Samsung back in favour as Moon kick-starts ‘economy’

Bloomberg

In a meeting that was unthinkable 19 months ago, South Korea’s president will this week introduce the head of the country’s biggest conglomerate to North Korean leader Kim Jong-un in Pyongyang.
The parley caps a remarkable period for Lee Jae-yong, vice chairman of Samsung Electronics Co., who since the start of 2017 has been arrested, tried and jailed before being released a year later. Meanwhile, President Moon Jae-in is finding his political fortunes tied to the company and South Korea’s other conglomerates amid
a sputtering economy, even though he swept to an election victory promising to rein in the power of the chaebol.
While close links between politicians and chaebol aren’t new in South Korea, Moon talked tough about cutting that influence before his election, a poll that only took place because his predecessor was brought down by a bribery scandal involving Lee.
With exports of semiconductors one of the few bright spots in an economy that’s showing signs of strain, the country’s reliance on its most profitable company is deepening and thus reducing regulatory pressure on Samsung.
“The government needs Samsung now,” said Chung Sun-sup, chief executive officer of corporate analysis firm Chaebul.com. “Samsung also has nothing to lose by complying.”
The president’s office and Samsung haven’t said what Lee would discuss on the trip.
The company doesn’t have any businesses in North Korea, which is subject to international sanctions.
“It is not likely that there will be MOU this time,” Yoon Young-chan, a spokesman for Moon, said. “I think there will be further discussions about economic cooperation that we just initiated. There will be no concrete results this time.”
Lee’s trip comes less than two months after he appeared at a photo opportunity at Samsung’s latest and biggest chip factory in Pyeongtaek, south of Seoul, where he met with Kim
Dong-yeon, South Korea’s finance minister. There, Samsung pushed for lower regulations on pharmaceuticals, construction of plants, mobile networks and other business areas, which the minister planned to look into, Kim said.
When Moon was elected in May last year, expectations were high that the government would force the chaebol to improve their corporate governance and reduce the power held by founding families such as the Lees at Samsung.
In a sign of how that dynamic has changed, Moon has called for easing a law that limits companies from owning a bigger chunk of a bank, generating criticism by activists that it could pave the way for chaebol families to use financial units to increase their control.
Samsung has an outsized influence on South Korea. Not only is it the biggest private employer in the country, but its flagship electronics business alone accounts for a staggering 20 percent of the nation’s benchmark Kospi index, and it has five other affiliates in the top 30.
On Tuesday, Lee and other chaebol leaders joined Moon at his third summit with the North Korean leader.
It’s the second public meeting between Moon and the Samsung boss this year after a brief handshake at the opening of an Indian smartphone factory.
The Samsung boss met with Ri Ryong Nam, a vice premier of North Korea’s cabinet.