Korea now boasts top-notch manufacturers such as Samsung and Hyundai Motor, rolling out smartphones, televisions and cars that impress global consumers.
But Korea’s performance in service industries is dismal. The proportion of the service sector to the nation’s GDP fell to 57.3 percent last year, from 60.3 percent in 2008. It compares with 78.6 percent in the U.S., 72.7 percent in Japan and 79.2 percent in France.
Value added by the service sector has been falling remarkably, to 55.3 percent of GDP in 2010, from 61 percent in 2005. This runs counter to the global trend whereby the service industry’s significance grows as the economy develops.
This grim picture of the nation’s service industry offers a stark contrast to that of other countries that are successfully driving service industries as growth engines. Singapore, for instance, has been promoting service industries including tourism since 2005.
It even allowed casinos, which otherwise would have been unthinkable in the city-state, which takes a firm line on ethics and social order. The results have been spectacular. Since 2010, the number of foreign visitors to Singapore increased by 40 percent, tourism revenue expanded by $10 billion and 60,000 new jobs were created.
There is no reason we cannot achieve the same success. In this context, the Park administration’s ambitious plan to develop the service sector should be carried out without a hitch. The government has chosen five areas ― health care, tourism, education, finance and software ― as core industries, but there could be other promising areas, such as law, retail, culture and arts.
Deregulation is the buzzword whenever there is a discussion on how to develop Korea’s service industry. Perhaps President Park bore the past governments’ repeated promises and failures to deal with this problem in mind when she called regulations an “enemy to crush” and “cancerous growths” early this week.
But Park is not the first president to show determination to remove unnecessary or excessive regulations. In order to make the government’s deregulation drive successful, persuading or pressuring bureaucrats is essential, because their resistance is the biggest barrier.
Also important is dealing with selfish groups bent on protecting their vested interests ― like the doctors who oppose allowing telemedicine and for-profit businesses connected to hospitals.