[Asia Economy Reporter Seulgina Jo] "I don't know the clear criteria. Are all companies that simply made money supposed to pay?" "The ruling party is dividing companies into COVID-19 beneficiaries and victims."
The ruling Democratic Party of Korea is pushing forward with the so-called 'COVID-19 Profit Sharing System,' causing distress among IT and platform industries such as Naver and Kakao, which have become major targets. This is because the innovation investments and win-win efforts that companies have made over several years are being ignored, creating an atmosphere of virtually 'forced profit recovery.'
Kim Jaehwan, Policy Director of the Korea Internet Corporations Association, which includes internet companies like Naver and Kakao, said on the 14th, "It looks like they are only trying to strengthen platform regulations from the beginning of the year, so I am worried," adding, "I am concerned that it will ultimately have the adverse effect of losing the momentum for innovative growth."
Although the principle of voluntary participation by the private sector was emphasized, the general view is that it will be carried out semi-coercively targeting Korean companies. An industry insider lamented, "If you don't participate in what the ruling party demands, you get targeted."
There are also criticisms that the criteria for the profit-sharing system are ambiguous. Another IT conglomerate official argued, "Does this apply to all companies that made profits after the outbreak of COVID-19?" and "Regardless of this, the achievements or efforts that companies have accumulated are being ignored." These are the reasons why criticism is mounting inside and outside the industry that 'the ruling party is dividing companies into COVID-19 beneficiaries and victims.' Some also question how representative global beneficiary companies like Google and YouTube will be handled. For these companies, even domestic sales are not accurately tracked.
Companies are clearly bewildered, fearing they might be labeled as bad companies that do not fulfill their social responsibilities. There are also blatant complaints that IT and platform companies, instead of being recognized for their innovation efforts undertaken with risks, are being dismissed as bad companies that only take various government supports without fulfilling social responsibilities.
Director Kim said, "It is true that many online companies have benefited, but they have not done nothing," adding, "The intention is good, but there are regrets about the way the profit-sharing system is being promoted. Citizens might end up perceiving 'internet companies = evil'." For example, portal sites like Naver and Daum (Kakao) have actively cooperated with social disasters by displaying government measures on their main screens, which can be considered their business territory, to help end the pandemic. If converted into money, this amounts to hundreds of billions of won. Numerous win-win programs such as donations through various channels, commission reductions, and support measures for small business owners have also been implemented.
Although the purpose is to resolve the polarization caused by COVID-19, there are concerns that the side effects will be greater in the long term. Forced profit recovery will inevitably create an atmosphere where IT and platform companies are reluctant to take risks for innovation. An industry official said, "There should be a virtuous economic cycle where companies that generate profits increase employment and investment, but this will block that," adding, "It only looks like a populist measure ahead of elections," expressing bitterness.
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
