[fn Editorial] A staggering 343 regulations blocking business growth

Choi Tae-won, Chairman of the Korea Chamber of Commerce and Industry, warned on the 4th that "economic growth will not occur if regulations are not lifted." He urged the abolition of step-by-step regulations, citing that private sector vitality is declining due to the structure where government regulations increase as the size of companies grows. Chairman Choi emphasized the need for regulatory reform across the economy through a keynote speech at the launch ceremony of the Business Growth Forum held that day.

The Business Growth Forum is a meeting jointly launched by economic organizations such as the Korea Chamber of Commerce and Industry, the Korea Economic Association, and the Korea Mid-sized Business Federation. The purpose is for the business community to consider the measures together in line with the government's growth-oriented policy. The business community has put forward the abolition of regulations as a prerequisite for growth. It is argued that the exit for the Korean economy, which is stuck in a low-growth quagmire, lies in regulatory reform. They said that instead of merely advocating for business-led growth, the government should stop hindering businesses.

Small businesses must be full of will to grow into mid-sized companies by increasing sales, and mid-sized companies must be able to dream of even greater growth for the economy to have hope. However, the current situation is the opposite, which is problematic. This is also revealed in the "Differential Regulation Survey" announced by Professor Kim Young-joo's research team at Pusan National University that day. It is said that there are 343 differential regulations for companies in 12 economic-related laws. The moment a small company becomes a mid-sized company, regulations increase by 94, and when it becomes a large company, they increase to 329.

In an environment where growing a company leads not to growth incentives but to being caught in a storm of regulations, there is no way the will to grow can arise. The practice of splitting companies to maintain their size because staying small is advantageous is rampant. If the regulation standard is set as a "50 billion won sales cap," companies try to maintain their sales without exceeding that cap.

As a result, only 4 out of 10,000 small businesses grow into mid-sized companies, and only one or two out of 100 mid-sized companies become large companies. In the past 25 years, only 11 companies have grown from small to large companies, and among them, only two were manufacturing companies: Celltrion and EcoPro. We need to ponder why there are so few.

The slow discovery of new industries and the lack of star companies are also for the same reason. Comparing the top 10 U.S. companies by market capitalization 20 years ago with now, Microsoft (MS) is the only one that has remained, while nine new companies, including Nvidia, Apple, and Amazon, have emerged. It was possible because there was vitality and dynamism in the industry. We have only newly entered two companies, including HD Hyundai. This shows how rigid the industrial structure has become. Companies avoided growth out of fear of regulations or could not grow further due to regulations.

The harm of the '2 trillion won asset' regulation hurdle is also severe. Regulations targeting listed companies with total assets of over 2 trillion won are becoming increasingly severe, and companies are struggling to reduce their assets below 2 trillion won. Listed companies with total assets of over 2 trillion won are also included in the recently amended 'stronger Commercial Act.' They cannot avoid various regulations such as mandatory cumulative voting and expanded separate election of audit committee members. Currently, listed companies with total assets of over 2 trillion won account for 45% of the total. The 2 trillion won standard served to check a few large companies during the high-growth period. Now, the economic scale is different. The standard needs to be significantly raised to fit reality.

We need to create a business environment where growth is not feared, and the reward for growth should be compensation, not regulation. For advanced industries, regulatory exceptions should be boldly allowed, and excessive economic punishment clauses should be urgently revised. Only then can entrepreneurial spirit be revived, and the entire economy can grow.