On April 4, at the launch ceremony of the Corporate Growth Forum held at the Lotte Hotel in Jung-gu, Seoul, Chey Tae-won, the Chairman of the Korea Chamber of Commerce and Industry, delivered a compelling keynote address warning of the impending stagnation of the South Korean economy. In his speech, he emphasized the detrimental impact of increasing regulations on businesses, particularly as companies grow in size. With a stark observation that the economy is veering towards a 0% growth trajectory, he posited that without regulatory reforms, economic growth would remain elusive.
Chey highlighted a concerning trend where the regulatory burden escalates with the size of the enterprise, thereby stifling private sector vitality. He pointed out that over the past three decades, while the private sector has contributed significantly to economic growth—accounting for 8.8%—the government’s contribution has lingered at a mere 0.6%. This disparity illustrates the pressing need for a re-evaluation of the regulatory framework that disproportionately hampers middle and large enterprises.
During his address, Chey presented statistical findings from a joint study conducted by the Korea Chamber of Commerce and a research team led by Professor Kim Young-joo from Busan National University. This study revealed that there are 343 separate regulatory measures affecting businesses, with the transition from small to medium-sized enterprises resulting in an increase of 94 regulations, and an alarming 329 additional regulations imposed once a company reaches large enterprise status. This regulatory escalation creates a chilling effect on entrepreneurial ambition, discouraging companies from striving for growth and innovation.
Chey shared poignant anecdotes from small and medium enterprises (SMEs) that have expressed their aspirations to scale up but are deterred by the complexities and challenges posed by regulatory constraints. He articulated that many SMEs are caught in a risk-averse mentality, often opting to remain within the bounds of their current size to avoid the pitfalls of increased regulation. The current regulatory environment creates a paradox where achieving greater success becomes a liability rather than an incentive.
The Chairman criticized the archaic approach of maintaining a regulatory structure that was once deemed appropriate during periods of rapid economic development. He pointed out that in today’s landscape, where growth drivers are faltering, such a framework only serves to hinder progress. He argued that simply amending this regulatory paradigm could significantly alter the economic landscape, allowing for more robust growth trajectories.
Chey emphasized the importance of shifting the focus of regulations from punitive measures towards incentivizing performance. He called for the elimination of tiered regulatory frameworks that inhibit enterprise growth, advocating instead for a system that rewards companies based on their achievements. Drawing parallels to historical policies that supported exporters during South Korea’s export-driven growth era, he insisted that similar frameworks should be developed to foster the emergence of large corporations in today’s economy.
The Chairman also noted that the current regulatory environment is particularly restrictive for companies attempting to leverage external funding for substantial investments, referencing Japan’s SoftBank as a model of success in utilizing external capital. He questioned the rationale behind the existing asset thresholds that dictate regulatory treatment, suggesting that such arbitrary distinctions need to be critically reassessed.
In conclusion, Chey Tae-won reiterated the urgency for reform, stating that without addressing these regulatory challenges, the prospects for economic growth would remain bleak. He committed to the ongoing efforts of the Corporate Growth Forum, which will focus on identifying unnecessary regulations, promoting performance-based support, and fostering a positive perception of large corporations. He urged a paradigm shift where the current ethos of expecting large companies to yield benefits must evolve towards a system that incentivizes growth and innovation across the corporate spectrum. The need for regulatory ‘free zones’ to stimulate growth, even in smaller regions, was also suggested as a viable strategy to enhance competitiveness and entrepreneurial dynamism in South Korea’s economy.
[관련기사] https://n.news.naver.com/mnews/article/016/0002524099?sid=101
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