Industry Requests "Conduct Regulatory Impact Assessments for Legislative Bills Like Government Legislation"

Industrial Federation Forum Submits 10 Improvement Proposals to Ruling and Opposition Policy Committees
"Must Prevent Overregulation Legislation... Need to Abolish Large Business Group Designation System"

The industry sector has urged the political circles to introduce a regulatory impact assessment system for parliamentary legislation, similar to that for government legislation. They called for improvements as excessive over-legislation is a fundamental cause of increased criminal liability rates for CEOs and the proliferation of regulations.

[Image source=Yonhap News]

On the 18th, the Korea Industrial Federation Forum announced that it sent a proposal containing 10 improvement tasks to the Policy Committees of the People Power Party and the Democratic Party of Korea. The proposal was created based on opinions discussed at the 48th Industrial Development Forum held on the 27th of last month. The forum consists of 17 industry groups including semiconductors and batteries.

The 10 tasks presented in the proposal by the forum are ▲ introduction of a regulatory impact assessment system for parliamentary legislation ▲ establishment of regulatory science principles ▲ elimination of overlapping regulations ▲ tax system improvement ▲ expansion of flexible and selective working hours systems ▲ complete abolition of the large business group designation system ▲ removal of service industry regulations such as restrictions on large corporations opening stores in traditional markets ▲ improvement and mitigation of penalties under the Serious Accidents Punishment Act ▲ easing administrative sanctions instead of criminal penalties for minor violations that infringe on basic rights ▲ and easing regulations on entry into new industries.

First, the forum emphasized the need to introduce a regulatory impact assessment system for parliamentary legislation to change the culture of over-legislation. According to the forum, the number of regulatory-related bills proposed by lawmakers increased more than fourfold from 5,728 in the 17th National Assembly to 23,352 in the 21st National Assembly. The average annual number of bills in the 21st National Assembly was 1,999, which is higher than Japan (112), the United States (193), and the United Kingdom (31). The forum pointed out, "Unlike government legislation, parliamentary legislation does not undergo review by the Regulatory Reform Committee, which has led to a sharp increase in the number of regulatory proposals and bills."

The forum pointed out that over-legislation acts as a cause of higher criminal liability rates for Korean CEOs. Last year, the 'Economic Penal Provisions Improvement Task Force (TF)' investigated 414 economic-related laws and discovered 5,886 economic penal provisions. Many of these involved double penalties or joint liability provisions. The forum stated, "Korean CEOs face a higher risk of excessive criminal punishment compared to overseas CEOs."

The forum argued that discriminatory regulations against large corporations should be improved, as they cause side effects such as reducing quality jobs. In particular, the large business group designation system is said to induce a 'Peter Pan syndrome,' where small and medium-sized enterprises hesitate to grow into medium-sized or large corporations. The forum claimed, "The large business group designation system imposes excessive responsibility on the same person (head of the group) based solely on the total assets of the corporate group and applies up to 342 regulations. Such discriminatory regulations are rarely found overseas."

Tax system improvement was also deemed urgent. Korea maintains some of the world's highest levels of corporate tax and a four-tier progressive tax base system. The forum said, "Korea imposes excessive taxes on entrepreneurs, such as a 26% corporate tax and a 50% inheritance tax (up to 60% when applying a premium valuation on major shareholder stocks), which weakens the capacity to discover new growth engines and make new investments." They added that weakened labor flexibility and unclear penalty provisions under the Serious Accidents Punishment Act are causing domestic investment to shrink and promoting overseas relocation. The attraction of multinational corporations' Asian headquarters to Korea is also being hindered.

Jeong Manki, chairman of the forum, emphasized, "Various labor regulations not only make it difficult for young people and the unemployed to find jobs but also combine with large corporation regulations to cause Korea's birth rate to decline. The fundamental reason why Korea's birth rate is among the lowest in the world is that excessive corporate regulations are causing the disappearance of quality lifelong jobs."