Pres. candidates silent on deregulation

Strategy and Finance Minister Bahk Jae-wan said Monday, “We’ll increase the competitiveness of Korean companies by easing regulation of the service industry.” The government will also change the legal and institutional system centered on individual sectors to help develop the convergence of industries. Deregulation requires legislation or revision of laws but both ruling and opposition party lawmakers are obsessed with the December presidential election. With only four months left before the incumbent administration ends , the government cannot ease regulation in the service sector. This is why many ask what all the fuss is about at the end of the administration.

Deregulation of the medical sector and hospitals is urgent to draw more foreign investors on the back of Korea winning the bid to host the Green Climate Fund in Songdo International Business District in Incheon. Since Songdo was designated an international free economic zone in 2003, several attempts were made to build hospitals but there is none for foreigners. This is because of a regulation that allows only non-profit organizations to establish a hospital. In early 2009, then Strategy and Finance Minister Yoon Jeung-hyun stressed deregulation in the medical industry but Health and Welfare Minister Jeon Jae-hee put on the brakes on the move. President Lee Myung-bak then stopped the discussion altogether, saying, “There should be no fights between ministries.” Opponents of deregulation say the move will merely benefit the rich, the privileged class want to block the entry of competitors, and government officials and politicians side with the elite.

The high-end service sector, especially medicine, tourism, finance, education and legal services, is value added and generates many jobs. It can create more demand in Korea despite the rapidly aging society and low growth. No presidential candidate has yet made a pledge on deregulation in the service industry. The so-called conglomerate-bashing economic democratization, about which many candidates compete to discuss, will only lead to tighter regulation, discourage entrepreneurship and investor sentiment, and stifle job creation.

The International Monetary Fund recently said in a global economic outlook report, “The world economy will not collapse but flounder in the mud until 2018.” The Korean economy is expected to slow gradually as it begins to age fast from 2016. If presidential candidates have an objective view on global trends and Korea`s own reality, they should devise plans to generate employment in a low-growth economy, including deregulation in the service sector. For a person who will run the country over the next five years to just talk about economic democratization and welfare is simply irresponsible.