Reviving 'Entrepreneurial Spirit' to Save the Korean Economy... "The Solution is to Remove Regulatory Barriers"

[Financial News] "The fundamental reason our country has not achieved new growth for 20 years is the decline of 'entrepreneurial spirit.' It is important how quickly large corporations invest in new businesses, engage in mergers and acquisitions (M&A), and create portfolios, but such innovation is difficult." 
Song Seung-heon, representative of McKinsey & Company Korea Office, diagnosed this at the 'What is the Direction of Regulatory Reform for the New Government?' forum held by the Korea Chamber of Commerce and Industry at the KCCI Hall in Jung-gu, Seoul on the 14th, stating, "After growing in the 1960s-80s and 1980s-2000s, the Korean economy has not created 'new growth' for the past 20 years." 
Our country's economy grew through the success of state-led heavy chemical industries from 1960 to 1980. Afterward, from 1980 to 2000, the economy transitioned to advanced manufacturing led by corporations, allowing for another growth phase. However, there has been little change in the past 20 years. Meanwhile, national competitiveness has rapidly declined, dropping from 20th place last year to 27th this year, a fall of 7 places. 
Song stated, "Even looking at Samsung Electronics, a key domestic conglomerate, its sales in 2005 were about 80 billion dollars, surpassing the total sales of the Magnificent 7 (M7) companies, but not anymore," adding, "In a non-growing economy, all sorts of side effects occur, such as abnormal educational fervor, declining birth rates, and inter-class conflicts." 
The key lies in reviving entrepreneurial spirit. Entrepreneurial spirit is literally the spirit of challenge, willing to take on risks in new areas in anticipation of high returns. However, it is difficult to demonstrate this entrepreneurial spirit due to regulations that block innovation. There are calls to review and examine regulations with high impact, such as the Inheritance Tax Act, Personal Information Protection Act, Venture Investment Act, Separation of Banking and Commerce Act, AI Basic Act, and the 52-hour Workweek Act. 
Song noted, "In the 22nd National Assembly, 11,000 new bills were proposed, about 30% of which were regulatory," and "The World Bank's Regulatory Quality Index ranks Korea 24th out of 38 OECD countries. (Regulations) are holding back a lot of innovation," he evaluated. 
Regulatory relaxation is also necessary for emerging startups. Choi Ji-young, Executive Director of the Korea Startup Forum, pointed out, "Startups are increasingly avoiding entrepreneurship in areas with regulations," and "(Regulatory relief) is important not only for the growth of existing companies but also for companies that will be born in the future." 
As there is not much time to create growth opportunities, the opinion was raised to pre-test in a 'Mega Sandbox' style. Lee Jung-hee, a professor at Chung-Ang University, suggested a model of pre-testing and then implementing, stating, "The regulations we face now can take years just for discussion." For example, applying region-specific exceptions such as flexibly adjusting inheritance taxes within certain zones or allowing flexible working hours in R&D special zones to loosen regulations. 
Jeong Byung-kyu, Director of Regulatory Innovation Planning at the Office for Government Policy Coordination, stated, "(This discussion) will be thoroughly reviewed in the process of designing the system," and "For regulatory relief, discussions related to regulations must continue not only in the government but also among political circles and interest groups." soup@fnnews.com Lim Soo-bin Reporter