Research and analysis

South Korea’s war on regulation – March 2014

Published 16 April 2014

This research and analysis was withdrawn on 18 June 2014

This document is no longer current.

On 21 March President Park held a seven-hour televised roundtable on deregulation, the centrepiece of her three year economic plan. Almost all Government ministers and Blue House senior officials sat through the whole event. In the meeting, she heard the views of ministers, officials, businesses and experts. As the only foreigner to be invited, the Ambassador was asked to share the UK’s One-in Two-out model for better regulation.

0.1 Red tape hampering investment

In 2013 Korea ranked 95th in the regulatory burden category of the WEF’s Global Competitiveness Report. Regional rivals Singapore, Hong Kong and Taiwan were 1st, 5th and 15th respectively. Heavy regulation, combined with intrusive and unpredictable enforcement, means new businesses and SMEs struggle; the financial sector is among the worst performing in Asia. It also has implications for levels of foreign investment.

0.2 Deregulation: the key to job creation

In her New Year’s speech President Park declared “war on regulation”, as the key to investment, job creation and economic growth. At the round table businesses large and small were given the opportunity to highlight regulatory burdens. They were forthright in their views, encouraged by the President. The government set out its proposals to lighten the burden including:

• introduction of a UK type one-in one-out system: ‘cost-in cost-out’ in 2015;
• cutting the number of registered business regulations by 10% within a year and 20% by 2016;
• expanding the use of ‘sunset clauses’ to speed up removal of redundant regulations;
• ministries to report all unregistered regulations by June 2014.

The following day Ministers gathered to discuss follow-up and announced they would review all problematic regulation raised by business and the public within three months.

0.3 The hard work is still to be done

The event attracted widespread headline media attention. This televised round table was the first such public debate in Korean history, reflecting the importance President Park places on deregulation. And it had the desired effect: the issue is now at the top of the agenda of all government departments. Businesses and experts welcomed the heavy emphasis placed on better regulation, including the proposed practical measures. However, many were concerned that shifting to a culture of better regulation would be challenging. A system of performance evaluation would be needed to reward officials who put customers ahead of administrative convenience.

Burdensome regulation is the most frequently cited market access issue for UK businesses in Korea. As a result of sustained engagement by this Embassy we are now at the heart of policy development, well placed to achieve real impact and make a difference to UK firms’ bottom lines.

0.4 Disclaimer

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