[Interview] Minister of SMEs and Startups: "Startup Regulations Deferred for 3 Years... Startups Are a National Priority"

"Removing Tangible and Intangible Startup Regulations"
Regulation Suspension and Inter-Ministerial Discussions
Plans to Strengthen Entrepreneurial Education
Emphasis on Labor-Management Relations and Establishing Intangible Transactions

Lee Young, Minister of the Ministry of SMEs and Startups, has rolled up his sleeves to revitalize the spirit (氣) of entrepreneurs. He is willing to engage in intense discussions with heads of other ministries to untangle complex intertwined regulations. To establish fair trade order, he is implementing a payment linkage system for supply prices and is closely consulting with the Ministry of Education to reflect on the meaning of entrepreneurial spirit.

◆ Full-scale regulatory reform... Supporting new industry startups = The Ministry of SMEs and Startups’ budget for this year is approximately 13.5 trillion won. With the disappearance of COVID-19 response budgets such as loss compensation, the budget has decreased by 28% (5.3 trillion won) compared to last year. When finances shrink, management naturally becomes more frugal. The ministry plans to focus on policies that deliver results on the ground by evaluating the efficiency of projects. The best way to help the private sector demonstrate its capabilities without spending a lot of money is ‘regulatory relaxation.’

In an interview with Asia Economy, Minister Lee said, "Removing tangible and intangible startup regulations is the best startup policy," adding, "It is a national task that requires full effort." First, a system will be introduced to defer newly established or strengthened regulations for startups for three years. The purpose is to guarantee freedom of business activities during the period of creating business models and testing them in the market.

There are three ways to establish the deferral system: △enactment of a special law △amendment of the Small and Medium Enterprise Startup Support Act △amendment of the Framework Act on Administrative Regulations. One of these will be chosen through research. Except for cases involving public concerns such as public safety and environmental pollution, the deferral benefits can be applied.

Complex regulations that fail to keep up with the pace of market changes will be resolved through inter-ministerial discussions. This is called ‘breaking regulations.’ A typical example is regulations blocking the commercialization of electric cargo bicycles. Eco-friendly electric bicycles are suitable as cargo transport means for short-distance delivery or courier services but are hindered by various regulations such as weight (30 kg), width (1 m), and speed limit (25 km/h). Minister Lee will bring together entrepreneurs appealing for relaxation of electric bicycle regulations and related ministries (Ministry of the Interior and Safety, National Police Agency, Ministry of Trade, Industry and Energy) to initiate regulatory reform. He said, "I want to send a signal of change to the private sector struggling to enter the market because outdated regulations are still applied despite changes in market conditions."

Lee Young, Minister of SMEs and Startups / Photo by Jinhyung Kang aymsdream@

◆ "Labor and management must go together" ... Criticism of politicization = To boost morale and enhance entrepreneurial spirit in the small and medium business sector, which has suffered from various labor regulations such as the Serious Accident Punishment Act and the 52-hour workweek system, the ministry is also consulting with the Ministry of Education. Minister Lee said, "The Republic of Korea exists today because entrepreneurs who challenge and innovate have contributed to society and the nation," adding, "Entrepreneurs deserve respect, and founders are socially meaningful professions. It is necessary to widely spread this message." He also said, "We are discussing with the Ministry of Education the establishment of programs that reflect on entrepreneurial spirit and the meaning of startups for elementary, middle, and high school students through after-school courses."

Minister Lee emphasized the partnership between labor and management and also criticized the political sphere. He said, "There are no workers without entrepreneurs, and no companies without workers," adding, "We must reflect on the past when labor exploitation and unfair corporate culture were widespread and move forward together with labor and management."

He also pointed out, "Politics has pursued the direction of politicizing one side by seizing the keyword ‘worker’ rather than solving issues and uniting the people." He criticized political behavior that fuels polarization, saying, "Noisy and sensational things may immediately attract attention and surface, but if they are not essential, they will fade away."

◆ After the linkage system... Promoting fair pricing for software = The payment linkage system, a 14-year-long wish of the small and medium business sector, will be implemented from the second half of this year. The legalization of the payment linkage system achieved by Minister Lee is regarded as a milestone in the history of small and medium enterprises. He said, "It is the first step toward establishing a fair and win-win trade culture," adding, "I hope the vicious cycle of repeated management difficulties for small and medium enterprises during periods of raw material price surges will be resolved."

The Ministry of SMEs and Startups has begun working on detailed regulations such as enforcement ordinances to concretize the system. Since it is the first year of implementation, the focus is on creating a framework that works in the market. Regarding criticism that the law is too loose because it reflects the position of large corporations, Minister Lee said, "It takes three years to settle one law," adding, "If the legal provisions are too strong, realism decreases and illegal or unlawful acts become widespread." Through amendments to enforcement ordinances, the authority to investigate and sanction violations of the payment linkage system will be delegated to the heads of local Small and Medium Venture Business Offices.

Minister Lee’s long-term goal is to establish a system that fairly buys and sells intangible values such as software, content, and consulting. His philosophy, based on his experience founding a software company, is that it is more difficult to receive fair compensation in intangible asset transactions than for visible goods. He said, "The digital economy means entering a system where intangible values compete," adding, "We will create a culture that leads the digital economy by not only ensuring fair trade but also inducing changes in the awareness of economic actors."

He calmly said, "I have set many tasks like this for this year as well, but only heaven knows what the results will be," adding, "If the results are good, I will be grateful and say ‘luck was on our side,’ and if not, I will internalize the ministry’s capabilities and believe that results will come someday."