🚨 Deregulation in Korea 2025: Complete Guide, Cases & Economic Impact

Today Korean Social News | 2025.04.07

📌 What are Regulatory Reform Plans and Why Do They Matter?

💬 Recently, Seoul city and other local governments as well as the central government have been actively announcing regulatory reform plans aimed at easing unnecessary administrative regulations. These regulatory reforms represent important policy changes that directly affect citizens' daily lives and business activities. In particular, Seoul City recently announced 10 additional regulatory reform measures, including allowing pets in youth safety housing and extending the residency period for independent living housing for people with disabilities, bringing the total number of regulatory reforms to 113.

Summary

• Regulatory reform plans are policies that ease unnecessary administrative regulations to reduce inconvenience for citizens and businesses and stimulate economic activity.
• While regulations are necessary for the public interest, excessive or outdated regulations can hinder social development.
• Effective regulatory reform requires private sector participation and continuous monitoring.

1️⃣ Definition

A regulatory reform plan refers to a policy measure by governments or local authorities that eases or eliminates administrative regulations that unnecessarily burden citizens' lives and business activities. Simply put, it is a policy that simplifies complex and unnecessary administrative procedures or restrictions to reduce inconvenience for citizens and promote economic activity.

Regulatory reform is not just about eliminating regulations, but includes a process of reasonably adjusting and improving regulations to match changing times.

💡 Why is it important?

• Excessive regulations can cause inconvenience in citizens' lives and suppress economic activity.
• Regulatory easing can create new business opportunities and jobs.
• Simplifying unnecessary administrative procedures can increase government efficiency.

2️⃣ Background and Principles of Regulatory Reform

📕 The Necessity and Limitations of Regulations

• Regulations are necessary for the public interest but have limitations. Government regulations exist to correct market failures and protect the public interest. First, safety regulations protect consumers and workers. Food hygiene standards, building safety regulations, and industrial safety regulations are essential regulations that protect citizens' lives and health. Second, environmental regulations protect nature and ecosystems. Air pollution standards and waste disposal regulations are necessary to prevent environmental pollution and promote sustainable development. Third, fair competition regulations prevent market monopolies. Prohibitions on unfair trade practices and regulations against collusion are important for maintaining a sound market economy order. However, regulations also have limitations. Excessive regulations can undermine market autonomy and creativity, and increase economic burden due to compliance costs. Additionally, outdated regulations that fail to keep pace with changing times can hinder the development of new industries and business models.

• It is necessary to distinguish between effective and ineffective regulations. Not all regulations are equally useful or unnecessary. The criteria for distinguishing between effective and ineffective regulations are as follows. First, clarity of purpose. We must examine whether the purpose of a regulation is clear and serves the public interest. Second, cost-effectiveness. We must assess whether the social benefits of a regulation outweigh the costs of compliance. Third, practical relevance. We must verify whether a regulation fits the actual situation and is implementable. Fourth, fairness. We must examine whether a regulation imposes an unfair burden on specific groups. Fifth, flexibility. We must consider whether a regulation is sufficiently flexible to adapt to changing situations. Regulations that do not meet these criteria need to be eliminated or improved.

📕 Approaches to Regulatory Reform

• Regulatory reform takes various forms. There are several ways to improve or eliminate regulations. First, complete elimination involves removing regulations that are no longer necessary. This applies to regulations that have lost their utility over time or are redundant. Second, regulatory easing involves narrowing the criteria or scope of regulations. For example, easing certain permit criteria or reducing the target audience. Third, regulatory rationalization involves making regulations more efficient and less burdensome. This includes simplifying or digitalizing complex procedures. Fourth, transitioning to negative regulation involves changing from "principle prohibition, exceptional permission" to "principle permission, exceptional prohibition." This can promote the development of new activities or industries. Fifth, introducing sunset clauses involves setting expiration dates for regulations and periodically reviewing their necessity. This allows outdated regulations to be automatically cleared.

