Destruction, or creation

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Destruction, or creation

Lately, salmon are thriving in the waters off Goseong County, Gangwon. A Korean company has acquired the technology to farm salmon year-round. As salmon live in cold water, salmon farming was a challenge in Korea. That’s why most salmon sold in Korea are from Norway or Japan. But when the East Sea salmon are marketed, consumers will be able to enjoy fresh salmon at lower prices throughout the year. Additional investments in processing plants will also add jobs.

These are the results of efforts and challenges of one businessman. Donghae STF President Kim Dong-joo was an IT venture businessman. In 2005, he saw the growth potential of the fisheries industry and entered the fish farming business. He began with saw-edged perch and rock breams and then turned to salmon. He overcame physical obstacles with technology. His solution was to set up the farm farther out in the sea and install rims that moved according to the temperature.

The government is also inspired by the possibility Kim has proven. In a recently announced investment plan, a proposal to ease regulations on fish farming was included. Until now, companies with more than 1,000 employees or assets over 500 billion won ($407 million) were not allowed in fish farming in order to prevent big enterprises from taking away market share from individual fishermen and smaller companies. As a result, the industry did not grow, and expensive species such as tuna and salmon, which require investment and technology to fish, were mostly imported. The government plans to remove the entry restriction and encourage large-scale capital investment in aquaculture.

But will removing regulations alone attract investment in fish farming? Donghae STF’s experiences show otherwise. Until the company succeeded in salmon farming, the regulations themselves were not the biggest obstacle. The company struggled because of various interests associated with the regulations and the attitudes of the central and local governments.

But preparing the documents required by the law won’t be enough. The company needs to consult the local government with jurisdiction over the potential site and get consent from the residents. The practice is not stated in the law but was created to save civil servants the trouble that may arise with local residents.

An industry insider said that the company had to persuade each member of the local fishing co-op and got consent from the residents, but then the local government raised various questions. It took three years to resolve all the issues. East Sea STF has only 13 employees, so imagine what would happen if a leading conglomerate joins the game.

In the end, the lesson of the salmon in the East Sea is that regulatory reform is a necessary condition for the creative economy but not a sufficient condition. Unless the tightly woven establishment and lax bureaucratic culture of civil servants are eradicated, it will be hard for new sprouts to grow. Destruction is another name for creation.

The author is a deputy business news editor of the JoongAng Ilbo. JoongAng Ilbo, March 2, Page 28

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