Korea should maintain pace of regulatory form, finds OECD
OECD - Paris, 19 March 2007
Korea has made impressive progress in reforming its regulatory policies and institutions over the last few years but needs to keep up the pace of reform to ensure Korea’s long-term economic growth, according to a new OECD report.
Korea: Progress in Implementing Regulatory Reform, reviews changes that have taken place since 2000 when the OECD published its first review of regulatory reform in Korea. Strong political leadership has helped drive through these reforms, the report notes.
The Regulatory Reform Committee has simplified regulations and business formalities. The Korea Fair Trade Commission has gained a reputation for independence, integrity and transparency. The liberalisation of the telecommunications sector has improved services, lowered prices and driven innovation. Customs and public procurement procedures have been streamlined and made more transparent. Structural reforms have also made the economy more resilient.
More could be done, however, to make administrative regulations more transparent. Negative perceptions towards imports and foreign investment persist among the media and the general public: efforts to address this would also help broaden support for needed reforms. To boost innovation and productivity, Korea needs to invest more in human capital. Its tertiary education system needs reforms to meet the challenges of globalization as well as the ageing of the population.
Among specific actions, the OECD also recommends that Korea should:
- Improve coordination among the agencies in charge of regulatory reform. The growing number of bills introduced by assemblymen that are exempt from the regulatory quality process is also a concern. This could be remedied by putting in place a permanent mechanism in the National Assembly to ensure the quality of new laws.
- Measure the cost to business of administrative formalities in order to guide future action.
- Strengthen the investigative powers of the Korea Fair Trade Commission (KFTC) so it can, for example, conduct "dawn raids" to enter premises and gather evidence. A clear rule against hard-core horizontal cartels should be established.
- Eliminate the programmes protecting small businesses from competition and lift the remaining anticompetitive constraints that still apply in some professions, including professional and legal services.
- Make the Korea Communications Commission, the sector regulator, more independent and take steps to eliminate foreign ownership restrictions in fixed and wireless telecommunications.
- Open up markets further, especially in traditionally protected sectors such as services and agriculture. The online procurement system for government contracts launched in 2002, called the Korea On-line E-Procurement System, has increased transparency and efficiency and government departments should use it more often.
- Increase standards in tertiary education by giving clear legal autonomy topublic universities so that they have, for example, more management control. A system should also be established to improve quality assurance and public accountability.
The Korean government is one of a number of OECD countries - including all G7 countries - to have requested a broad review by the OECD of its regulatory practices and reforms. The report presents an overall picture, set within a macroeconomic context, of regulatory achievements and challenges including the quality of the public sector, competition policy and market openness. It also includes detailed reviews of the telecommunications sector and the tertiary education system.
Korea: Progress in Implementing Regulatory Reformis available to journalists on the password protected websiteor on request from OECD's Media Division. For further information, journalists are invited to contact Josef Konvitz, OECD Regulatory Policy Division (tel. [33] 1 45 24 97 47 or mailto:[email protected]),Stéphane Jacobzone, OECD's Regulatory Policy Division (tel. [33] 1 45 24 85 56/[33] 6 76 03 34 47 ou mailto:[email protected]) or the OECD Media Division (tel. [33] 1 45 24 97 00).