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No More Red Tape

Posted January. 21, 2008 08:16,   


A few days ago, President-elect Lee Myung-bak pointed to the power poles in the Daebul Industrial Complex as a typical example of the red tape hindering business investment and advancement. Unfortunately, however, those are not the only ones on the black list.

Entrepreneurship has been deterred by numerous "power poles" set up along the new or improved roads to various industrial establishments such as the Hynix plant in Icheon, Shinsegae Chelsea Premium Outlets in Yeoju, and the LG-Philips LCD plant in Paju.

It was confirmed on Sunday that the presidential transition committee has drafted a plan to abolish regulations in eight main areas—to allow easy plant establishment and promote the flow of goods and trade, in order to remove these business discouragements and hindrances. Now, the committee is reportedly fine-tuning the plan with the Grand National Party (GNP).

Each and every part of the regulatory categories has stood, just like the power poles, in the smooth business operations, despite the mounting and repeated requests for abolishment from the private sector, largely due to government organization’s self-interest or differing interest between ministries.

So far, the government has not allowed a corporate entity to establish a plant or factory along one of the four major rivers including the Han River, the Nakdong River, the Seomjin River and the Yeongsan River, in case the projected pollution of the plant or factory exceeds the maximum limits set by the head of the local government of that area.

But the regulation was conceived without due consideration of the potential for the future development. Consequently, it was impossible to build additional industrial facilities in some areas where the caps have already been reached, including, for example, Naju City and Jangseong County in South Jeolla Province, Jincheon County in North Chungcheong Province, and Haman County in South Gyeongsang Province. Now, with the new limits set by the committee, corporations will be able to establish additional plants in those areas. Furthermore, the head of each local government can increase or decrease the limits by 20 percent at his or her discretion.

Therefore, the Icheon city government can now allow Hynix Semiconductor to expand and add its manufacturing facilities in the city, which has been banned under the regulation prohibiting additional establishment based on the total amount of pollutants.

Likewise, major outlets will also benefit from the new rules. In the past, shopping malls like Shinsegae Chelsea had to make sure that the total area of the improvements did not exceed 50 percent of the total area of the mall. In the future, the ratio will be increased to 70 percent. It is in due consideration of the criticism that the old regulation has blocked malls from securing sufficient business space.

The committee also plans to reduce taxes for small and medium companies, and to apply lower electricity rates to venture firms that make significant R&D investments.

Professor Jeon Jun-su of Business Administration at Sogang University expects, “Now, people are expecting a lot from the incoming administration. When the expectations are supported by detailed and specific plans, business entities will think it’s going to pay off to make more investment.”