Deregulation key to reviving economy

People have high hopes and expectations for the 21st National Assembly which kicked off its four-year term May 30. For their part, lawmakers must be feeling a heavy sense of responsibility when considering how best to represent the interests of their constituents.

In this regard, members of the Assembly have shown a willingness to work hard for the people and the nation by actively engaging in the legislation process.

They need to avoid the mistakes committed by the members of the 20th National Assembly who invited criticism for not working hard. Yet, one might be surprised to know that the previous Assembly passed 8,904 bills in its term.

If the work of parliament is judged solely by the number of bills it passed, the 20th Assembly could have been seen as the hardest working ever in the history of Korean legislature. Then why are the people deeming the 20th as one of the most ineffective and negligent?

Let's look at the present situation in Korea. The economy is going downhill, and society is becoming polarized. Not to mention how chaotic the markets are. Blaming the current economic catastrophe only on COVID-19 is way too convenient.

It is undeniable that the coronavirus outbreak has had a devastating impact on economic vitality. The very root of the Korean economy has been impacted by its structural defects. People should realize that the economy had already been weakened well before the COVID-19 outbreak.

Employment has hit rock bottom ― the worst since the Asian financial crisis battered Korea in 1997. The gap between real growth and potential growth rates has widened steadily and continuously. Uncertainties and volatility have increased as the real economy has suffered.

To find the right solution for these problems, we need to make a precise and accurate diagnosis of the situation. It is no different for the case in which the economy is damaged. Without facing up to reality, there can be no good or appropriate policy to solve the problems at hand.

The number of bills the Assembly passed only portrays how both the government and the ruling party are obsessed with the idea of solving every problem by legislation. What we need is not a greater number of bills, but an Assembly which will push for market-friendly legislation to revive the economy and stabilize people's incomes.

Most of all, it is important to revitalize the private sector by deregulation. Korea is a stringent regulatory state in which restrictions and controls are in place all over the country.

The "Start-up Korea" report released by the Asan Nanum Foundation clearly shows the reality of all-pervading regulations in Korea.

The report states, "... more than half of the 100 most successful startups around the globe would be illegal if they set foot in Korea, due to heavy regulations enforced on enterprises and even major business opportunities." It is disheartening to realize how many jobs and opportunities have disappeared because of dull and outdated regulations.

The Product Market Regulation Index issued by the OECD put Korea's figure at 1.69. It is fifth among the 34 member countries. Not to disappoint the evaluation, the 20th National Assembly managed to table more than 1,200 regulatory bills in 2019 alone.

A somewhat unexpected bipartisanship "performed" to pass a bill banning the ride-hailing service Tada is a key example of such regulatory stiffness the 20th Assembly exhibited.

The 21st Assembly has to be different. Without easing off the grip on the veins of our economy, it is impossible to find any means to revive our economy under immense pressure.

Positive regulations outline economic activities that corporate entities are "allowed" to do. On the other hand, negative regulations outline "what not to do" and allow the rest. What we need is more of the latter than the former.

Regulations in the capital and its surrounding regions, such as those on plant locations, are the archetypes of regulations that have been in place for years. Especially in this given condition under COVID-19, medical and digital contactless industries are primary targets for deregulation.

Welfare coupons may guarantee temporary yet vanishing satisfaction. Such measures may be necessary in these challenging times. What the economy needs is an insight set for the future and policies to back it up.

Policies are to make way for the future, not to hold on to the past and drag the present down. Those may not take effect instantly. Time and patience are the key. Such a stance and action are vital in bringing prosperity and stability back into people's lives over the long term.

Abolishing regulations clogging investment and employment in various parts of our economy are of absolute urgency. We need a legislature which can pass a meaningful bill to oil the market and bring prosperity, not one tossing around meaningless bills just to stack up the numbers.

Choi Sung-no is president of the Center for Free Enterprise.