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[Editorial] Regulatory barriers

Outdated regulations stifle creative business ideas

Under the vision of making Korea a “creative economy,” the government has been striving to foster new businesses based on creative ideas and emerging technologies. Yet the government’s efforts are seriously hampered by Korea’s regulatory backwardness.

The Korean Chamber of Commerce and Industry recently released a report showing how outdated regulations or the absence of proper regulations are stifling efforts to start a business using such new technologies as the Internet of Things, 3-D printing, self-driving cars, drones and medical food.

In the Internet of Things area, the report says telecom service providers cannot engage in development of IoT sensor devices and other equipment based on their expertise in communication technologies, because the relevant law, enacted long ago, bans telecom service providers from engaging in equipment manufacturing.

Wireless sensor technology can also be used for the development of intelligent disaster-prevention facilities, such as evacuation guidance devices that notify occupants of a fire by detecting smoke through a sensor and then provide evacuation routes. But local firms cannot produce such IoT-based smart devices because there is still no standard for approval of such products.

These days, robots are widely used for logistics applications. But in Korea, robots cannot be used to operate elevators because the current safety standard for electrical appliances only allows humans to operate elevators. In Korea, drones cannot be used extensively for industrial purposes either, as there exists no detailed guideline on their use.

In advanced countries, 3-D printers are increasingly used to produce artificial limbs and organs. But in Korea, there is still no safety standard for 3-D printers other than that used for office printers. This detracts from the credibility of Korean-made 3-D printers.

The law on blood management also deters the development of diverse medical products using blood, because it enumerates only 22 medical products that can be made of blood.

Similarly, the law on cosmetics only recognizes three types of functional cosmetics — antiaging, whitening and sun block. It hinders the development of cosmetics with other functions, such as skin repair and skin nutrition.

The government is not unaware of these problems. It recently announced a plan to establish “regulation-free zones” in major cities and provinces in a bid to foster new industries based on emerging technologies. In a regulation-free zone, a provincial government can nurture one or two industries of its choice free of all regulatory constraints.

The plan was conceived because of the difficulty of scrapping all outdated regulations with a single stroke. But its effectiveness is questionable at best. It remains to be seen how the government could remove all regulatory red tape in a regulation-free zone.

Furthermore, it is uncertain when the plan could be implemented. The government plans to submit a bill to the National Assembly in June this year. Given the slow legislative process these days, nobody can tell for sure when the bill might be approved.

The fundamental problem is that Korea’s business-related regulations are based on what is called a “positive” approach, under which regulations specify business activities that are allowed, banning all others.

This method of regulation makes it difficult for entrepreneurs to take advantage of new technologies as they are banned from selling new products or services not included in the list of permitted activities.

To create a propitious environment for starting a business in new technology fields, the government needs to overhaul the regulatory framework based on a more flexible “negative” approach. This task obviously requires endorsement from the ruling and main opposition political parties.