[Expectations for the 22nd National Assembly] 68% of Top 50 Companies Request Increased Tax Credits and Subsidies

Our Newspaper Conducts Survey of 50 Major Companies
7 out of 10 Companies Say "Government Support Needed"
Companies Thirsty for Regulatory Improvement... 74% Say "Regulations Must Be Eased"
Whether Opposition Parties with Over 180 Seats Can Realize This Remains to Be Seen

Among the top 10 domestic companies, 7 hope for ‘regulatory improvement’ in the 22nd National Assembly. Since reform tasks have been stalled for years under the previous administration, companies are urging bold deregulation to revitalize the economy.

Democratic Party of Korea leader Lee Jae-myung participating in the National Assembly plenary session vote. [Image source=Yonhap News]

According to a survey conducted by Asia Economy from the 29th of last month for a week targeting the top 50 domestic companies ahead of the 22nd general election, 74% of the responding companies identified ‘improvement of regulations on corporate activities’ as the most desired legislative agenda.

42% of the respondents demanded ‘expansion of tax credits and reduction of corporate tax,’ followed by calls for strengthened subsidies (cash support) at 26%, and legislation to resolve judicial risks for management at 8%.

Companies also pointed to ‘expanding the discovery of killer regulations’ as a policy task that must be addressed in the 22nd National Assembly. The proportion of companies urging not only agenda setting but also concrete actions reached 62%. This was followed by discussions on inheritance tax reform (36%), easing regulations on internal corporate transactions (28%), and relaxation of the separation of banking and commerce (8%).

The reason companies ranked deregulation as the top priority for the 22nd National Assembly is due to concerns that economic vitality has declined as various reform efforts have stagnated. Overseas economic research institutions are also urging measures such as strengthening labor market flexibility, expressing concerns about Korea’s long-term low growth.

However, with the opposition parties including the Democratic Party of Korea securing more than 180 seats in this general election, there is uncertainty about how much the companies’ demands for regulatory reform will be reflected. Out of a total of 300 seats, the Democratic Party of Korea and the Democratic Union won 175 seats combining constituency and proportional representation, and the Justice Innovation Party, classified in the same camp, secured 12 seats. As a result, at least 187 opposition lawmakers can cast votes in agreement during major policy legislation processes. According to Korean parliamentary law, if more than 180 seats move together, they can exercise powerful authority to pass almost all bills except constitutional amendment legislation requiring over 200 votes and presidential impeachment proposals. They can secure the Speaker position, designate fast-track bills, or terminate unlimited debate (filibuster) by minority parties after 24 hours.

Various ‘corporate tax cut’ policies that the government and ruling party intend to promote are also unlikely to be guaranteed legislation. The government had planned to expand tax credit measures for key industries such as semiconductors before the general election, but it is expected to face difficulties if opposed by the opposition in the National Assembly. A senior business official said, "We have no choice but to communicate more actively with the opposition."

Companies also unanimously agreed on the need for low birthrate support measures. It is interpreted that more companies have recently been considering childcare support for their employees. More than half (54%) of the responding companies hoped the National Assembly would support a ‘childcare helper budget.’ There were also considerable demands for strengthening parental leave (40%), supporting childbirth costs (34%), and additional installation of daycare centers (12%).

The survey included 50 companies such as Samsung Electronics, SK Hynix, LG, and Hyundai Motor. Respondents were allowed to select up to two answers for multiple-choice questions.