[KOSPI 5000 Midterm Review] ③ Oh Ki-hyung: "After Legal and Institutional Reforms, It’s Up to Market Participants"

[Interview] Oh Ki-hyung, Chairman of the KOSPI 5000 Special Committee
"After the era of policy-driven initiatives, it will be the market's time"
Focusing on capital market reform... Also pursuing changes to treasury share tax regulations

Oh Ki-hyung, chairman of the KOSPI 5000 Special Committee of the Democratic Party of Korea, emphasized that after institutional improvements such as amendments to the Commercial Act to revitalize the capital market, the role of market participants becomes crucial.

In an interview with The Asia Business Daily on the 19th, Assemblyman Oh discussed the medium- and long-term goals surrounding the recently proposed third amendment to the Commercial Act, stating, "Once the era of policy-driven initiatives passes, it will be the market's time." The KOSPI 5000 Special Committee leads discussions and legislative activities within the party to revitalize the capital market, including amendments to the Commercial Act. This is why attention is focused on Assemblyman Oh's blueprint, as he is responsible for outlining these policies.

On the 19th, Oh Ki-hyung, a member of the Democratic Party of Korea and chairman of the KOSPI 5000 Special Committee, was interviewed by The Asia Business Daily at the National Assembly in Yeouido. Photo by Oh Ki-hyung's Office

Assemblyman Oh explained, "Our (the committee's) consistent concern is to level the playing field," adding, "We are demanding consistency from both the political sphere and the government so that no one in the market is blindsided, and we are also saying that the market itself must play a role." He further stated, "Institutional changes may help the price-to-book ratio (PBR) reach 1.8, which is the average for emerging markets, but beyond that, further progress cannot be made without voluntary changes from market participants themselves."

On the 24th, Assemblyman Oh introduced the third amendment to the Commercial Act, which includes the principle of mandatory cancellation of treasury shares. He explained, "Treasury shares are essentially the same as unissued shares, because the company issues shares for cash and then buys them back, effectively reclaiming shareholder rights for cash," adding, "When treasury shares are released outside the company, the same regulatory procedures as new share issuances should apply."

Assemblyman Oh is concerned that companies are treating treasury shares as assets that the board of directors can handle at their discretion. He criticized this practice, saying, "Companies are showing an absurd attitude by freely giving treasury shares to their related parties." Assemblyman Oh also mentioned the need for tax law reform, pointing out, "Although treasury shares are treated as capital in accounting, there is a practice of handling them differently for tax purposes, as if they are not capital."

On the 19th, Oh Ki-hyung, a member of the Democratic Party of Korea, is responding to interview questions at the National Assembly in Yeouido. Photo by Oh Ki-hyung's Office

Regarding the separate taxation of dividend income, he drew a clear line, saying, "Tax policy is not at the core of capital market revitalization." Assemblyman Oh stated, "Tax neutrality means that taxes should not excessively influence the competitiveness of goods and services traded in the market."

However, he added, "Since there is already a prevailing perception in the market regarding the separate taxation of dividend income, I will not strongly oppose or fight against it in the opposite direction." While the government's proposal sets the top dividend income tax rate at 35%, the party and government have indicated that reasonable adjustments are needed. The ruling and opposition parties and the government are currently discussing lowering the rate to 25%.

Regarding the financial investment tax, Assemblyman Oh said, "It is a tax system suitable for diversified investment," explaining, "If you invest in products A, B, C, D, and E, there will be both gains and losses, but tax is only imposed on the final net profit." He added, "Basically, if assets are functioning meaningfully (generating real value and returns), we should not treat the financial investment tax as a taboo subject."