FKI: "Private SPCs Should Be Excluded from Business Groups"... Delivered Regulatory Improvement Tasks to the Government

Proposals for Corporate Regulation Improvements in 2023
10 Cases in Construction and Location, 4 in Fair Trade, 3 in Environment and Safety, Total 31 Cases

The Federation of Korean Industries (FKI) announced on the 25th that it delivered the '2023 Regulatory Improvement Tasks' to the government on the 24th. Through collecting opinions from member companies, the FKI proposed a total of 31 regulatory improvement tasks, including 10 in the construction and location sectors, 5 in insurance, 4 in fair trade, 4 in energy, 3 in environment and safety, 3 in distribution, and 2 in investment.

First, regarding regulations in the fair trade sector, the FKI proposed a total of 4 tasks, including excluding private investment special purpose companies (SPCs) from the scope of business groups and improving regulations on joint investment by grandchild subsidiaries. The Fair Trade Commission includes private investment SPCs, which are outside the control and supervision of the competent authority and beyond the control of the business group's head, within business groups. Since private investment SPCs included in large business groups are subject to various regulations, this acts as a factor hindering construction companies belonging to large business groups from participating in private investment projects. Additionally, the FKI proposed regulatory improvements to allow subsidiaries under holding companies to jointly invest in grandchild subsidiaries. Under the current Fair Trade Act, joint investment by multiple subsidiaries in grandchild subsidiaries is prohibited, making it difficult to attempt diverse investments within a holding company system. Major overseas countries such as the United States, Europe, and Japan do not prohibit joint investment by multiple subsidiaries.

In the environment and safety sector, three tasks were presented, including the realization of the obligation for security personnel to board during the transportation of explosives. Under the current Firearms and Explosives Control Act, when transporting explosives, in addition to the driver and person responsible for transportation, security personnel must board the vehicle. However, the aging of security personnel is severe, and it is difficult to replenish personnel due to labor shortages across the industry. Therefore, the FKI proposed improving related regulations so that if digital equipment is installed to ensure safety, separate security personnel would not be required.

In the construction and location sector, 10 tasks were proposed, including the relaxation of installation standards for axle load scales at construction sites. Axle load scales, which measure the weight of vehicles, must be installed at construction sites above a certain scale. However, installation is exempted at water supply and sewage and city gas facility construction sites due to practical constraints, but for heat transport pipe construction sites, which have similar conditions, installation is mandatory. The FKI argued that for heat transport pipe construction, since the sites are scattered along roads making installation of axle load scales practically difficult, the obligation should be exempted.

Choo Kwang-ho, Head of the Economic and Industrial Headquarters at the Federation of Korean Industries, emphasized, "In an uncertain economic environment and with intensifying global competition, unreasonable regulations should not hold back companies," adding, "It is necessary to support corporate management activities by improving regulations that are outdated or do not fit current realities."

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