South Korean President Lee vows to ease excessive penalties on corporate activities

Seoul, July 30 (IANS) South Korean President Lee Jae Myung pledged Wednesday to launch a government task force to explore ways to ease excessive penalties on corporate activities in a bid to help reduce regulatory hurdles and boost investment.

Lee outlined a series of measures for what he described as a "pragmatic, market-oriented" government, including easing outdated regulations and limiting excessive penalties, while encouraging companies to enhance shareholder value.

"It is time we should address concerns that breach of trust charges are being overly applied in ways that hinder business activity," he said at a meeting of an emergency economic review task force.

"To ensure that corporate management activities are not stifled by excessive economic punishments, the government will immediately launch a task force to rationalise such measures."

Acknowledging growing concerns among business leaders over the risk of criminal punishment, Lee said the government will pursue legislative and regulatory reforms during the upcoming regular session of the National Assembly.

To foster new engines of growth, he also called for the swift creation of a 100 trillion-won ($72.4 billion) public-private fund to invest in cutting-edge industries, including artificial intelligence and renewable energy.

He also emphasised the importance of balanced regional growth, noting the negative effects of the concentration of investment and resources in the Seoul metropolitan area, Yonhap news agency reported.

His remarks came as South Korean companies are facing growing pressure to strengthen corporate governance following the recent enactment of the Commercial Act, which expands the fiduciary duties of corporate board members to all shareholders.

The Lee administration is also pushing to pass the Labour Union Act, commonly known as the "yellow envelope law," aimed at broadening labour protections and restricting companies from seeking damages for legitimate union activities. The bill, previously vetoed by former President Yoon Suk Yeol, has reemerged as a key policy initiative under the Lee government.

Adding to corporate concerns, the government plans to raise the top corporate tax rate back to 25 per cent from 24 per cent amid heightened trade uncertainty fueled by US President Donald Trump's aggressive tariff policy.

During the meeting, Lee urged the government to "drastically restructure" spending on inefficient projects and mandatory expenditures when drafting next year's state budget while ensuring sufficient funding for key policy priorities, according to Kim Yong-beom, the presidential chief of staff for policy.

"President Lee stressed it is part of the process of normalising fiscal management so that government finances can serve as a stimulus for economic recovery at a time when even normal fiscal operations have become difficult," Kim told reporters.

--IANS

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