[Editorial] All Talk, No Action

The government yesterday decided to extend the “sunset rule” to all regulations by 2010 at the National Competitiveness Committee meeting chaired by President Lee Myung-bak. The rule, under which regulations automatically expire after a specific timeframe, was valid for new or government-proposed regulations but will now apply to all regulations and administrative rules. Another provision that requires deciding the validity of regulations automatically will also be introduced.

Key figures of the administration stress that deregulation and reform of the public sector are their top priority, saying the president has a strong determination. Looking back on what has been done, however, brings up doubt about whether the administration had the will to implement measures and what it has done so far.

Deregulation has been slow not because of the absence of the sunset rule. Extending the rule had long been mentioned by the previous government. If deregulation is not properly done at the right time, the adverse effects will be much bigger. A case in point is regulations on real estate. Construction companies have yet to set plans to sell new housing units because the government has not decided to introduce the new housing price cap. The ruling Grand National Party says it will revise bills to ease real estate regulations – eliminating the cap and exempting transfer taxes on unsold new houses – at the preliminary parliamentary session next month, but skepticism over this abounds.

More serious is the reform of state-owned companies. The Strategy and Finance Ministry has come up with ways to streamline state-run corporations five times since August last year, but nothing specific has been carried out. In the wake of the economic crisis, the plan to privatize Korea Development Bank and Industrial Bank of Korea has in effect failed. Merging the Korea National Housing Corp. and the Korea Land Corp., which topped the reform list, has shown no sign of progress. The reform measure is apparently taking forever given that the government must wait until related bills pass and must persuade residents of the area where the corporations are to be relocated and their unions.

President Lee told the ministry and the heads of state-run corporations at the end of last year that they should step down if they fail in reform, saying, “We must complete the reform in 2009.” There is no sign of specific changes, however. As for deregulation and the reform of state-run companies, the government must reflect on what it has done.