[The Editors' Verdict] Suggestions to End the Exclusion of the FKI

Repeated Exclusion Even Under a Conservative Government
Secretariat Reform and Lowering Entry Barriers Needed
Bold Moves Required, Including Electing a Younger Chairman

The Federation of Korean Industries (FKI) has turned on its emergency lights. The FKI, which is searching for a new leader, has publicly taken action for the first time by forming a recommendation committee. The baton has been taken by Lee Woong-yeol, Honorary Chairman of Kolon Group. Chairman Lee has full authority to find a presidential candidate and plans to have the final selection at the regular general meeting. This is a different method from the past, when the FKI vice chairmen unanimously endorsed a single candidate who was then elected at the regular general meeting.

This selection method was unexpected even earlier this year. The position of FKI chairman, once held by prominent conglomerate heads such as Lee Byung-chul of Samsung Group, Chung Ju-yung of Hyundai Group, Koo Ja-kyung of LG Group, and Choi Jong-hyun of SK Group, has become a headache since the 2000s. Whenever a new chairman needed to be found, each group company would give various reasons to decline, saying "Our chairman is having a hard time." The fact that Chairman Huh Chang-soo set the record for the longest tenure of 12 years was largely due to this. It was expected that a similar scene would unfold at this year’s general meeting. However, the FKI has changed.

Why suddenly? It is likely because the sense of crisis is greater than ever. The "FKI passing" that followed the progressive Moon Jae-in administration like a label was actually understandable. But the problem is that this exclusion has been repeated even under the conservative Yoon Suk-yeol government, which emphasizes pro-business policies. In the early days of the Yoon administration, the FKI participated in economic meetings led by the presidential office, but it was excluded from the recent UAE and Davos Forum trips. An official from the government, whom I met recently, said that this exclusion was due to the Yoon administration’s economic and social philosophy, which does not align with the FKI, still seen as an outdated organization.

After the political scandal in 2017, the FKI proposed an innovation plan focused on eradicating collusion between politics and business. However, aside from organizational restructuring, there was no significant change. The superficial reason was that under the Moon administration, where it was treated like an invisible entity, there was nothing it could do, but it seemed to be waiting for the storm of the progressive government to pass. It was as if they believed that the status could be restored once the government changed to a conservative one. But that was just an illusion.

Milton Friedman, the American Nobel laureate in economics, said, "Only a crisis produces real change." The current tense sense of crisis within the FKI is the last chance to change. The solution is clear. Although it is an organization representing large corporations, it should transform into one that proposes measures everyone can agree on. This does not mean grandly turning into a think tank like the Heritage Foundation in the U.S. The starting point is reforming the secretariat. Since Vice Chairman Kwon Tae-shin has also expressed his intention to resign along with Chairman Huh, there is a need to boldly bring in external talent.

The entry barriers for members should also be lowered. The Japanese business federation Keidanren, which served as a model for the FKI’s founding, did the same. When Keidanren was excluded from the Growth Strategy Meeting immediately after the inauguration of the Suga Yoshihide Cabinet in 2020 and faced a crisis, it actively recruited information and communication technology (ICT) companies as members and focused on related measures. Through these changes, Keidanren’s status gradually recovered.

A chairman who receives full support must also emerge. It does not look good to demand innovation while leaving the chairman selection to the recommendation committee chair. It does not have to be a chairman from the top 10 conglomerates. Creating an atmosphere where a young chairman who can lead innovation can be boldly nominated and empowered is enough. In particular, it would be good to see the top 10 groups actively participating together.