One-fourth of startups consider going abroad due to regulations
About 25 percent of Korean startups are considering relocating overseas due to excessive regulations, according to a recent survey by the Korea International Trade Association. Nothing more aptly shows the problem of bureaucratic red tape here than this opinion poll. If firms that have just started business face this problem, more companies that have grown and reached maturity have also likely considered going abroad.
Each preceding administration declared a "war on regulations," but the result was always the opposite. According to another business survey, the number of regulations totaled 14,961 this past May, remaining hardly changed from 14,857 a decade ago. While some bureaucrats and politicians called for regulatory reform, other officials and legislators mass-produced regulations.
Of the 304 regulatory laws newly introduced or strengthened since 2017, 271, or 90 percent, were sponsored by legislators. One of the reasons for so many lawmaker-sponsored regulatory laws is that they, unlike central government-initiated bills, need not undergo a regulatory impact assessment.
In this era of the Fourth Industrial Revolution, it is no exaggeration to say that the future of Korea, Inc. depends on startups. However, an analyst said that 55 of 100 global "unicorns" ― unlisted companies with a corporate value of 1 trillion won ($733 million) or more ― would not have tried to start a business in Korea due to regulations. A country with such a business environment has no future. And that explains why some experts point out that regulatory reform is the best investment in startups and the No. 1 policy to foster them.
Policymakers should first convert entry barriers, which account for more than 70 percent of business regulations, from the current positive system to a negative formula. By doing so, they ought to guarantee free corporate activities in new business areas, such as mobility, telemedicine and artificial intelligence. Above all, the National Assembly must quickly enact the pending bill, which calls for the mandatory assessment of the impact of legislator-sponsored regulatory laws, to put the brakes on regulatory expansion.
About 25 percent of Korean startups are considering relocating overseas due to excessive regulations, according to a recent survey by the Korea International Trade Association. Nothing more aptly shows the problem of bureaucratic red tape here than this opinion poll. If firms that have just started business face this problem, more companies that have grown and reached maturity have also likely considered going abroad.
Each preceding administration declared a "war on regulations," but the result was always the opposite. According to another business survey, the number of regulations totaled 14,961 this past May, remaining hardly changed from 14,857 a decade ago. While some bureaucrats and politicians called for regulatory reform, other officials and legislators mass-produced regulations.
Of the 304 regulatory laws newly introduced or strengthened since 2017, 271, or 90 percent, were sponsored by legislators. One of the reasons for so many lawmaker-sponsored regulatory laws is that they, unlike central government-initiated bills, need not undergo a regulatory impact assessment.
In this era of the Fourth Industrial Revolution, it is no exaggeration to say that the future of Korea, Inc. depends on startups. However, an analyst said that 55 of 100 global "unicorns" ― unlisted companies with a corporate value of 1 trillion won ($733 million) or more ― would not have tried to start a business in Korea due to regulations. A country with such a business environment has no future. And that explains why some experts point out that regulatory reform is the best investment in startups and the No. 1 policy to foster them.
Policymakers should first convert entry barriers, which account for more than 70 percent of business regulations, from the current positive system to a negative formula. By doing so, they ought to guarantee free corporate activities in new business areas, such as mobility, telemedicine and artificial intelligence. Above all, the National Assembly must quickly enact the pending bill, which calls for the mandatory assessment of the impact of legislator-sponsored regulatory laws, to put the brakes on regulatory expansion.
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