[Regulatory Republic] "In Step with the Era of Industrial Convergence, Paradigm Shift Needed to 'Ex Post Regulation'"

<1>Government Hinders Technology Development and Global Competition
Interview with Yoo Hwan-ik, Head of Corporate Policy at the Federation of Korean Industries
Past Focus on 'Truck Forklift' Regulations Blocked New Business Growth
Priority on Regulations Prevents Creating New Future Industries with 'Positive Regulation'...Urgent Shift to 'Negative Regulation' Needed

Yoo Hwan-ik, Head of Corporate Policy Office, Federation of Korean Industries

[Asia Economy Reporter Haeyoung Kwon] "It is urgent to shift from the so-called 'positive regulation,' which requires explicit permission by law to enter new industries, to 'negative regulation,' which in principle imposes no regulations."

On the 10th, Yoo Hwan-ik, Director of Corporate Policy at the Federation of Korean Industries, stated in an interview with Asia Economy, "In Korea, companies hesitate to create new industries because they worry whether they violate existing laws, making it difficult for new industries to emerge."

He added, "In countries like the United States, the system regulates only after problems arise, allowing many previously nonexistent industries to emerge. As the global trend of industrial convergence breaking down barriers between sectors accelerates, we too must first ease regulations to encourage the creation of new industries and then shift the paradigm to post-regulation."

The 'truck forklift' developed in 2008 by the SME SM Heavy Industries exemplifies how positive regulation in Korea blocks the emergence of new products and services. The truck forklift, which has a truck front and forklift rear, faced unclear approval standards under relevant laws on whether it should be classified as construction machinery or an automobile. Consequently, it was unclear which government department had jurisdiction, leading to delays in approval as each ministry postponed decisions. Ultimately, it took over two years to approve the truck forklift product, during which time overseas buyers stopped inquiries, resulting in losses reportedly amounting to tens of billions of won for the company.

Director Yoo emphasized, "The truck forklift controversy would not have occurred under a negative regulation system. The law should specify only what is prohibited, and all other activities should be allowed by lifting regulations."

He pointed out that conflicts between platform-based new industries such as fintech and shared vehicle services and traditional industries are inevitable, but the government is trying to resolve these conflicts solely through platform regulations. Yoo argued, "Applying existing industry regulations to new industries is a completely reductionist approach. Given the continuous emergence of new platforms, it is preferable to ease regulations on existing industries to create an environment where they can compete on equal footing with platforms." He stressed the need for 'minus regulation,' which relaxes regulations on traditional industries to the level of new industries, rather than 'plus regulation,' which applies traditional industry regulations to new industries.

Looking at current domestic regulations such as online eyewear sales, shared vehicle services, and bans on big tech's online financial product comparison and recommendation, most fall under plus regulation. For example, Uber, a shared vehicle service, re-entered the domestic market through a loophole but had to cease operations in 2013 due to opposition from the taxi industry. At that time, prosecutors indicted Uber on charges of illegal passenger transport, and the National Assembly passed a law banning Uber's operations.

He also emphasized the need to establish a social consensus body capable of accepting and resolving conflicts between existing and new industries.

He advised, "With the current regulation-centered approach, new future growth engines cannot emerge in Korea, and in a borderless era, this will ultimately result in foreign platform companies like Amazon taking over our market. We must acknowledge and accept conflicts arising from new industries and focus on establishing structures to resolve these conflicts." The level of decision-making in conflict mediation bodies depends on participants and consultation methods, but so far, they have been temporary committees led by the government and ruling party. Yoo said, "Current conflict resolution bodies between new and traditional industries include only stakeholders and the National Assembly, but expert groups should be included. Instead of new platform regulations, we should acknowledge conflicts, efficiently mediate them, and seek ways to remove regulations."

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