Boiled frogWarnings are of no use when they fall on deaf ears. It was in 2013 that the Korean economy was first likened to a frog in slowly boiling water in a McKinsey report. The consulting firm judged that the Korean economy was slowly breaking down and being cooked to death without perceiving the danger because it was only focused on itself and unresponsive to overseas changes. It prescribed radical deregulations to increase productivity.
Five years have passed and the economy is in a graver state. Park Yong-mann, chairman of the Korea Chamber of Commerce and Industry (KCCI), said the frog in the boiling water has started to get burned.
He was most frustrated about the lack of progress on deregulation. “No one wants to carry the cross. The government is all talk and no action.” In the sitting National Assembly, over 800 bills on new business regulations have been motioned. “Why do we need 800 regulations when companies are already drowning in a sea of regulations?” he complained.
Korea Inc. is sinking due to regulations. Even the president’s order does not work. President Moon Jae-in commanded action so that the country no longer hears that it is lagging behind other nations due to the layers of regulations. He ordered a so-called “regulatory sandbox” to allow demo products and services to test out markets first and come up with necessary regulations afterwards. But nothing happened. According to Park, the business lobbying group handed in a list on areas for immediate liberalization 39 times, but there has not been a single case of a regulatory sandbox. The sharing economy that has become common elsewhere is vehemently rejected in Korea. Liberalization cannot go through the orthodox players. Someone should carry the cross, but the government makes little effort to persuade the mainstream players.
All other countries are making big strides in new industries. The gap is widening fast. The sharing economy can fuel a smart city. In the age of the fourth industrial revolution, new industry evolves into other new industries. A late start means more difficulty catching up with frontrunners. Korean enterprises must watch opportunities fly past. Like Park said, there is no time to lose. Regulations do not disappear simply with words. The president must penalize ministers whose offices are late in deregulation. The frog won’t just get burned: it will eventually die if it stays in the sizzling water any longer.
JoongAng Ilbo, Dec. 27, Page 34