It all rests on deregulation

President Park Geun-hye vows massive deregulations day after day. To the CEOs of global companies who gathered at the Davos forum yesterday, the president pledged to ease all types of unnecessary regulations on investment in Korea. In a New Year’s press conference earlier, she also promised to scrap an old regulation for a new one and preside over a new minister-level committee to check the progress of deregulation.

We take note of President Park’s focus on rejuvenating the economy as the top priority and spearheading the effort herself. In fact, every administration promises to ease red tape whenever it takes power. But we always end up with more regulations in the end.

The only exception was the Kim Dae-jung administration, which introduced large-scale deregulation to help the country overcome the foreign exchange crisis of 1997-8. President Kim himself kept tabs on the deregulation process. Thanks to that, the government removed more than 2,000 regulations on business activities. A sense of desperation from a national crisis and the president’s unflinching determination made it possible.

Though not as dramatic as the days of the 1997 crisis, we still face a serious crisis stemming from continued low growth amid the prolonged economic slowdown. That rings alarm bells as it could lead to a critical loss in growth for the future. If we want to put our once-resilient economy back on track, the government must shift the focus of growth from exports to domestic demand, which requires the enlargement of the services industry in particular. Deregulation is one of the easiest - and cheapest - ways of catching the two rabbits - fostering the service sector and expanding local investment. We welcome the Park administration’s priority on revving up domestic demand through deregulation.

But deregulation means a war with the establishment as well. It is only possible when the government overcomes the pressures from various interest groups and resistance from civil servants. If the president doesn’t keep close watch, a deregulation drive quickly loses its steam. We believe the president’s commitment to deregulation deserves credit. The government plans on coming up with deregulation measures for five services: medicine, education, tourism, finance and software. If the Park administration succeeds in deregulating and public-sector reform, it will achieve an unrivaled success. The Park administration and our economy’s future depends on deregulation.