, such as the three corporate regulation laws (Commercial Act, Fair Trade Act, Financial Group Supervision Act) and labor laws, also passed the National Assembly floor tailored to the ruling party's preferences, deepening concerns within the financial sector.

According to political and financial circles on the 1st, the most controversial bills expected in this extraordinary session are the 'Three Coexistence Solidarity Acts' aimed at resolving polarization caused by COVID-19: the Loss Compensation System, the Cooperative Profit-Sharing Act, and the Social Solidarity Fund Act to activate the profit-sharing system. The ruling party has already decided through a policy party meeting on the 27th of last month to pass 103 bills during this session. Within the ruling party, it is generally believed that the opposition party will find it difficult to oppose these bills aimed at COVID-19 damage relief until the end.

Among the Three Coexistence Solidarity Acts, the bill that the financial sector reacts to most sensitively is the 'Social Solidarity Fund Act.' This is because the level of participation in the profit-sharing system by the financial sector will be determined depending on the passage and content of this bill. Since the 21st National Assembly, a total of five bills under different names have been proposed.

The Democratic Party has established a basic policy to pass the Social Solidarity Fund Act but is still discussing the specific contents of the bill. However, the general view is that the 'Partial Amendment to the Act on Support for Financial Life of Ordinary People' proposed by Representative So Byeonghun will form the main framework. So's bill proposes establishing the Citizen Finance Promotion Agency, which will use private resources such as financial companies' contributions, corporate donations, dormant deposits, and government resources to provide credit guarantees and loans. This contains the core of the profit-sharing system in the financial sector that has recently begun in political circles.

Ruling Party Plans to Handle Controversial Bills in February Extraordinary Session

The fact that such fund formats have been successfully activated is another factor increasing anxiety in the financial sector. The 'Large and Small Business Win-Win Cooperation Fund' started in 2013 with a contribution of 226 billion KRW but has grown nearly fivefold to 1.3499 trillion KRW as of 2021 in just eight years. Although it began under the name of 'voluntary donations,' most of the country's leading companies, including Samsung and Hyundai Motor Company, now participate.

The 'Cooperative Profit-Sharing Act,' which shares profits between COVID-19 beneficiary and affected industries, is also controversial. The bill, based on the 'Large and Small Business Win-Win Cooperation Promotion Act' proposed by Representatives Jo Jeongsik and Jeong Taeho respectively, originally focused on profit distribution between large and small businesses. However, recently, the ruling party expanded the scope to include platform companies, putting fintech firms on alert.

The partial amendment to the Electronic Financial Transactions Act proposed by Democratic Party Representative Yoon Gwansuk in November last year is also scheduled for full discussion in the February extraordinary session. This bill includes the introduction of new licenses for MyPayment and comprehensive payment settlement service providers. If passed, big tech (large information and communication companies) and fintech firms based on data will become 'quasi-banks,' able to perform most banking operations except deposits and loans.

This content was produced with the assistance of AI translation services.