Deregulation is key

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Deregulation is key

The Korean Chamber of Commerce and Industry (KCCI) says Korea needs deregulation to ease social inequalities and stimulate start-ups. A study it conducted shows that if the top 100 global businesses were launched in Korea, 13 could not have even started and 44 would have been stalled or stopped by regulations.

As it turned out, entrepreneurs make up only 25.9 percent of the Korean business community — the lowest in 78 countries. Most public policies are designed to sustain established enterprises. Policies should be changed to encourage promising young enterprises and encourage them to restart even after early failures.

In short, the KCCI is suggesting the government help the market work more properly. The Korean market is small with companies dominating specific sectors. The dominant players lobby to ensure the playing field stays favorably tilted toward them and new competitors are blocked.

The regulatory system also serves them well. For instance, taxes are uniformly levied on liquor based on the price and not its quantity. As a result, premium whisky and traditional spirits can hardly grow because even bottling costs fall under taxation. Political causes also get in the way. Politicians must cater to the mom-and-pop stores more than large stores. Uber and other car-hailing services have trouble cracking the local market due to opposition from the local taxi industry. Policies serve existing industries instead of consumers.

The government must address the regulatory system in order to fix inefficiencies in the market. It must lift all regulations except for essential ones. This is the only way to promote creativity and pave the way for new markets. A government usually has momentum to carry out reforms in its early stages. The government and ruling party must not waste that opportunity.

JoongAng Ilbo, Nov. 18, Page 26
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