Debate erupts over state intervention to curb price hikes

• Published date: 05 March 2023
• Publication title: The Korea Times

The Yoon Suk Yeol administration has sparked a controversy over its repeated intervention in markets intending to curb rising commodity prices.

Critics point out that government intervention contradicts Yoon's campaign pledge to protect the free market economy. They raised suspicions that the administration's recent moves to pursue bigger government are intended for the ruling People Power Party to win in the general elections in April next year.

In contrast, supporters defended the government, claiming that its policies will resolve the market distortions caused by oligopolistic structures.

After public sentiment worsened over the rapid rise in heating costs earlier this year, the government began to accelerate its efforts to stabilize commodity prices by meddling in the market.

In February, the presidential office announced that the government would moderate the hike in electricity bills and energy costs, while freezing other public utility charges during the first half of this year. Municipal governments also delayed their planned public transportation fare hikes at that time, in line with the central government's stance.

As a result, concerns have grown further over the cumulative losses of Korea Electric Power Corp. (KEPCO) and Korea Gas Corp. (KOGAS). As of the end of last year, KEPCO's cumulative operating loss reached 33 trillion won ($25 billion). KOGAS had about 9 trillion won of uncollected gas bills as of the end of last year.

The president, however, put more emphasis on lightening the burden shouldered by low-income households, who are already suffering from soaring commodity prices.

"The government will take care of low-income households by having every government policy focus on the livelihood of the public," Yoon said on Feb. 15.

War on oligopolies

When Yoon ordered the stabilization of public utility bills, he also sent warnings to banks and telecommunication firms, both of which have benefited from their oligopolistic hold over markets. Stressing the public duties of banks and telecommunication firms, which he said were able to thrive due to the government's approval of licenses, the president urged them to voluntarily join efforts to share the burden.

"They have maintained their oligopolistic holds, based on their licenses given by the government," Yoon said at that time, even attracting support from Rep. Lee Jae-myung, the chairman of the main opposition Democratic Party of Korea.

In response, telecommunication firms decided to provide their...