In a radio interview on Feb. 2, Oh, the ruling party's chief negotiator on the National Assembly's Finance and Economy Committee, said of the single-stock leveraged ETF controversy: "I don't think a parliamentary investigation is necessary, nor is this a matter for a special counsel." He added, "We can debate it sufficiently through the parliamentary audit and interpellation sessions." He then revisited the proposal to overhaul the financial supervisory framework, which had fallen through during the government reorganization.
"From another angle, we have some soul-searching to do. In reorganizing the Government Organization Act, we proposed separating the Financial Services Commission into a Financial Supervisory Commission and consolidating financial promotion policy into the Ministry of Finance and Economy, but that couldn't proceed last year because of opposition party resistance," Oh said. "I think the policy separation of the financial supervision function should actually be debated more widely in society."
Oh continued: "The financial supervision function serves the stability of financial markets and consumer protection, but when proposals aimed at invigorating the market come in, the voice of financial policy — industry promotion — has at times overwhelmed it, triggering public controversy." He added, "We had the private equity fund scandal, the DLF scandal, the ELS scandal, and now this single-stock leveraged ETF affair on top of them."
The government had earlier pushed, during last year's reorganization, to convert the Financial Services Commission into a Financial Supervisory Commission and transfer its financial industry functions to the Ministry of Finance and Economy. The plan collapsed because the People Power Party held the chairmanship of the Political Affairs Committee, which handles the Government Organization Act.
Oh drew a line by describing the renewed push to restructure the FSC as "my own opinion," but said, "I intend to open a debate within the party."
Oh also urged caution on the so-called "share-price suppression prevention" measure targeting listed companies with low price-to-book ratios, included in the government's tax code revision bill. He said the approach of using the tax system to induce share-price normalization at listed companies with low PBRs has drawn criticism from both industry practitioners and investors, and that further discussion is needed. "There are no examples abroad of resolving this through tax law, so designing it is not easy and presents difficulties," Oh said. "My understanding is that it was passed to the National Assembly with the sense that more ideas need to be gathered."
Instead, he argued that capital market institutional reform, rather than taxation, is needed to normalize the value of undervalued companies. Capital market law should be overhauled so that tender offers and mergers and acquisitions targeting low-PBR companies can flourish, as with the "bear hug" mechanisms in the United States and Japan, he said.
On the real estate tax overhaul, Oh said the government's revised bill does not reflect all of the ruling party's demands. "I see it as reflecting part of what was raised at the high-level party-government consultative meeting, but not all of it," he said. "It will be refined in its final form through the National Assembly's deliberations, reflecting diverse views and expert proposals."
He said further discussion is needed in particular on the issue of single-home non-resident owners and taxation related to rental business operators. On disclosing the party's specific demands, however, he was reticent, saying, "We're in a position where we have to take responsibility for the outcome and work it out."
