Gov’t says ‘guillotine’ will cut lots of red tapeThe government has decided to accept a proposal to reduce regulations on the investments of conglomerates in smaller affiliates while increasing the current limits on mobile pay as well as allowing restaurants and lodging businesses easier access to loans.
These were some of the 114 projects proposed by the private sector that the government will be placing in the “regulation guillotine,” which is supposed to reduce red tape that may be holding back the economy from reaching its full potential.
On Sunday, the government and representatives from leading business lobbying groups including the Federation of Korean Industries and the Korea Chamber of Commerce and Industry gathered at the government administrative center of Sejong City in a joint meeting to find regulations to cut.
“The ‘regulation guillotine’ is an intense regulation reform that is targeted at getting rid of inconvenient and inefficient regulations that aren’t compatible with market principles and hold back economic innovation, and to do so within a short period of time,” said Choo Kyung-ho, head of the Office for Government Policy Coordination. “During the past one month, government departments led by the Office for Government Policy Coordination and the Finance Ministry have tried to accept as many proposals made by the economic groups as possible.
“We plan on operating a swift and strong guillotine for regulations that are considered an obstacle to creative business activities, creating quality jobs and those that are considered irrational and fail to fit global standards.”
Since November, the government has been accepting proposals from eight business groups and collected a total of 153.
It has decided to accept 74.5 percent of the proposals.
The government has decided to fully accept 61 proposals, including the easing of investment regulations on conglomerates in their smaller affiliates. It will partially accept 18 proposals and find alternatives to 35.
However, 16 proposals were dismissed entirely, and it has decided to discuss 23 proposals.
“Some of the proposals were hard to accept as they either asked for strengthening the regulations to protect existing powers or limit competition and there were several regulations that were in effect after undergoing public discussion,” Choo said.
One of the proposals that the government accepted was easing investment regulations, which the conglomerates have been claiming has been limiting their expansion.
Under current law, an affiliate of a conglomerate when creating its own affiliate, has to invest 100 percent in the company. The business community has been requesting the government ease the regulation to only 50 percent.
Once the regulation is changed, the conglomerates will be able to expand their empires by only investing 50 percent in new affiliates while joining hands with partners or foreign investors.
The 100-percent regulation was set to limit conglomerates from expanding too much into areas dominated by smaller businesses.
The government will also change electronic finance legislation to increase the limits on mobile payment while easing regulations against IT companies’ expansion into the electronic finance business.
For companies applying for government research and development projects, the debt-to-asset ratio, one of the main conditions, will be eased.
Restaurants and lodging businesses will be eligible for startup investment loans that have been limited to IT companies if they have a creative idea.
However, the business community wasn’t entirely satisfied as some of their major proposals were passed over for “further discussion.”
This included a proposal of easing regulations that force major retailers to take two days off every month since April 2013.
The government has also put off a discussion on easing regulations on financial support for companies returning to the greater Seoul area, as well as conglomerates’ access to government software projects.
BY LEE HO-JEONG [email@example.com]
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