Ministry of SMEs and Startups Cuts Regulatory Costs by 290 Billion KRW for 80,000 Companies through Regulatory Impact Assessment

[Asia Economy Reporter Kim Jong-hwa] The Ministry of SMEs and Startups has been able to reduce regulatory costs by approximately 290 billion KRW annually for about 80,000 small and medium-sized enterprises (SMEs) and small business owners by preemptively blocking the legalization of newly established or strengthened regulations.

On the 21st, the Ministry announced that through this year's SME Regulatory Impact Assessment, it reviewed 1,185 newly established or strengthened regulations from various ministries and submitted 32 modification suggestions, of which 21 were improved.

The "SME Regulatory Impact Assessment" is a system whereby the Ministry of SMEs and Startups reviews the impact on SMEs and small business owners when central administrative agencies establish or strengthen regulations, in accordance with Article 7 of the Framework Act on Administrative Regulations, to preemptively block the legalization of unreasonable or excessively burdensome regulations.

According to the regulatory cost analysis results from the Regulatory Impact Assessment Center of the Korea Institute for Startup & Entrepreneurship Development for the 21 improved cases this year, it is expected to reduce regulatory costs by about 290 billion KRW annually for approximately 80,000 SMEs and small business owners. Since the current government took office, it is estimated that a total of 934.4 billion KRW in regulatory costs have been saved.

Analyzing the cost-saving effects by year shows: from May to December 2017, 1,738 companies saved 12 billion KRW; in 2018, 32,408 companies saved 134.2 billion KRW; in 2019, 60,191 companies saved 254.4 billion KRW; in 2020, 233,562 companies saved 243.3 billion KRW; and in 2021, 81,166 companies saved 290.5 billion KRW.

Additionally, although it is difficult to measure the regulatory cost reduction effect, improvements such as ▲simplification of administrative procedures ▲improvement of administrative disposition standards ▲postponement of regulation application timing ▲clarification of regulatory content are expected to enhance regulatory compliance for about 900,000 SMEs and small business owners and reduce managerial uncertainties.

The SME Regulatory Impact Assessment system, benchmarked after the U.S. Regulatory Flexibility Act, has been in operation since 2009. The U.S. Small Business Administration (SBA) announced that through eight regulatory improvements during the 2020 fiscal year (October 2019 to September 2020), it saved approximately 2.7 trillion KRW (2.259 billion USD) in regulatory costs.

Cho Kyung-won, Policy Planning Officer and Head of the Regulatory Reform Task Force at the Ministry of SMEs and Startups, said, "With the prolonged COVID-19 pandemic leaving SMEs’ foundational strength depleted, cost reduction through regulatory reform is as important as financial support," adding, "We plan to continue actively conducting SME Regulatory Impact Assessments to ensure that newly established or strengthened regulations from each ministry do not become a heavy burden, thereby supporting the improvement of the business environment for SMEs and small business owners."

This content was produced with the assistance of AI translation services.