S. Korean government launches TF for regulation reform

The South Korean government referred to the crucial regulations that hinder corporate investment as ‘killer regulations’ at a meeting for the second half of the year’s economic policy directions. The government intends to remove even a few regulations that prevent corporate investment. A task force of relevant ministries was launched on Wednesday for killer regulation reform under the leadership of the Office for Government Policy Coordination. While what regulations are considered killer regulations has not been mentioned specifically, it was a showcase of the government’s determination to accelerate regulation reform in the second half of the year.

However, it is still concerning that the upcoming regulation reform will simply stop at an attention-catching slogan. Regardless of political orientation, previous administrations proposed regulation reforms as one of the main national political agendas from the beginning of their terms but fell short of actual results. They are only left with slogans – ‘utility poles’ for Lee Myung-bak, ‘thorns under fingernails’ for Park Geun-hye, and ‘red flags’ for Moon Jae-in. Some administrations actually added more new regulations than what was abolished toward the end of their terms, even though they called for deregulation.

The current administration also referred to regulations as ‘sandbags,’ ‘stones in shoes,’ etc., emphasizing regulation reform. However, deregulation for remote medical service, etc. has not even taken a step forward, and irrational regulations experienced on business sites are still prevalent. According to the Korea Chamber of Commerce and Industry’s research on deregulation progress, only nine percent of regulations that were pointed out for the need of improvement four years ago in the high-tech industries were actually improved as of April this year.

The reason why the previous administrations failed to reform regulations was that they faced a number of issues after taking office and lost motivation and drive for deregulation. The deep-rooted tendency to rely heavily on regulations among public officials is also an issue. Public officials created new regulations to exercise their power and excessively introduced ‘shadow regulations,’ such as administrative maps, which held down businesses.

A realistic solution for South Korea to escape the low-growth trend with below-two percent growth rates is implementing a regulation reform to encourage corporate investment and drive growth. A full-scale switch from positive to negative regulations should be made by applying minimum regulations only where necessary. Rigorous efforts to communicate with and convince the opposition party for urgent legislation on regulation reform should also be made. The government should showcase its strong determination for successful regulation reform throughout its term. Fancy words alone won’t be enough to complete deregulation.