Reviving the sunsetThe so-called “Sunset Rule,” adopted in 1998 to reduce regulations, has existed in name only. Under that rule, an expiration date for certain regulations is established, and once the date passes, the given regulations are abolished.
However, according to the Korea Chamber of Commerce and Industry, of 2,549 regulations introduced since the Sunset Rule came into place, only 48 had expiration dates. Most major regulations did not set a time limit. The timeframe rule was supposed to have been applied except under special circumstances, but that obviously has not been heeded.
It is little wonder that after nine years of the Sunset Rule, Korea still carries the stigma of being the “Republic of Regulations.” According to the World Bank, Korea ranks 116th in terms of having a favorable environment for those hoping to start new businesses.
Many regulations are also ambiguous, so one hears frequent criticism that nothing gets done at Korean government agencies. These regulations are the main reason that local companies are moving their production facilities overseas.
Also, regulations are deterring foreigners from making investments here. Indeed, while Korean companies’ foreign direct investment amounted to $18.4 billion last year, foreigners’ direct investment in Korea was $11.2 billion.
Each new administration pledged to relax regulations, but each fell short of its promises. The Roh administration is no exception.
In 2004, it even formed a Regulatory Reform Task Force under the auspices of the prime minister, but it has done next to nothing.
Then again, the government regards some regulations, such as ones on factory construction in the metropolitan Seoul area, as being sacred and untouchable.
So how is a task force of any use at all? Besides, the current government added 48,000 civil servants, who sit at their desks and continue to add even more regulations.
Unless this congestion of regulations is relieved, our economy will not rebound. Try reviewing these restrictions from the companies’ standpoint. It is only right to abolish regulations that place burdens on corporate activities or that flow against market theory. We must also revive the Sunset Rule.
When the government is not doing much to revitalize the economy, the last thing it should do is to restrict corporate investment and limit job creation.