Reforming Old Regulations and Resolving Conflicts... Corporate Expectations for the New Government's Reform Agenda

Source=Korea Chamber of Commerce and Industry

[Asia Economy Reporter Jeong Dong-hoon] Nine out of ten domestic companies chose "revising outdated regulations" and "resolving conflicts of interest" as the key regulatory reform tasks that the new government should prioritize.

According to a survey conducted by the Korea Chamber of Commerce and Industry on the 13th targeting 300 domestic companies regarding the "direction of regulatory reform by the new government," 94.7% of the responding companies selected "revising outdated regulations" and "resolving conflicts of interest" as the regulatory reform tasks that the new government should focus on.

Following that, to enhance the effectiveness of the government's regulatory impact assessment, "strengthening total regulation management" (93.3%) and "expanding private sector self-regulation" (83.7%) were identified as important tasks.

"Regulatory Burden Must Be Eased... Labor-Management Systems Should Align with Global Standards"

When asked about the desirable direction of regulatory policy, 48.7% responded that the regulatory burden should be eased to the level of advanced countries, and 33.7% said that self-regulation should be expanded for exemplary companies that comply well with the law, emphasizing "easing" (82.4%). Only 17.6% responded that the current regulations should be maintained or strengthened.

Among regulatory reform tasks by sector, in the employment and labor field, 44.7% of respondents said that related systems should be revised to meet global standards to balance power between labor and management, followed by "expanding the scope of labor-management autonomous consultation" (35.3%) and "rationalizing excessive legal penalties" (20%).

In the environmental sector, 69.3% responded that voluntary regulatory compliance should be encouraged through incentives depending on compliance with mandatory requirements, which was higher than the 30.7% who said regulations should be enforced through penalties.

The Korean Confederation of Trade Unions Construction Union held a "Rally of Construction Workers' Resolution to Strengthen Punishment for Murderous Companies! Strengthen the Serious Accident Punishment Act! Urge the Enactment of the Construction Safety Special Act!" on the 20th of last month in front of the Cheongwadae Sarangchae in Jongno-gu, Seoul. / Photo by Moon Honam munonam@

In the industrial and safety sector, 46% of respondents said that the law should be amended so that workers also comply with safety obligations, the highest response, followed by 40% who said the administrative system should shift from post-penalty to prevention-centered. This seems to reflect the burden and anxiety caused by the Serious Accident Punishment Act implemented last month. <‘Improvement of the legal system focusing on user penalties’ 14%>

Regarding regulations related to large corporations, 48.7% of respondents said that regulations should be eased only in new industries and new market sectors, followed by 43% who said "complete revision of regulatory provisions not present in competing countries." <‘Maintain current policy’ 8.3%>

The Obstacle to Regulation Is 'Regulation Omnipotence'

Companies pointed to "regulation omnipotence," the tendency to solve everything through regulations, as the main reason why regulatory reform efforts by past governments have struggled to produce results (42.3%). This was followed by "conflicts of interest" (22%), "lack of public consensus on regulatory reform" (21%), and "passive administration by public officials" (14.7%).

Professor Lee Hyuk-woo of Paichai University said, "Since new regulations are established whenever problems arise, it is difficult to feel improvements even if some regulations are reformed, and once established, they are not easy to abolish, which acts as a long-term burden on companies. This is why, despite continuous regulatory reform efforts by past governments, the effects are not felt on the ground."

In fact, in this survey, when asked whether they expect the regulatory environment for companies to improve rapidly after the new government takes office, 42.7% responded that they have "no expectations."

Finished vehicles are waiting in the storage yard next to the export shipment dock at Hyundai Motor Company's Ulsan plant. [Image source=Yonhap News]

Expanding Dedicated Regulatory Personnel... Must Provide Real Help for Industrial Innovation

Companies identified "improving systems such as personnel and organization" (42.7%) as the most important factor for promoting regulatory reform. This means that securing personnel related to regulatory reform and strengthening the authority of dedicated organizations, along with overall system improvements, are necessary.

Professor Kang Young-chul of KDI Graduate School of International Policy said, "Unlike advanced regulatory countries where chief economists quantitatively analyze regulatory impacts and reduce corporate burdens, Korea is currently facing a severe shortage of regulatory specialists. Expanding specialized personnel and budgets in each ministry and research organization to build internal capabilities is a prerequisite for successful regulatory reform."

Other important factors for promoting regulatory reform included "forming consensus on regulatory reform" (25.0%), "strong regulatory reform leadership" (20.0%), and "activating proactive administration" (12.3%).

Lee Sang-heon, head of the Regulatory Sandbox Office at the Korea Chamber of Commerce and Industry, said, "As the next government’s inauguration approaches, expectations for new regulatory policies will grow," adding, "We hope that the regulatory environment will improve in a way that promotes corporate innovation and change, and that various policies providing practical help to companies on the ground will be prepared."

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