Act on Chemicals
Those in the business world are greatly concerned over the implementation of the Act on the Registration and Evaluation of Chemical Substances. Particularly, they are anxious about the huge costs entailed by the registration of a small amount of novel chemical substances. They are also worried about multinational testing agencies’ dominance in a chemical substance testing and analysis market that is expected to reach at least several trillion won, several billion dollars, in size.
According to a report published recently by the Ministry of Trade, Industry and Energy, local testing organizations’ capabilities are insufficient and their foreign counterparts are likely to dominate the market once the Act on the Registration and Evaluation of Chemical Substances becomes effective. In particular, Korea has no testing agency at all when it comes to 17 out of the 46 testing categories stipulated in the law -- 15 with regard to environmental hazards and two concerning harmful effects on the human body.
Once the law takes effect, a huge new market will open up in the field of chemical substance registration and evaluation. The thing is, foreign entities are predicted to take up the largest part of it. Korean testing organizations are currently meeting just 46.3% of the total demand, but the percentage is forecast to drop further down the road.
“Foreign agencies’ analysis costs are twice to five times more expensive than those priced by Korean organizations,” said an industry insider, adding, “It seems that all of our options are running out but resorting to multinational organizations.” A petrochemical industry source echoed by saying, “The new market worth several trillion won could end up in their hands if the testing and evaluation market was encroached upon by them.”
According to the Act on the Registration and Evaluation of Chemical Substances, even those materials in an R&D stage are required to be registered. Entrepreneurs are claiming that such regulations could result in delays in R&D activities and the launching of new products.
The report published by the ministry supports their opinion. It points out that the registration and evaluation of chemical substances takes 10 months on average -- nine months for the testing and analysis for the registration of harmful data and three months for the registration. It added that the process takes at least 10 months on average under the Registration, Evaluation, Authorization and Restriction of Chemicals (REACH) regulation in effect in Europe.
Researchers and developers create various types of new chemical substances for experiments and the like. If the registration procedure takes as long as 10 months before the materials are allowed to be used, they cannot but face a significant decrease in their competitiveness against foreign companies.
The report also mentioned that the clause for a mandatory provision of the amount of use and sales volume of chemicals could lead to trade secret piracy and affect the business activities of small firms. This is why Gyeonggi Province governor Kim Moon-soo is strongly against the act as well. “The 2,800 or so companies located in Gyeonggi Province would be on the brink due to the financial burden amounting to 1.6 billion won per substance and deterred R&D efforts,” he commented. Under the circumstances, the Gyeonggi Research Institute under the provincial government is doing studies regarding the possible impact of the region, and is planning to announce the research result within this year. The Federation of Korean Industries (FKI) has voiced concerns over the implementation of the law, too.
“Before the act comes into effect on the first day of 2015, we need to prepare lower statutes to provide against its potential side effects,” an industry expert emphasized, continuing, “At the same time, I would like the government to be all ears to the business community with regard to the Toxic Chemicals Control Act and the Environmental Pollution Damage Compensation Act as well.”