Core elements missing from measures to promote service sector

“We also wanted to try. But if we tried, we get into dispute all the time…Such a bill has never passed the National Assembly.

This is what a ranking official at the Strategy and Finance Ministry had to say, upon hearing comments that “something critical seems to be missing” on Thursday when the government announced “Phase 1 measures to promote the service industry.”

Expectations ran high even before the announcement because the latest set of measures was expected to enable pundits to gauge the government’s basic perception toward high value-added service industries, including education and medicine, as the Park Geun-hye administration’s first batch of measures to promote the service industry. The Lee Myung-bak administration, which repeatedly urged “deregulation of the service sector” and announced related measures on dozens of occasions, also failed to remove barriers to the development of the service industry.

Nevertheless, a policy report, which related ministries jointly released on Thursday, did not include all major issues that were mentioned as being urgent tasks required to create quality jobs and to develop the service industry.

Instead, it only included one line reading, “Tasks of dispute entailing conflicting interests will be addressed in phases based on social compromise.” The report thus only mentioned by pledging discussions “next time,” but avoided defining countless tasks over which no practical progress has been made despite ample discussions over the past 10 years. Such issues include the introduction of medical organizations open to investment (also known as for profit hospitals), attraction of foreign nonprofit education institutions to Korea, and establishment of incorporated drugstores.”

The Strategy and Finance Ministry also has much to say to excuse itself. “Opinions on the issue such as for-profit hospitals are not even coordinated among ministries let alone at the National Assembly,” said a source at the ministry. “Amid this situation, we have no choice but to address first things that can be handled for now, rather than single-handedly pushing to implement.”

This time, the report even failed to include “allowing remote medical treatment,” which the president instructed her administration to implement as an example of deregulation for fusion and convergence. The officially cited reason is “Discussions have yet to end,” but the reality is not the case. A government source said, “If remote treatment is to be introduced, the current Medical Act should be revised. But the moment one suggests ‘the Medical Act should be revised,’ the chance for the bill to pass the National Assembly gets to zero.” Watchers say that “ideological dogma” in Korean society, which makes certain matters sacred areas, has brought about "defeatism" among bureaucrats, who are tasked with devising and generating new policies.

The Strategy and Finance Ministry, the Science, ICT and Future Planning Ministry, and the Culture, Sports and Tourism Ministry held a meeting of economy-related ministers presided over by Deputy Prime Minister for Economy Hyun Oh-seok at the Export-Import Bank of Korea in Seoul on Thursday. They announced the “phase 1 measures to promote the service industry,” which calls for expanding the service sector businesses entitled to tax benefits including tax exemption for job-creating investments, and adjustment of the burden of public fees and expenses levied on service sector companies to the level of those of the manufacturing sector.

“The development of the service sector is linked to the fate of the Korean economy,” Hyun said, adding, “We will continuously push for ways to develop the sector based on a mid- to long-term perspective, rather than piecemeal measures.” The government said it has yet to determine the theme and announcement timing of a “Phase 2 measures.”