A half-baked planPresident Moon Jae-in on Wednesday announced an initiative to deregulate industry at the first meeting of the government’s Fourth Industrial Revolution Committee. He said the new government plan will help ambitious entrepreneurs open a new frontier without restrictions. For instance, the administration plans to remove the clause of joint and several liability, a major obstacle to starting new businesses.
But the problem is the scope of the deregulation, which is confined to start-ups and new industries. That raises a serious question about the effect of the deregulation plan. The Korean economy has lost its signature vitality over the past two decades due to the suffocating regulations across the board.
Even if enterprises wanted to build a factory around Seoul, they couldn’t in the face of various regulations on the development of the Seoul Metropolitan Area. When they wanted to test their drones or self-driving cars, laws on air safety and traffic control prohibited it. As a result, Korea has become an isolated region like the Galápagos Islands while global IT powerhouses like Google are leading in AI technology and Chinese companies take up 70 percent of the global drone market. According to Hyundai Research Institute’s analysis of the base technology needed for the fourth industrial revolution, Korea (77.4 points) is lagging far behind the United States (99.8) and the European Union (92.3).
It all results from Korea’s unique approval system in which domestic companies can start new businesses only when they are allowed by the law. As a result, many companies choose the Silicon Valley to test their cutting-edge technologies and conduct a sophisticated bioengineering experiment overseas.
On the Big Data front, too, local companies cannot move forward as the area is strictly restricted by the privacy protection act. Despite past conservative administrations’ campaign to remove such idiosyncratic regulations, it ended up a failure.
President Moon vowed to create an innovative ecosystem leading to more jobs and new industries.
Local companies, big or small, are increasingly reluctant to invest in new fields after the government drastically raised the minimum wage and corporate tax rates. Wishing for a revitalized ecosystem while keeping deep-rooted regulations intact is same as hoping for a bloom of a dead tree.
JoongAng Ilbo, Oct. 14, Page 30