According to Yonhap News,

(SEJONG = Yonhap News) The regulatory reform scheme, which was included in the government’s three-year economic innovation plan, mainly focuses on improving the investment climate for businesses.

“When I say regulatory reform, I mean job creation,” President Park Geun-hye has said. The government intends to create a virtuous cycle of revitalization for the business sector and job creation through its reform scheme.

The primary objective of the scheme is to control the number of new regulations and eliminate excessive regulations by implementing a negative system and a cap on the total number of regulations.

But it is often hard to change the regulatory framework, as many stakeholders are involved in the regulation-making and revising process, such as the central and municipal governments, conglomerates, small and medium-sized enterprises (SMEs) and other economic entities.

For this reason, Park decided to chair the regulatory reform conference, which was presided over previously by the prime minister. In the quarterly conference, the president will evaluate reform progress and seek measures to resolve structural problems, which is why the business community welcomes the government’s plan with open arms.

◇The government’s decision to revise the corporate governance system

The total number of regulations registered with the Regulatory Reform Committee (RRC) dropped from 10,000 to 7,000 during the Asian economic crisis. But the number has grown steadily every year and reached 15,269 at the end of 2013.

Three hundred and thirty five economy-related regulations were created between 2008 and 2012, with 153 market entry regulations and 19 price regulations.

To this end, the government decided to carry out a sweeping revision of its corporate governance system.

First, the government is set to bear down on the volume of regulations by introducing a cap on the total number of regulations. It will benchmark the U.K.’s “one-in, one-out policy,” which measures costs of government policies on a monetary basis.

The government will push ahead with a policy that gradually increases deregulation costs to lead a progressive decrease in the total number of regulations, and conduct a government department performance evaluation and announce the results to the public annually.

In addition, the government will implement a sunset provision, which sets expiration dates and reassessment periods for existing regulations in advance to decide whether the regulations should continue to exist.

The government plans to introduce a negative system, which aims to eliminate all regulations except for specifically listed cases, and affiliate the system with the sunset provision to widen the scope of application of the provision.

It also plans to draw up overall guidelines for the system in the first half of this year and periodically assess its regulations to eliminate those considered unnecessary.

Along with its regulatory reform scheme, the government will also improve the RRC’s website (www.better.go.kr) and share information about the progress and results of its regulatory reform with the public.

◇ Removal of the Green Belt and introduction of the investment promotion scheme were excluded from the three-year economic innovation plan.

However, the government made a last-minute decision to exclude the “core regulatory improvement measures for business activities” and “industrial investment promotion measures,” the action plans that were submitted by the Ministry of Strategy and Finance (MOSF), from its three-year economic innovation plan.

“We still need to push ahead with the plans with other general tasks of the government, for the government’s overall policy direction remained unchanged,” said an MOSF official.

The government will lift the development restriction on the green belt in a bid to ease industrial site regulations for businesses.

The gross area of the green belt in Korea was nearly 238 km2 as of last year. In 2008, the government decided to relax controls on a total of 532 km2 of green belt land, and 293 km2 of land has been declassified since then.

“The government is more likely to focus on easing land use regulations on the green belt, rather than increasing the size of the target area,” said another MOSF official.

Declassified green belt lands are currently designated as exclusive residential areas, and only low-rise residential buildings and apartments were allowed to be built within the areas. The government is expected to revise land use regulations to loosen controls on such land. Under the revised land use regulations, the declassified green belt land will be designated as semi-industrial and neighboring commercial areas, which will be allowed to host factories and commercial facilities with a gross floor area of less than 5,000 m2.

Other than business site location support, the government will also ease regulations on various business activities such as the establishment of new businesses, employee recruitments, corporate financing, sales activities and pending corporate investment projects as part of its quarterly investment promotion plan.

This year, the government will focus on revitalizing the regional economy, strengthening the competitiveness of venture start-ups and SMEs and developing future growth engines and the prospective service industry.