10 Out of 7 New Industry Companies Blocked by Regulations Face 'Business Delays'

KCCI Survey on Business Perceptions of New Industry Regulatory Environment
Top 3 Issues in New Industry Regulation: ① Positive Regulation ② Entry Barriers ③ Inadequate Legal Systems

[Asia Economy Reporter Yoonju Hwang] Companies facing regulatory difficulties in new industries have experienced business disruptions such as ▲project delays ▲business downsizing or changes ▲unnecessary cost expenditures. It was found that 1 out of 10 companies gave up their business.

The Korea Chamber of Commerce and Industry (KCCI) conducted a survey on the "Perception of Regulatory Environment in New Industries" targeting 244 companies that have entered or plan to enter new industries. The results showed that 7 out of 10 companies (71.8%) experienced regulatory difficulties. Following that, 37.9% reported business downsizing or changes, and 34.7% experienced additional costs. Companies that responded with 'business abandonment' and 'promotion of overseas expansion' were 12.1% and 10.5%, respectively.

The types of regulatory difficulties experienced by companies entering new industries were mostly cases where "there is no legal basis or it is unclear" (55.6%). This was followed by "complex administrative procedures such as certification and permits" (47.6%), "complete prohibition of products or services" (34.7%), and "restrictions on qualifications such as facilities and business history" (19.4%).

Top 3 Issues in New Industry Regulations: ① Positive Regulation (30%) ② Entry Barriers (28%) ③ Inadequate Legal System (27%)

Companies identified the biggest problem in the regulatory environment of new industries as the "positive regulation method that prohibits everything except those explicitly allowed by law" (29.9%). This was followed by "high entry barriers such as capital and business history restrictions" (27.5%), "inadequate legal systems applicable to new industries" (26.6%), and "passive attitude of public officials" (13.1%). Meanwhile, the overall evaluation of the regulatory environment in new industries was an average score of 2.8 out of 5.

Professor Seokin Jang of the Korea University of Technology and Education said, "From the perspective of companies developing new technologies, products, and services that did not exist before, the current positive regulatory system that only allows what is listed in the law is the biggest obstacle," adding, "To promote corporate innovation activities and strengthen the competitiveness of new industries, it is urgent to establish a regulatory environment that allows businesses to proceed."

Perception of Improvement in New Industry Regulatory Environment is Divided... ‘Feeling Improvement’ 49.2% vs. ‘Difficult to Feel Improvement’ 50.8%

When asked whether they feel the improvement of the regulatory environment in new industries, 49.2% responded that they do feel it, while 50.8% said it is difficult to feel.

Positive factors contributing to the perception of regulatory environment improvement included the government's "continuous institutional improvements" (36.7%) and "regulatory exemptions such as regulatory sandbox and regulatory free zones" (31.7%). This was followed by "establishment of standards such as certification and specifications" (19.2%), "spread of proactive administrative culture" (8.3%), and "operation of various regulatory improvement channels" (4.1%).

The factor making it difficult to feel the improvement in the regulatory environment was most commonly cited as "focusing on minor regulatory improvements rather than core regulations needed in the field" by 56.5% of companies. This was followed by "lack of government coordination of interests" (15.9%), "offsetting improvement effects due to new regulatory strengthening" (14.5%), and "excessive time required for regulatory improvements" (13.1%).

Desirable Direction for New Industry Regulatory Policy: Expansion of ‘Regulatory Exemption (Prior Permission, Post Regulation)’ (53%), Demand for ‘Active Coordination of Interests’ (25%)

Companies viewed the most important task for improving the regulatory environment in new industries as "expanding regulatory exemptions for new industries (prior permission, post regulation)" (53.3%). This was followed by "active coordination of interests by the government" (25.0%), "strengthening prior impact assessments for new or strengthened regulations" (13.9%), and "adjusting excessive regulations compared to competing countries" (6.6%).

Lee Sangheon, head of the Regulatory Innovation Team at KCCI, said, "Not only bold regulatory reforms suitable for the 4th Industrial Revolution era but also expanding regulatory exemptions for new industries and active coordination of interests should be strengthened to provide tangible improvements that can be felt on the ground and practical help for business promotion."

This content was produced with the assistance of AI translation services.