중앙데일리

Government eases regulations for the service sector

Aim is to enhance competition and reduce red tape to expedite growth  PLAY AUDIO

May 09,2009
The government has announced a series of measures aimed at making it easier for foreign businesses to set up shop in Korea, part of a bid to boost the overall quality and competitiveness of the local service industry.

The measures cover nine service sectors such as education, medicine, broadcasting and telecommunications.

They were made public yesterday at a meeting presided over by President Lee Myung-bak and attended by 51 ministers and heads of private companies. The details come weeks after the government heralded a plan in March to strengthen the service sector.

Under the new measures, foreign schools will be able to enroll a greater number of Korean nationals.

The proportion of local students to newly enrolled students in a foreign education institution in free economic zones will be up to 30 percent, the government said.

Under current regulations, foreign schools in areas including Songdo, Gwangyang and Jeju are limiting enrollment of Korean students - at 30 percent of the total number of students enrolled - making it impossible for foreign schools, in particular new schools, to accept local students if there are no foreign students already at the school.

The change will be implemented by July, the government said.

Foreign schools will also be allowed to remit profits from their local businesses back home. Currently, they are required to use the money they earn in Korea.

“The ban on remitting surplus and limiting the number of local students to be admitted has impeded the entry of quality foreign education institutions into the local market,” said the government in a statement.

“The government hopes to advance the local education services industry by opening doors and enhancing competition,” it said. “It will help reduce the amount of money Koreans spend for overseas studies.”

According to the government data, Korea lost $4.4 billion from overseas study expenses last year more than they earned from spending by foreign students in Korea.

The loss from education services is skyrocketing each year compared with $1.4 billion loss in 2002 and $0.9 billion in 1994.

As for medical services, the measures also included a plan to come up with legal ground under which foreign hospitals can operate in Korea by June.

With regard to the measures, President Lee said advancing the service sector was an urgent task, as the local service industry lags far behind those in several developed countries.

Cumulative foreigner investment in the local service industry as a percentage of their total investment made locally as of 2006 stood at 49 percent, the third lowest in the Organization for Economic Cooperation and Development.

President Lee said considering the number of self-employed people in Korea is relatively high compared to other developed countries, a significant portion of whom work in the service industry, the actual contribution to the national economy is relatively low.

According to an OECD report, the proportion of single-person businesses to the whole service industry in Korea was 25.8 percent in 2007, much higher than 7.1 percent for the U.S. and 9.7 percent for Japan and 13.8 percent for the average OECD country.

The government has seen the service industry as a key for the export-driven economy to lower excessive external dependence. The government also said the measures will allow private companies to provide comprehensive health care service beginning 2011.

Cable TV program providers will also be allowed to provide comprehensive broadcasting programs from news to documentaries to entertainment and sports. Currently, a cable program provider is allowed to focuse on only one type of program.

The selection of such program providers will be made by the end of this year, it said.


By Moon Gwang-lip [joe@joongang.co.kr]



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