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Deregulation Seen as King Pin of Economic Reformation
Shortcut to Escape Recession
Deregulation Seen as King Pin of Economic Reformation
  • By matthew
  • July 25, 2014, 08:45
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The United Kingdom started a new regulation improvement system ‘one-in, one-out’ in 2011. When a new regulation is applied, one existing regulation which has equivalent costs to the new one is removed. This maintains aggregate regulation costs to a certain level with very powerful influence. Since this new system started in 2011, £1.2 billion (2.1 trillion won, US$2.0 billion) of corporate regulation costs have been saved. The British government made a very precise decision to pick the right regulation reformation card for economic recovery.

Professionals agree that regulation improvement is the number one priority to revive the Korean manufacturing industry. Jung Yoon-jin, a chief researcher at the Regulation Reformation Team of the Federation of Korean Industries explained, “Regulation formation, different from interest rate cuts or quantitative easing, is a very effective economic revival policy to boost corporate investment and create jobs without additional government expenditures.”

In fact, according to the report of the Federation of Korean Industries, the per capita gross domestic product (GDP) of Korea will increase by 2.6 percent if the Korean market is deregulated to similar levels of low-regulation countries including the U.S., U.K., and Australia. This is why Park Yong-man, chairman of the Federation of Korean Industries, emphasized, “Regulation improvement is a King Pin for economic restructuring.”

Industries expect a “one-in, one-out” system to be started in Korea next year as well, upon the implementation of administrative regulation reformation law. A regulation improvement request system for anyone to propose to improve regulations that obligates a response from the related ministries within 14 days is also expected. Ko Yong-ee, Regulation Reformation Team Leader of the Federation of Korean Industries, evaluated, “Most importantly, criteria for regulation improvement changed to quality-oriented from numbers-oriented in the past.”

Industries insist on establishing a regulation improvement system to not be influenced by regime. Although they have been claiming to improve regulations since the start of civilian government, consistent improvement could not be done since the agreements, methods, and systems for regulation improvement change with each new administration.

In the long term, ex-post regulations are the solutions for corporate regulation, according to industries. Lee Kyung-sang, director at the Economic Research Center of the Korea Chamber of Commerce and Industry, said, “Most advanced countries are deregulating, but enhancing ex-post responsibilities instead. With an ex-post regulation system, regulation effects will be achieved, while most good companies could obtain autonomy.”