[Hopes for the 22nd National Assembly] Fear of 'Unresolved Regulations'... 46% Say "Tax Benefits Needed to Attract Overseas Talent"

In a survey conducted by Asia Economy targeting 50 major companies ahead of the 22nd general election, the majority of companies calling for 'deregulation' underscores that it is the most urgent issue to be resolved.

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Among the 50 companies that participated in the survey, 74% identified 'improvement of regulations on corporate activities' as the most desired legislative agenda for the 22nd National Assembly, and 62% pointed to 'expansion of killer regulation discovery' as the policy task that must be passed. This reflects the perception that, while numerous large and small regulations still apply extensively in the field, the identification of 'killer regulations' that should precede regulatory improvements is not being properly conducted.

In particular, despite the current government having promised regulatory improvements to companies several times and implementing some related measures, the survey results revealed that companies still feel a 'regulatory fear.'

Our government, led by the Ministry of Justice and the Ministry of the Interior and Safety, has been correcting various large and small regulations identified as problematic in the current legal system to revitalize corporate activities and has publicized these efforts. In February, the Ministry of the Interior and Safety announced that it had improved a total of 163 regulations last year through cooperation with related ministries and local governments. Despite this considerable number, the perceived impact among companies is reported to be very low. According to economic organizations, there is a considerable perception among domestic companies that "China is better than South Korea for free business operations." Although China is a socialist country, it follows market economy principles in the industrial sector, resulting in fewer regulations applied to companies and guaranteeing freer business activities compared to South Korea.

Son Kyung-sik, chairman of the Korea Employers Federation (KEF), also recently responded in an interview to a question about his hopes for the 22nd National Assembly by urging, "Please unite to prepare laws that invigorate the economy," and added, "Regulatory improvement is urgent for companies to create many jobs."

At the nameplate ceremony of the 22nd National Assembly Opening Comprehensive Support Office held at the National Assembly Members' Office Building on the 8th, 300 National Assembly member badges were unveiled. Photo by Hyunmin Kim kimhyun81@

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However, with this general election ending in a sweeping victory for the progressive camp, there is growing analysis that whether regulatory improvements will be realized through the legislative process of the National Assembly as companies hope remains to be seen. The ruling Democratic Party and the Democratic Coalition, which secured 175 seats and solidified their position as the 'giant opposition,' will determine the fate of regulatory improvements depending on their response, but it is still difficult to predict.

During the election campaign, the Democratic Party promised to improve some corporate-related regulations in response to the People Power Party's pledges. In early last month, Democratic Party leader Lee Jae-myung and Policy Committee Chairman Lee Gae-ho, who visited SK Hynix's Icheon campus, announced a pledge to designate southern and eastern Gyeonggi regions such as Suwon and Yongin as semiconductor-specialized areas and to establish an RE100 semiconductor cluster using 100% renewable energy. At the event, they also pledged to further extend the sunset clause on investment tax credits for national strategic technologies like semiconductors. The Democratic Party has also been reviewing legislation related to regulatory reform and institutional improvements while operating the 'Corporate Competitiveness Enhancement' group since April last year.

However, there is skepticism within the business community. Previously, the Democratic Party showed a somewhat passive attitude toward deregulation by rejecting a mediation proposal on February 1 to postpone the application of the Serious Accidents Punishment Act to workplaces with fewer than 50 employees for two years, which was proposed by the government and ruling party. There is also widespread analysis that it remains unclear whether the Democratic Party will support various tax credit policies envisioned by the government and ruling party for our key industries such as semiconductors. The role of Ko Dong-jin, a former Samsung Electronics executive who was elected as a People Power Party candidate in Gangnam-gu B district, is expected to become important, but this view is underpinned by distrust toward the Democratic Party.

Beyond regulations, companies also hope that the National Assembly will legislate to allow flexible recruitment of overseas talent, especially in sectors like semiconductors facing labor shortages. In Asia Economy's survey, 46% of respondent companies suggested that legislation should provide tax benefits to companies attracting overseas talent. The demand for 'securing overseas professional visas and improving residency requirements' was equally high at 46%. This was followed by 'tailored benefits such as cash support for companies providing incentives to overseas talent' (30%) and 'government subsidies for wages of high-level overseas talent' (10%).

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