With President Lee Jae-myung signaling that he will ease the separation of finance and industry regulations only for the artificial intelligence (AI) sector, discussions in the National Assembly are expected to pick up speed. The Democratic Party of Korea, which has stuck to the principle of separation of finance and industry out of concern over the expansion of conglomerates' financial dominance, also showed a change in stance, saying, "We need to support strategic industries."
After meeting with OpenAI Chief Executive Officer (CEO) Sam Altman the previous day, President Lee instructed officials to "review ways to ease regulations on the separation of finance and industry (the separation of financial capital and industrial capital)." With OpenAI requesting Samsung Electronics and SK hynix to supply up to 900,000 high-bandwidth memory (HBM) units per month, the judgment was that easing separation rules is necessary to raise large-scale investment capital, on the premise of safeguards to block monopolistic harms.
The ruling party is also responding in kind. Han Jeong-ae, the Democratic Party policy chief, told ChosunBiz on the 2nd, "The president's remarks are intended to support strategic industries such as semiconductors and AI, like the 150 trillion won National Growth Fund," adding, "If conditional clauses are attached, we can fully consider it." She explained, "If the presidential office first drafts a plan on how to implement safeguards to reduce monopolistic harm, the party will review it."
The Democratic Party has stipulated in its platform that it "maintains the principle of separation of finance and industry to curb undue capital concentration and enhance the rights and interests of financial consumers." This time, however, it appears to be stepping back from its previous position. Chief spokesperson Park Soo-hyun also noted, "Even if it is the Democratic Party platform, a new era requires flexible responses and insight."
The separation of finance and industry system was introduced in 1982 out of concern that if large conglomerates owned financial firms, preferential lending to affiliates or a concentration of funds could occur and distort market order. Currently, based on the Monopoly Regulation and Fair Trade Act and the Financial Holding Companies Act, in principle, large business groups with assets of 10 trillion won or more cannot have financial subsidiaries, and the voting rights of industrial capital in bank equity are limited to within 4%.
Democratic Party lawmakers on the National Assembly's National Policy Committee also agreed on the need to allow exceptions to the "principle of separation of finance and industry." They said that to inject large-scale private capital into high-tech industries such as AI, it is necessary to remove investment barriers caused by separation regulations.
One lawmaker said, "The separation of finance and industry was introduced to prevent financial capital from funneling money to specific companies, but for the development of strategic industries such as AI, we should keep the basic principle while adjusting it appropriately within a scope that does not undermine it." Another lawmaker also emphasized, "As we are a latecomer in the AI field, special measures are needed," adding, "We should apply a regulatory sandbox, such as easing the separation of finance and industry, limited to specific strategic industries."
With the shift in sentiment within the Democratic Party, talks between the ruling and opposition parties also appear likely to proceed smoothly. One lawmaker predicted, "Since the People Power Party has long argued for easing the separation of finance and industry, it may be easier to reach an agreement than on revising the Capital Markets Act."
However, financial consumer groups and some civil society organizations may strongly oppose the move, saying it could allow conglomerates to expand their financial control. The establishment of safeguards and the scope of application are expected to become key issues in the legislative process ahead. A Democratic Party official said, "We need to discuss the scope of exceptions to fit the investment projects."