The Korean government needs to ease regulations to reinvigorate the startup ecosystem, startup promotion organizations said in a policy recommendation report released on Aug. 20
The report says that while Korea’s startup investment environment has improved significantly, high regulatory barriers impede the growth of startups.
“The size of the government’s financial support for startups is expected to hit a record high of 1.10 trillion won (US$909.84 million) this year. However, a high level of regulations hampers the growth of startup companies,” said Asan Nanum Foundation chairman Lee Kyung-sook. “The government needs to protect the startup ecosystem by easing regulations.”
Lee was speaking at a forum held at the Korea Chamber of Commerce and Industry building in Seoul to present the 2019 “Startup Korea!” report.
The report was co-authored by the Asan Nanum Foundation, Google for Startup Campus, Startup Alliance and Korea Startup Forum. It was presented by Bain & Co.
The size of the government’s startup support programs has surged from 615.80 billion won (US$509.35 million) in 2017 to 1.10 trillion won (US$909.84 million) in 2019, according to the report. As the number of unicorn firms has increased to nine, South Korea is now the world’s No. 5 in terms of the number of startups with market valuation of over $1 billion. However, the figure falls far short of 177 in the United States and 94 in China. Startups have become the core driving force behind the South Korean economy, but there is still so much room for improvement in their status and competitiveness.
In particular, the report pointed out that 53 percent, or 31, of the world’s top 100 startups in terms of global cumulative investments faces restrictions in turning their business models into a money-making venture in South Korea due to entry barrier regulations. Thirteen firms, such as credit assessment platform WeCash and ride-hailing company Grab, cannot run business in South Korea at all due to regulations. Home-sharing giant Airbnb can do business only limitedly.
Ahn Hee-jae, a partner of Bain & Co. Korea, said, “The government needs to change Korea’s regulatory framework to a negative approach, shorten the time to assess the effects of regulations and create an environment where startups can have fair competition with existing operators.”