Regulation, Jobs, Corruption

Choi Byung-sun, a professor at the graduate school of public administration of Seoul National University and former chairman of the Regulatory Reform Committee, said in a lecture a few years ago, “Lazy civil servants can be less harmful to a nation.” He did not defend complacency in the public sector but criticized the problems and side effects of administrative bodies increasing regulations and their authority. “An incorrect sense of duty by the government can harm the national economy,” he said.

In Korea, half of 1,121 industries are subject to entry regulations under a positive system that prohibits all activities except those explicitly approved, meaning the government has huge discretionary power. The World Bank last year ranked Korea 23rd out of 181 countries in the ease of doing business, with the ease of starting a business coming in at 126th place. A lower ranking means harsher regulations, and overregulation is blinding Korea`s status as the world’s 15th-largest economy.

Excess regulations limit economic activities and the creation of jobs and encourage corruption in the public sector. The Korea Institute for Industrial Economics and Trade said a drop of 10 percentage points in entry regulations can create 75,000 jobs, while the Korea Development Institute said regulations cut GDP growth half a percentage point. Kwon Hyuk-cheol, director of market economy research at the Center for Free Enterprise in Seoul, said, “Lifting unnecessary regulations and reducing corruption can raise economic growth 2 percentage points and create 100,000 jobs.” Excluding those on environmental pollution, protection of the weak, hot money and supervision of financial soundness, regulations should be abolished since they lead to exploitation and corrupt ties.

The Government Legislation Ministry plans to change the basic regulatory framework and ease 372 regulations by the end of next year. It will make a shift from the positive system to a negative one that allows all activities except those specifically prohibited. President Lee Myung-bak has ordered the government to revise enforcement ordinances before parliament makes legal revisions. Regulatory reform is a must to benefit both companies and citizens.

Editorial Writer Kwon Sun-hwal (shkwon@donga.com)