[Editorial] Gov¡¯t venture business policy full of holes

The chain of disclosures surrounding president of Korea Digital Line Jung Hyung-Joon can be summarized as a venture-styled illegality resulting from a combination of moral laxity of certain venture businessmen and the slipshod governmental policy for venture businesses.

While the virtuous venture businessmen work through many nights to develop new technology utilizing all their mental resources, other not-so-virtuous venture businessmen have put all their misguided efforts toward haphazard growth by cashing-out after a phase of pumping up the stock prices. The situation was built upon a rather cozy relationship between the government officials or a group of social elite who readily looked the other way.

It would not be an overstatement to accuse the government of the greatest responsibility of allowing such venture business travesty and perversion in Korea through its fundamentally pock-marked policy.

First, the government's venture business promotion policy must be examined. Last year, the government proposed to help foster 20,000 venture businesses by 2002 and earmarked 4 trillion won into a venture business fund. Then, the government announced it would help the growth of venture businesses to 40,000 by 2005 and hammered in its resolve.

Using the survivability ratio recorded in other developed countries, 5%, in order for Korea to help establish 40,000 venture business, it would have to give birth to 800,000 with 760,000 closing their doors. The government, rather than finding way to minimize the accompanying loss, only has focused on creating a venture bubble.

The policy of promoting quantity was made worse by loose control of funding, which resulted in many frowning upon the fund as a sort of vending machine of taxpayers¡¯ money, being handed out blindly, yet another example of the miserable limitation of the government. The government's policy of re-investment into limited venture businesses in an effort to collect on the original investment largely ignored the very nature of the venture businesses, which should find a way to survive amid limited funds in cutthroat competition.

While retaining the authority to certify venture businesses, the government's failure to keep close tabs during and after the registration of venture businesses has led to "bastard-child" types of venture businesses. Once the venture business were registered and provided with public funding, the on-site inspection conducted by the government reached 20%, pointing to the government's lack of readiness for the policy implementation, even as it went ahead with expansion of the policy. As such, it would have been quite foolish to expect the government to keep tabs of exactly what the venture companies were doing with the public funding.

There is no doubt that venture companies will provide a new engine of economic growth for Korea in the 21st century. However, the current venture business policy, which fails to prevent and even promotes such moral hazards, cannot be expected to result in much good. It is the hope of many that the government learns a lesson well from this string of events and prevents another Jung Hyung-Joon incident by re-examining the shabby venture business policy. It is time to lean toward a policy that will remove the rotten apples from mingling with the good.