KCCI "Domestic Companies Have Low Expectations for Regulatory Improvements This Year"

[Asia Economy Reporter Kiho Sung] Domestic companies surveyed expect South Korea's regulatory environment to become more negative this year compared to last year.

The Korea Employers Federation (KEF) announced on the 17th that the Corporate Regulation Outlook Index (RSI) was 93.3, below the baseline (100), based on the '2022 Corporate Regulation Outlook Survey' conducted among 1,112 companies with 10 or more employees nationwide.

The RSI is a perceived regulation outlook indicator quantified by surveying businesses' opinions on the expected level of corporate regulations in the future. The baseline of '100' represents the same level as the previous year. The closer the index is to 0, the more companies expect the regulatory environment to worsen. Conversely, the closer it is to 200, the more companies expect an improvement in the regulatory environment.

Companies cited "excessive populist policies around the presidential election" (31.5%) and "lack of government will for regulatory reform" (29.2%) as the main reasons for their negative outlook on this year's regulatory environment.

By industry, the RSI was lowest in construction (73.4), steel (77.5), shipbuilding and shipping (87.2), and automobiles and auto parts (89.4), in that order.

On the other hand, new industry sectors such as pharmaceuticals and bio, and platform services showed RSI values above 100, indicating a positive outlook for regulatory improvement. KEF interpreted this as reflecting expectations related to the introduction of regulatory sandboxes and the activation of regulatory free zones.

By region, Gwangju (62.5) had the most negative outlook on the regulatory environment, followed by Jeonbuk (70.0) and Daejeon (77.8). Regions with a positive regulatory outlook included Sejong (110.7), Gyeongbuk (106.8), and Incheon (106.7).

By company size, companies with 300 or more employees had the highest RSI at 97.7, followed by those with 50?299 employees (91.9), and 10?49 employees (90.2), indicating that smaller companies tend to have a more negative outlook on the regulatory environment.

Additionally, KEF evaluated the burden on companies for 12 major regulatory issues including the Serious Accident Punishment Act, the 52-hour workweek system, minimum wage, environmental regulations, and corporate tax. Among the 12 industries surveyed, eight industries including semiconductors, steel, shipbuilding and shipping, and construction identified the Serious Accident Punishment Act as the most burdensome regulation.

Regarding regulatory reform policies desired from the next government, the establishment of a comprehensive control tower (52.0%) was the most frequently selected.

Lee Hyung-jun, Head of Employment and Social Policy at KEF, said, "Although this year marks the start of a new government, expectations for regulatory improvement are low. In particular, the burden on companies due to the recently implemented Serious Accident Punishment Act appears high, and urgent measures to supplement it are needed."

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