Getting serious about servicesThe government announced measures to bolster services including health and medical care, tourism and logistics. The aim is to devote as much government aid and attention to the services sector as the manufacturing sector.
It will lift regulations, exempt taxes for startups, provide 7 billion won ($6 million) in policy loans and aid to research and development in services over the next three years. It accepted industry demands by easing curfews on minors in internet gaming and allowing electric kickboards on bike lanes.
Korea’s services sector is lagging. It is essential to bolster this segment of the economy to help stimulate domestic demand, add value to the economy and increase job opportunities. The share of services against gross domestic product falls far below the United States, the United Kingdom and Japan.
But the new measures are not, in fact, new. They are more or less repackaged measures that have come out 20 times since 2001 to boost services. In addition, they left out some essential areas that need deregulation such as ride-sharing and telemedicine.
The measures do not show any signs of government efforts to iron out the differences between traditional and new industries to help show the country new areas of potential growth. Regulations in services are four times the number in the manufacturing sector. Times have changed and regulations like those cannot work today. Without removing outdated rules, there is no future in services.
The legal grounds must be fixed first. The basic act proposing to allow for-profit medical facilities has been stuck in the legislature for nine years. The antiquated privacy protection law that restricts employment of big data sits neglected due to never-ending skirmishes between rival parties.
Even the ruling party is divided on key deregulation issues. Korea is falling behind despite its International Trade Commission prowess in the fourth industrial age because of regulatory bottlenecks. The government and politicians must show some spine and remove the regulations.