New rule puts chemical companies in a bind

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New rule puts chemical companies in a bind

A manufacturer of chemical components, which asked not be named in this article for fear of running afoul of the government, has been running shop for the past 30 years, producing pesticides that combine chemical components with microorganisms to kill fungus and termites.

It had been doing well, making annual revenue in the range of 10 billion won ($8.7 million). Last year, its product portfolio included nine different chemical components.

But this year, it faced a tough situation that almost put it out of business when the government enacted stricter regulations governing the use of chemical substances.

Under the new rules, companies have to register each chemical they use to the Ministry of Environment if the load exceeds 1 ton a year whether it is manufactured or imported.

“We can’t afford the cost of registering all nine components,” an official from the company said.

The company’s operating profit last year was 300 million won, but it would have cost 490 million won to register all nine chemical components, so the company decided to give up on six of the chemicals and register just three, which amounted to 130 million won. It did receive some financial aid from the government to cover registration, but it was just 25 million won.

The stricter regulation was enacted in 2015 after reports of pregnant women and children dying from toxic chemicals used in humidifier sterilizers manufactured by Oxy. The law mandates all companies register its chemicals with the government by June 2018. Companies have to turn in all data on the characteristics as well as toxicity levels of the chemicals.

However, the government will only accept data from certain Korean and foreign research institutions, and the price of this research is huge. On average, registering a chemical component costs 115.9 million won, and some require as much as 1.5 billion won. As a result, some companies have given up on manufacturing chemical components as the cost of registration has exceeded their operating profit.

In April 2014, the government promised the industry it would devise measures to prevent any losses that companies might face as a result of the new law. However, out of 510 chemical components registered, only 13.9 percent were eligible for government financial aid. Even those that qualified could only use the aid to cover low-cost research. Some high-cost tests like those determining the effects of repeated exposure, which could cost at least 60 million won, were left out.

The companies have also complained about a lack of research centers that test the toxicity of chemical components. The government only accepts results from 30 local research centers, and some of these centers are unable to analyze certain chemicals without outside help. And since the administrative process is complicated, many companies depend on consulting firms, but only six are able to manage the cases, adding to the cost.

The government has recommended companies file registrations jointly to share the cost. Among the 510 components that have already been registered, half of them were filed jointly.

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