• Private sector participation and continuous monitoring are important. Effective regulatory reform requires the participation of various stakeholders rather than unilateral government decisions. First, gathering citizen opinions is important. Listening to the voices of citizens who experience actual inconvenience due to regulations is the starting point for effective improvement. Second, consultation with businesses and industries is necessary. It is essential to understand the practical difficulties and improvement measures of companies that must comply with regulations. Third, expert advice is helpful. Opinions from experts in each field can help analyze the effects and side effects of regulations. Fourth, regulatory impact assessment is necessary. The economic and social impacts of regulatory changes should be assessed in advance to minimize side effects. Fifth, follow-up monitoring is important. Even after regulatory reform, continuous monitoring is needed to verify effectiveness and make additional adjustments if necessary.

Main Directions of Regulatory Reform

1. Simplification of unnecessary administrative procedures: Simplifying complex licensing procedures, minimizing document requirements
2. Promoting digital transformation: Expanding online applications and processing, enhancing e-government services
3. Removing barriers to startups and new industries: Easing regulations related to new technologies and industries
4. Improving housing and living environments: Rationalizing housing-related regulations, resolving daily inconveniences
5. Strengthening support for vulnerable groups: Improving regulations for people with disabilities, youth, and the elderly
6. Reducing burdens on business activities: Easing regulatory burdens on small businesses and self-employed individuals
7. Expanding local authority: Enhancing autonomy of local governments, improving regulations to suit local characteristics
8. Expanding regulatory sandboxes: Providing opportunities to test innovation through temporary regulatory exemptions
9. Enhancing citizen convenience: Identifying and improving inconvenient regulations in daily life
10. Strengthening predictability of regulatory systems: Providing clear standards and transparent enforcement

3️⃣ Examples and Impacts of Regulatory Reform Plans

✅ Recent Examples of Regulatory Reform Plans

• Regulations in areas closely related to daily life are being eased. Let's look at examples of recently announced regulatory reforms closely related to citizens' daily lives. First, allowing pets in youth safety housing. Previously, pets were not allowed in public housing, but now young people can live with their pets in safety housing. Second, extending the residency period for independent living housing for people with disabilities. The period has been extended from the existing 4 years to 6 years, allowing people with disabilities to establish a more stable foundation for independent living. Third, temporary suspension of credit information provision for local tax delinquents. This is a measure to provide an opportunity for economic recovery to delinquents facing economic difficulties. Fourth, easing support criteria for joint parking lot creation projects in residential areas. Support conditions have been relaxed to make it easier to create parking lots in residential areas with insufficient parking space. Fifth, complete reform of the education method for freight transport workers. Convenience for transport workers has been increased by expanding online education from the existing focus on collective education.

• Improvements in regulations related to economic activities are also active. There are many cases of regulatory improvements to support business activities and economic development. First, improvement of floor area ratio incentives when donating public facilities. More construction benefits can now be received when donating public interest facilities during urban development. Second, mandatory digital transformation of design competitions in autonomous districts. The architectural design competition process has been digitalized to lower participation thresholds and streamline procedures. Third, simplification of licensing procedures for living accommodation facilities. Establishing and operating hotels, guesthouses, etc. has become easier. Fourth, integrated processing of small and medium-sized enterprise factory establishment licensing. Procedures that previously required visits to multiple departments can now be done in a one-stop process. Fifth, expansion of regulatory special cases for alley commercial districts. This supports improving competitiveness by easing regulations for small business owners in specific areas. These measures contribute to lowering barriers to economic activity and creating new business opportunities.

✅ Impact and Evaluation of Regulatory Reform

• Regulatory reform has positive effects as well as challenges. Regulatory easing has various impacts. First, economic effects include reducing administrative burdens on businesses, stimulating startups, and creating jobs. When costs and time due to regulations are reduced, more resources can be invested in core businesses. Second, social effects include improving citizen convenience, resolving daily inconveniences, and strengthening support for vulnerable groups. Quality of life for citizens can improve as unnecessary restrictions are reduced. Third, administrative effects include enhancing government efficiency, promoting digital transformation, and strengthening administrative transparency. However, there are also challenges. These include the possibility that regulatory easing may undermine public interest or cause safety issues, the need for response measures for new problems that may arise after regulatory reform, and how to adjust the opposition and resistance of existing stakeholders.

