[Interview] Regulatory Reform Committee Chair: "All Economic Regulations to Have 5-Year Sunset... Will Stop Them from Becoming 'Sandbags'"

[Interview with Kim Jong-seok, Chairman of the Presidential Regulatory Reform Committee]
"No Preferential Regulatory Reform... Must Follow the Iguan Jegwan Model"
Focus on Regulatory Innovation That Does Not Block Corporate Standby Investments

[Asia Economy Reporter Koo Chae-eun] “The anticipated macroeconomic difficulties this year are not self-inflicted. The sharp rise in energy and grain prices are uncontrollable external variables. The way to overcome this is to reduce internal inefficiencies and waste, and regulatory reform will focus on that aspect.”

Kim Jong-seok, a private member of the Regulatory Reform Committee (RRC), recently said this in an interview with Asia Economy held at the RRC in Jongno-gu, Seoul. Given the unprecedented economic crisis tsunami approaching, with limits to interest rate and fiscal policies, bold regulatory innovation is necessary to reduce corporate waste costs.

Since his appointment in August last year, Kim, known as an 'economic expert' within the ruling party, has spent his life tackling regulatory improvement tasks across the National Assembly, academia, and government. He served as president of the Korean Society for Regulation Studies from 2004 to 2005 and chaired the economic division of the Regulatory Reform Committee in 2014. He has also been the private chairman of the Policy Evaluation Committee at the Korea Fair Trade Commission, president of the Korea Economic Research Institute, director of the Yeouido Institute during the Saenuri Party era, and served as a member of the 20th National Assembly (Liberty Korea Party, now People Power Party).

Since Kim’s appointment, the status and authority of the RRC have increased, discovering 1,278 regulatory improvement tasks after the launch of the Yoon Suk-yeol administration. Among these, 446 regulatory improvements have been completed. Out of 502 reviewed regulations, 61 important regulations were selected, recommending over 77% improvement or repeal. The Regulatory Petition System was also revitalized. The Regulatory Innovation Strategy Meeting chaired by the president and the Regulatory Innovation Promotion Team under the prime minister were newly established, accelerating decision-making speed.

Jong-seok Kim, Private Committee Chair of the Regulatory Reform Committee / Photo by Younghan Heo younghan@

Kim said, “Progressive governments assumed ‘the market is unfair, companies are greedy, and only bureaucrats and politicians are righteous,’ so they believed the government must correct market faults, showing little interest in regulatory innovation. The Yoon Suk-yeol government is exactly the opposite. The biggest premise is to promote economic development centered on the private sector.”

He pointed out, “Looking back, if Tada had been legalized, taxi drivers’ demand would have increased significantly. The taxi industry itself was expanding, but regulations blocked it.” He added emphatically, "Not only Tada but also issues where political circles succumbed to pressure from interest groups must be overcome by the Regulatory Reform Committee.”

The RRC plans to apply a maximum five-year sunset (review) period to all newly established economic regulations starting this year and regularly maintain them. This is to prevent economic regulations from becoming rigid like ‘sandbags’ once established. The sunset is subdivided into expiration-type and review-type to examine the sunset status more thoroughly. Kim explained, “This is to put a brake on the perpetuation of regulations once introduced.”

He plans to shift from the previous ‘appeal-type’ regulatory reform, which was a tug-of-war between the private and public sectors, to a method where the bureaucrats who created the regulations themselves ease them. Kim said, “The private sector can never win in a tug-of-war with bureaucrats. Creating a public servant organization dedicated to regulatory reform and establishing a system of ‘regulators regulating regulators’ is the direction for realizing regulatory reform.”

Below is a Q&A with Chairman Kim.

“Moon Administration’s Premise of ‘Market Unfairness, Corporate Greed, Only Bureaucrats Are Righteous’ Was Fundamentally Wrong”

Jongseok Kim, Private Committee Chair of the Regulatory Reform Committee / Photo by Younghan Heo younghan@

Macroeconomic conditions are expected to be difficult this year. What significance does regulatory reform hold in such times?

It is very significant. The difficulties we are experiencing are not self-inflicted. The surge in energy and grain prices is beyond our control. The U.S. is likely in the same situation. The way to overcome this is to reduce inefficiencies and waste internally. We must absorb externally imposed cost increases internally. There are limits to interest rate and fiscal policies. Regulatory reform addresses these issues. It helps eliminate inefficiencies and waste that companies may face. Through regulatory innovation, we reduce regulatory costs and open paths for businesses currently blocked.

What differentiates the Yoon Suk-yeol administration’s regulatory reform?

Including previous administrations, progressive governments assumed ‘the market is unfair, companies are greedy, and only bureaucrats and politicians are righteous.’ They believed the government must correct market faults. Consequently, they showed little interest in regulatory innovation. The Yoon Suk-yeol government is exactly the opposite. The biggest premise is to promote economic development centered on the private sector. The constitution states that Korea’s economy is based on economic freedom and creativity of individuals and enterprises. Article 119, Paragraph 1 of the Constitution says so. Regulatory reform will be pursued in line with this principle.

You mentioned Article 119, Paragraph 1. What is your view on Paragraph 2 (the economic democratization clause)? There have been criticisms that it conflicts with Paragraph 1.

