Outdated rules trap Korea in regulatory republic

Examining the proposals that business groups submit for regulatory relief makes clear how long society has remained trapped in a web of restrictions. Even in 2025, some rules still invite the question, “Do such things really exist?” Regulations fit for the mid-20th century continue to shape the economy a century later.

A telling example is the regulation on establishing research institutes. To qualify for a tax credit, a corporate lab must have four physical walls. No matter how much state-of-the-art equipment or talent it gathers, without walls it is not recognized as a research center. The rule was originally intended to prevent sham laboratories from abusing tax benefits.

Today the situation is entirely different. In fields such as information technology, biotechnology, and design, open labs that use space flexibly have become the standard. Cutting-edge laboratories worldwide work in wide spaces without even a glass partition. Yet Korean law still insists on solid walls. It is like demanding that a communications network in the smartphone era be built around a rotary phone.

Advertising rules show a similar inconsistency. The same commercial can air on television with only self-regulation, but in theaters it requires prior review by the Korea Media Rating Board. The stated reason is that moviegoers are a captive audience before the film begins. In practice, the inconsistency stems from the division of authority between the Broadcasting Act and the Promotion of Motion Pictures and Video Products Act.

Why do these outdated and irrational regulations remain? The writer recalls covering the Office for Government Policy Coordination during the Park Geun-hye administration’s “war on regulation.” At the time, a civil servant explained, “Regulations are also laws. Once enacted, it is naturally difficult to abolish them.”

Korean society has a strong tendency toward legalism, seeking to control everything through statutes. When problems arise, the first response is to draft new rules. As a result, regulations continue to multiply. Each one brings a bureaucracy to enforce it, and once allies of regulation are established within government, the rules take on a life of their own.

The recent debate over the so-called Yellow Envelope Law, an amendment to Articles 2 and 3 of the Trade Union and Labor Relations Adjustment Act, risks becoming the latest example of unreasonable regulation despite its good intentions. The bill is meant to protect workers. Yet under the current draft, companies would be required to respond to bargaining demands from an unspecified number of subcontracted workers and to recognize labor disputes pursued for political purposes. With businesses already tightly bound by labor, safety, and environmental rules, this bill would add yet another noose.

For the Korean economy to grow again, the first task is to break the vicious cycle of regulation. Unlike the United States, Korea cannot pressure global companies to relocate, and unlike China, it cannot rely on vast domestic demand to nurture new industries. The United Kingdom, facing similar limits, adopted the “One In, Two Out” rule a decade ago, abolishing two existing regulations for every new one created. Korea has pledged several times to introduce the system but has yet to make it stick.