• There are conditions for successful regulatory reform. Several conditions are necessary for regulatory reform to lead to substantial results. First, contextual appropriateness is important. Customized regulatory reform is needed that suits the characteristics of each industry and region. Second, a balanced approach is necessary. An appropriate balance must be found between protecting public interest and private autonomy. Third, systematic implementation is important. It must be supported by substantive implementation and inspection, not just simple declarations. Fourth, transparent communication is necessary. The purpose, process, and expected effects of regulatory reform must be clearly explained to stakeholders. Fifth, continuous monitoring is important. The effects and side effects of regulatory reform must be continuously observed and supplemented if necessary. When these conditions are met, regulatory reform can more effectively contribute to social development.

✅ International Regulatory Reform Trends

• It is necessary to examine global regulatory reform trends. Regulatory reform is actively being carried out worldwide, with notable trends. First, digital regulatory innovation is increasing. Regulatory frameworks that promote innovation in new technology areas such as the data economy, artificial intelligence, and digital platforms are being introduced. Second, regulatory sandboxes are spreading. Safe experimental spaces where innovative business models and services can be tested are being operated in many countries. Third, data-based regulation is being strengthened. Regulatory design and effect measurement based on objective data and evidence are becoming increasingly important. Fourth, citizen-participatory regulatory reform is increasing. Direct participation and opinion gathering of citizens in the regulatory reform process is becoming more active. Fifth, international regulatory cooperation is strengthening. Regulatory harmonization and cooperation between countries to respond to global issues are increasing.

• Characteristic regulatory reform cases by country can be referenced. There is much to learn from successful regulatory reform cases in other countries. First, the UK's "One-in, One-out" policy. This is a method of managing the total amount of regulation by requiring the elimination of an existing regulation when introducing a new one. Second, Denmark's "Business Forum." This is a public-private partnership system where businesses directly propose unnecessary regulations and discuss improvement measures. Third, Australia's "Regulatory Impact Analysis (RIA)" system. This method filters out unnecessary regulations in advance by mandating cost-benefit analysis for all new regulations. Fourth, Singapore's "Smart Nation" initiative. This policy uses digital technology to simplify administrative procedures and provide one-stop services. Fifth, Japan's "Regulatory Reform Special Zone" system. This method tests new regulatory frameworks in advance of nationwide regulatory reform by designating specific regions. These overseas cases can be useful references for regulatory reform in Korea.

4️⃣ Related Terminology

🔎 Regulatory Sandbox

• A regulatory sandbox is a system that allows testing of innovative business models.
• A regulatory sandbox refers to a system that, like a sandbox where children can play safely, temporarily exempts new products or services from existing regulations to allow for testing. This was introduced to solve the problem of innovative technologies or business models not being able to enter the market because they do not fit within the framework of existing regulations. Regulatory sandboxes are mainly used in new industry fields such as fintech, healthcare, mobility, and energy, and in Korea, they have been operated since 2019 in the form of "Regulation-Free Special Zones," "Financial Regulatory Sandboxes," and "ICT Regulatory Sandboxes." Through this system, companies can test new ideas in a limited environment, and the government can set future regulatory directions based on the demonstration results. However, minimum safety measures for safety and consumer protection are maintained. The regulatory sandbox is a flexible approach to finding a balance between innovation and regulation, and its importance is growing in the era of the Fourth Industrial Revolution.

🔎 Regulatory Impact Analysis

• Regulatory Impact Analysis systematically evaluates the effects and costs of regulations.
• Regulatory Impact Analysis (RIA) is a process of systematically analyzing the impact of regulations in advance when introducing or revising them. This comprehensively examines the costs and benefits of regulations, their impact on various stakeholders, and alternative regulatory methods. The main elements of Regulatory Impact Analysis include first, problem definition and analysis of regulatory necessity; second, setting regulatory objectives; third, reviewing regulatory alternatives; fourth, cost-benefit analysis; fifth, small business impact analysis; and sixth, competition impact assessment. In Korea, central administrative agencies are required by the Basic Act on Administrative Regulations to prepare a regulatory impact analysis report when establishing or strengthening regulations. This allows for filtering out unnecessary or excessive regulations in advance and seeking more efficient and effective regulatory measures. Regulatory Impact Analysis is an important tool for promoting evidence-based policy decisions and improving the quality of regulations.

