KCCI Report Criticizes Government Regulation Policies

The Korea Chamber of Commerce and Industry (KCCI) said, “The incumbent government is the first government in Korean history that has not pursued a ‘small government,’ which is the basic philosophy behind deregulation” in a report entitled “Tasks for Institutional Improvement to Boost Global Competitiveness” released yesterday.

The report added, “The incumbent government adopted a ‘big government’ principle as it tried to become an efficient government and trusted government. This led to fundamental limitations in implementing market-oriented policies.”

Against this backdrop, the report said the number of public officials increased, the privatization of public corporations was suspended, and the restructuring of government-affiliated agencies was delayed.

It warned, “Increasing the number of public officials can contract economic activities in the private sector by increasing regulation and decreasing private investment and consumption by expanding fiscal spending and taxes.”

According to the KCCI, the number of public officials rose to 590,000 last year from 562,000 in 2002 shortly before the administration took office.

The number of regulations, which went down to 7,127 at the end of 1999, increased from 7,723 to 8,083.

The report stressed: “The government should shift its focus from a ‘big government’ to ‘small but efficient government’.”

It also criticized, “A regulation-based approach is based on the idea that the government should regulate the private sector because the sector will become messy if it enjoys freedom.”

For instance, the investment cap system in which the government determines an investment cap can restrain market competition, moving the private sector backward and ultimately undermining national competitiveness.

Moreover, it said, “The government is still obsessed with the deregulation of individual government agencies and quantitative deregulation. But it is time to consider deregulation as a national strategy.”

It also added, “The Fair Trade Commission should move beyond controlling concentrations of economic power and correcting unfair trade practices, and considering global standards that promote competition.”

The report contained three suggested courses of action, including strengthening deregulation and establishing fair rules to compete with other countries. The report was sent to all political parties and major government agencies, including the Ministry of Finance and Economy.

Meanwhile, the Korea Federation of Small and Medium Business distributed a policy document entitled “The Creative Growth Engine in the Global Era” to political parties yesterday. The document proposed three policy goals, including the expansion of economic policies centering on SMEs, the development of global SMEs, and strengthening Korea’s innovation capacity.

abc@donga.com