Moon administration is generating regulations behind the back

It has been revealed that the incumbent Moon Jae-in administration has been generating roundabout regulations by making amendments to enforcement decrees, an easier way to make changes to the regulatory framework than to making statutory revisions, while championing “revolutionary regulatory repeal” at the front. The joint analysis conducted by The Dong-A Ilbo and the Federation of Korean Industries revealed that 86.9% of a total of 5,800 regulations that have been either newly instituted or reinforced under the Moon administration were modifications of enforcement decrees and enforcement rules, much greater compared to the Lee Myung-bak administration (73.8%) and the Park Geun-hye administration (77.9%).

Even though some of the modified regulations introduced under the current administration, such as limiting the term of nonexecutive directors to six years and allowing a broader authority for the National Pension Service to participate in the management of businesses, are of critical importance, which may restrain private business activities, these regulations were swiftly introduced by circumventing the National Assembly’s legislative procedure. The National Assembly’s representatives are also producing many regulations by themselves. The regulatory legislations that the incumbent representatives under the current administration have tabled amount to a total of 4,100, triple the amount under the Park Geun-hye administration. This is translated to two to three regulatory legislations every day.

The regulatory sandbox, which the current administration proudly presents as the example of its innovative growth and regulatory reform, shows unsatisfactory results. Its intended purpose was to allow businesses to freely experiment with ideas, unfettered by regulations, as if children play in the playground. However, of some 600 projects that have been chosen for the past three years, a meagre 20% actually saw an easing of regulations. On the contrary, more than 40% of the projects failed to deliver results or dropped out in the process, due to either low feasibility or bureaucratic and multi-departmental regulations.

A number of healthcare and robotics technologies of the South Korean businesses that drew global attention at the CES 2022, which took place in Las Vegas in January this year, will not be commercialized in Korea because of regulations. Global game companies are mobilizing all efforts to develop cryptocurrency-based games, but such games are considered illegal in South Korea, and as such, Korean game companies are developing crypto games with an aim of launching them overseas, except for in Korea. The number of startups seeking to operate businesses overseas in an attempt to avoid regulations are on the rise as well.

The Fourth Industrial Revolution is often termed as a “regulatory revolution” rather than technology revolution, evidencing global race for developing new industries through regulatory reform. However, South Korea is losing growth momentum, as has been pointed out by the OECD’s analysis that estimated South Korea’s potential growth rate to plunge to 0% by the 2030s. If the government keeps on increasing regulations in a tricky manner while repeating an empty slogan of regulatory reform, the goals of growth recovery and creation of good jobs for young people will never be attained.