[fn Editorial] With 8,000 Economic Criminal Penalties, Can We Really Expect Innovation?

It is shocking that there are more than 8,000 corporate activities subject to criminal punishment under domestic law. This figure comes from a comprehensive review of penalty provisions in 346 economic laws conducted by the Federation of Korean Industries (FKI). Excessive legal regulations, including these penalty clauses, are a major reason why complaints about the difficulty of doing business in Korea never cease. While the government has announced plans to form a task force to address these issues, many remain skeptical about its resolve. The government must deliver tangible results that businesses can truly feel, not just superficial administrative gestures.
Companies are subject to overlapping and inconsistent penalty clauses, facing double or triple sanctions, and in some cases, even up to fivefold punishment. In fact, nearly 3,000 actions are subject to overlapping penalties, accounting for 34% of the total. These include imprisonment, fines, additional administrative penalties, and punitive damages. There are also many cases where the penalties are difficult to accept. For example, even minor structural changes to a store's terrace can be punished as a violation of building extension regulations. Cosmetics sellers who store or display products with damaged labels for sale can face up to three years in prison or fines of up to 30 million won. Such harsh penalties are not only excessive but also out of touch with the times.
Under current law, the heads of large business groups must submit annual reports on related parties and shareholdings to the Korea Fair Trade Commission (KFTC). Even unintentional omissions due to simple mistakes can result in criminal charges. While the system of designating business groups may have been appropriate in the 1970s and 1980s, it is excessive to impose criminal penalties for inadvertent failures to submit documents today. In advanced countries like the United States, only serious offenses such as collusion are subject to criminal penalties. The business community has repeatedly pointed this out, yet the government has remained unresponsive.
As seen at the recent Asia-Pacific Economic Cooperation (APEC) summit in Gyeongju, the role of businesses in national affairs is crucial. Without businesses, there can be neither national security nor economic growth. The reason foreign leaders are taking a renewed interest in Korea is the outstanding performance of Korean companies in global markets. Korean semiconductor, automobile, and shipbuilding companies are elevating the nation’s standing and boosting national pride. In this era of technological hegemony, the role of businesses will only become more important.
Recognizing the contributions of businesses and supporting them with institutional reforms so they can thrive globally is the responsibility of the government, the ruling party, and the political establishment. Yet, policy has moved in the opposite direction. The handling of the Yellow Envelope Act and the Commercial Act, both strongly opposed by businesses, is a case in point. Excessive punishment of business owners for industrial accidents is another. To reduce accident rates, it is more effective to implement sophisticated preventive measures than to impose severe post-incident penalties. There are countless laws and economic penalty clauses that need urgent revision.
The government's goal to revise 30% of economic criminal penalties within a year is a step forward, but it is not enough. Even if 30% are revised, that would only address about 2,400 out of more than 8,000 penalty provisions, leaving over 5,600 untouched. Business leaders still feel as if they are 'walking a tightrope over a prison wall.' It is difficult to foster innovation and passion when entrepreneurs are viewed as potential criminals. Only the penalties truly necessary by global standards should remain, and the rest must be swiftly eliminated. Imprisonment for minor violations is hopelessly outdated.