Structural reform is crucial

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Structural reform is crucial

The government has come up with ideas to ease regulations on businesses a week after the heated public forum presided over by President Park Geun-hye. For instance, it decided to revise the mandatory requirements for authenticating online transactions. Even Chinese people have complained about the red tape they have to go through on Korean websites to buy a coat that became a hot item after a Korean actress wore it on the popular drama “My Love From the Star.” Even cybersecurity experts have criticized the government.

The government presented several solutions: developing a replacement for ActiveX, Microsoft’s security software for online transactions, which customers must install to get authentication certificates; easing mandatory authentication for online payments for products priced above 300,000 won ($280); and launching an online shopping mall exclusively for foreigners. The moves are aimed at promoting consumer convenience.

But experts point out that the real problem with our online authentication procedures stems from the “structure of regulation,” not the regulations themselves. Bureaucrats control authentication procedures by directly getting involved in developing such systems and then putting up bothersome barriers to prevent other technologies from entering the market. That led to the dominant use of ActiveX, which is vulnerable to malicious hacks despite its usefulness in the 1990s when public awareness of cybersecurity was low. There are also criticisms that the online authentication market is controlled by a few IT companies, in which financial companies have their stakes. That resulted in the teaming up of regulators and businessmen at the cost of consumer protection, turning Korea into a so-called Galapagos of regulations.

Kim Kee-chang, a Korea University professor who has long warned about the dangers of using authentication procedures, underscored that it is not about technology but about competition. He argued that the authorities must let private companies develop more reliable and sophisticated technologies on their own to compete with their rivals around the globe. If the government sticks to removing visible inconveniences without reforming the sclerotic structure, it will go nowhere. It is time to begin structural reforms, no matter how long it will take.

JoongAng Ilbo, March 28, Page 34

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