'Empty Autonomy'... A Surge of Bills Undermining the Foundation of Capitalism

Surge of Bills on Loan Interest Reduction and Waiver in Politics
Voluntary Participation as Part of Profit-Sharing System, but Ultimately Forced by Law
Financial Sector Targeted with 'Official Arm Twist'
Experts Warn "Excessive Financial Intervention May Shake Market Economy"

The National Assembly plenary session (Photo by Yonhap News)

[Asia Economy Reporter Kwangho Lee] As the ruling party-driven profit-sharing system increasingly targets the financial sector, the pressure is mounting. Although it is premised on 'voluntary participation,' the National Assembly is continuously introducing bills that tighten regulations on financial companies, leading to criticisms that it is engaging in 'official arm-twisting.' Experts and even members within the party express concerns that excessive political intervention in finance could undermine the foundation of the market economy order.

According to the National Assembly and financial circles on the 9th, 16 members of the Democratic Party of Korea, including Representative Song Young-gil, proposed a partial amendment to the "Act on Registration of Loan Business and Protection of Financial Users." The bill requires credit finance institutions to reduce the loan interest rates for landlords who lend money secured by small business owners and commercial buildings, with the state providing interest subsidies covering 50% of the reduced amount, thereby sharing the business risk.

They stated, "Small business owners and self-employed individuals have experienced a sharp decline in sales due to the COVID-19 pandemic, but they still have to bear fixed costs such as rent and loan interest for business funds," adding, "This is not only a matter of survival and existence for small business owners and the self-employed but also a risk factor for the entire South Korean economy."

They also argued, "There is an opinion that it is unfair for only small business owners and the self-employed to bear the social losses incurred while overcoming national disasters such as infectious diseases," and "It aligns with the concept of justice that not only the state responsible for overcoming disaster situations but also all members of society and economic agents share the burden together."

A similar bill was already proposed at the end of last year under the name of Democratic Party Representative Lee Dong-joo. Known as the 'Rent Stop Act,' Lee's bill reduces the rent that tenants must pay by 100% if they are subject to a gathering ban due to COVID-19 quarantine administrative measures, and by 50% during periods of gathering restrictions. When criticized for shifting the COVID-19 damage burden onto landlords, Representative Lee also proposed the 'Tax Stop Act (Restriction of Special Taxation Act).'

Experts Express Concern Over "Serious Excessive Political Market Intervention"

Additionally, Democratic Party Representative Min Hyung-bae proposed a partial amendment to the Bank Act that would compel banks to waive even the principal of loans if self-employed individuals suffer damage from disasters such as COVID-19.

Furthermore, Representative Lee Sung-man previously proposed a bill that prohibits charging more than 50% of rent to self-employed individuals in special disaster areas or regions subject to gathering bans under the Disaster Basic Act, and Representative Yoon Jun-byung introduced an amendment legally affirming the right of self-employed individuals affected by COVID-19 to request a reduction in commercial rent.

Professor Sung Tae-yoon of Yonsei University's Department of Economics expressed concern, saying, "Excessive political intervention in finance can shake the market economy order and cause dysfunction in autonomy." Similar criticisms also come from within the party. A senior Democratic Party lawmaker worried about market confusion, saying, "I am not sure if it is right to prevent banks from collecting principal and interest on loans."

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