I believe the economic democratization clause has been overinterpreted. That clause refers to balanced economic development in Korea. The draft of Paragraph 2 of Article 119 was prepared by former Minjung Party lawmaker Hyun Kyung-dae, who chaired the National Assembly’s constitutional amendment subcommittee during the 1987 constitutional revision. He clarified that economic democratization meant a private sector-centered economy. Until then, Korea had a government-controlled economy. Therefore, Korea’s economic order is based on a market economy, i.e., economic freedom and creativity of the private sector, while also pursuing balanced development. Regulatory reform naturally follows this direction.

Appeal-Type, Beneficiary Regulatory Reform Won’t Work... Must Adopt Regulator-Regulating-Regulator Model

Jong-seok Kim, Private Committee Chairman of the Regulatory Reform Committee / Photo by Younghan Heo younghan@

Regulatory reform has been pursued in past administrations but often failed, with criticism that the market has developed resistance. What is your view?

Because regulatory reform was ‘appeal-type’ and ‘beneficiary-based.’ The private sector appeals, and bureaucrats who regulate may or may not accept it?this approach has fundamental limits. If bureaucrats enforce regulations by ‘listening to appeals from the field,’ the private sector cannot win against the public sector. However, under the Yoon Suk-yeol government, the burden of proving the necessity and appropriateness of regulations has shifted to the regulators. A representative example is the Regulatory Tribunal. It verifies the necessity and appropriateness of regulations from the private sector’s perspective. That is why two-thirds of the Regulatory Reform Committee members are private citizens.

While some suffer from regulations, others are harmed when regulations are removed, such as with the Tada Ban Act or easing mandatory closures of large marts. Conflict resolution is key, isn’t it?

All regulations that everyone now demands to be removed have already been eliminated. Remaining regulations are conflict-type. There is an ecosystem of beneficiaries and enforcers of regulations. Therefore, improving regulations causes conflicts or resistance. We must continuously find mutually beneficial win-win solutions through scientific analysis, data-based compromise, and communication with stakeholders. It is not a matter of pushing through unilaterally. Solutions beneficial to all must be found through communication and compromise.

Ultimately, isn’t the issue the jobs of those opposing reforms?

Looking back, if Tada had been legalized, taxi drivers’ demand would have increased significantly. It was a wrong judgment. The taxi industry itself was expanding, but regulations blocked it. It’s not just Tada; there are issues where political circles succumbed to pressure from interest groups. The Regulatory Reform Committee must overcome such issues.

Are there any obstacles from the National Assembly regarding regulatory reform?

Most of Korea’s poor, unrealistic, unenforced, and preemptive regulations come from member bills. Government regulations must pass through the RRC and undergo verification procedures. But member bills do not have such procedures. Therefore, regulatory impact analysis is needed for member bills as well. When I was in the National Assembly, it was the first bill proposed in the 20th National Assembly. At that time, there was reluctance to pass it, but now both the Democratic Party and People Power Party agree, and the bill has been proposed. Passing this bill is urgent.

Bureaucrats face a dilemma as both ‘objects’ and ‘subjects’ of regulatory reform, and inter-ministerial conflicts over regulations are intense. How can bureaucrat-led regulatory reform succeed?

I believe it should be solved through a ‘regulator-regulating-regulator (以官制官)’ system, where public servants dedicated to regulatory reform oversee regulatory officers. The RRC has over 100 full-time public servants. Their job is to preemptively control and manage regulations in other departments, like the Budget Office controls other departments’ budgets. I always emphasize that ‘the responsibility for quality control of regulations lies with the bureaucrats who create them.’ The quality management of regulatory products is the bureaucrats’ responsibility. The way to succeed in bureaucrat-led regulatory reform is to have bureaucrats in charge of regulatory reform.

This Year, Focus on Not Blocking Corporate Standby Investments in Regulatory Reform

Jongseok Kim, Private Committee Chair of the Regulatory Reform Committee / Photo by Younghan Heo younghan@

Then, should ‘regulation’ be seen as conflicting or completely opposite to ‘innovation’?

There are many regulations that promote corporate creativity and innovation. For example, intellectual property protection, promotion of fair competition, and regulation of monopoly abuse foster corporate creativity and innovation. However, fundamentally, regulations cause costs?compliance costs and opportunity costs that block income-generating opportunities for businesses and products. The core is to reduce these two regulatory costs to create a business-friendly environment. Regulatory reform is not about eliminating regulatory means but managing their quality. It is like managing water quality in a reservoir. It blocks new poor-quality regulations and dredges outdated or poor-quality existing regulations to update them. The RRC performs these two functions.

What areas does regulatory innovation for new industries and job creation focus on?

Our economy is rapidly digitalizing. However, most current regulations were created in the analog era. The platform economy did not exist about ten years ago. Analog regulations were holding back the platform economy. Therefore, in new industries, negative regulation is the principle. Instead of defining what can be done, it lists what cannot be done, allowing everything else by default. This applies to bio-health, metaverse, robotics, cultural content, and renewable energy sectors. Also, when meeting companies, many mention standby investments. We aim to remove regulations that cause ‘we cannot proceed because of this regulation.’

As chairman of the Regulatory Reform Committee, what has been the most meaningful and rewarding achievement since your appointment?

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