🔎 Negative Regulation

• Negative regulation is an approach that allows in principle and prohibits exceptionally.
• Negative Regulation refers to a regulatory approach following the principle of "permission in principle, prohibition as an exception." This is an approach that allows everything except what is explicitly prohibited by law or regulation. It contrasts with the positive regulatory approach of "prohibition in principle, permission as an exception," which only allows what is specified by law. The advantages of negative regulation include first, promoting innovation and the development of new business models; second, being able to respond more flexibly to rapidly changing technological environments; and third, reducing administrative burdens and regulatory costs. In Korea, the transition to a negative regulatory framework is being carried out, especially in new industry fields, and is being actively introduced in areas such as finance, ICT, and biotech. However, negative regulation needs to be applied cautiously in areas where public values such as safety, environment, and public health are important, and an appropriate post-management system needs to be established.

5️⃣ Frequently Asked Questions (FAQ)

Q: Are there ways for citizens to report unnecessary regulations or propose improvements?

A: Yes, there are various channels through which citizens can propose regulatory improvements. First, through the People's Voice (www.epeople.go.kr), you can report unreasonable regulations and suggest improvements. People's Voice is the government's official channel for handling civil complaints and citizen proposals, with a dedicated menu for regulatory improvement. Second, the Regulatory Reform Sinmungo (www.better.go.kr) is a site that specializes in receiving and processing suggestions related to regulations. It focuses particularly on requests for improvement of regulations that hinder business activities. Third, there are regulatory improvement windows operated by local governments. Seoul City, for example, operates a "Regulatory Reform Reporting Center" and receives regulatory improvement proposals from citizens. Fourth, the Regulatory Reform Committee of the Office for Government Policy Coordination also receives complaints related to regulations through its "Regulatory Complaint Reporting Center." Fifth, you can propose regulatory improvements in the relevant field through the "Citizen Proposal" corner operated on the websites of each ministry and agency. When making proposals, it is helpful to present specific cases, the necessity for improvement, and, if possible, alternatives, which increases the likelihood of consideration. The government reviews citizen regulatory improvement proposals and reflects them in policies, and also operates a reward system for excellent proposals. Active participation from citizens plays an important role in creating a better regulatory environment.

Q: Are there any potential side effects of regulatory reform?

A: Regulatory reform has potential side effects along with positive effects. First, safety and health issues may arise. If safety-related regulations are excessively relaxed, there is a possibility of increased industrial accidents or consumer safety issues. Second, there are concerns about environmental damage. Relaxation of environmental regulations can have a negative impact on environmental protection and sustainability. Third, social inequality may worsen. Some regulations function to protect vulnerable groups, so the elimination of such regulations raises concerns about widening social gaps. Fourth, market monopolies and unfair competition may occur. Relaxation of competition-related regulations can lead to strengthened market dominance by large corporations. Fifth, financial instability may increase. Financial regulatory easing may lead to excessive risk-taking and systemic risk. To minimize these side effects, it is necessary to establish minimum safety measures to protect public values when eliminating regulations, conduct thorough pre-impact assessments and post-monitoring, and take a gradual and stepwise approach. It is important to remember that the goal of regulatory reform is not simply to reduce regulations but to build a better regulatory system.

Q: How are other countries promoting regulatory reform?

A: Countries around the world are promoting regulatory reform in various ways. First, the United States emphasizes "cost-benefit analysis." All major regulations must undergo rigorous cost-benefit analysis, and the Trump administration introduced a "Regulatory Cost Cap (2-for-1 Rule)" requiring the elimination of two existing regulations when creating a new one. Second, the United Kingdom operates a "Better Regulation" program. It focuses on improving the quality of regulations and uses innovative approaches such as the "Red Tape Challenge" to ease business regulations. Third, Australia is pursuing a "Cutting Red Tape" initiative. It sets and strictly manages regulatory cost reduction targets for each government department. Fourth, Singapore operates a "Pro-Enterprise Panel" that directly reviews and promptly processes business regulatory improvement proposals. Fifth, Germany is making efforts to continuously measure and reduce administrative burdens through its "Bureaucracy Reduction and Better Regulation" program. These diverse international experiences can be useful references for regulatory reform in Korea, and wisdom is needed to analyze the success and failure cases of each country and apply them to the Korean situation.