Kim Jong-moon, Distinguished Professor at Hankyong National University / Advisor at Law Firm Taepyungyang

Finance|
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By Seoul Economy
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null - Seoul Economic Daily Finance News from South Korea

The devil is in the details. A single standard in subordinate regulations that receives less public attention, or one phrase in an attached appendix, can have a critical impact on corporate management. Even when regulations are established within broader policy frameworks, companies must pay attention to the specifics until the end. Once regulations are implemented, they become difficult to amend due to path dependency and entrenched interests. This is why proactive response is crucial.

Most people agree with regulations limiting speed in school zones to protect children. However, opinions are divided on whether these rules should be uniformly applied at night or on weekends when children are rarely present. Various arguments arise depending on perceptions of risk and personal responsibility, traffic accident timing and patterns, and the degree of inconvenience to citizens. This is an area requiring discussion and compromise.

Democratic decision-making requires procedural legitimacy to ensure substantive validity. The legitimacy of decisions and compliance rates increase only when diverse opinions are rationally reviewed. This is precisely where the Regulatory Reform Committee's regulatory review gains significance. Opinions that gain persuasive recognition during the review process become regulations.

The Framework Act on Administrative Regulations requires comparison and review of multiple regulatory alternatives and non-regulatory alternatives when introducing regulations, along with comprehensive consideration of costs and benefits, ripple effects, and enforceability. The document containing these review results is the Regulatory Impact Analysis.

Each ministry publicly releases this analysis when announcing legislation containing regulations, and the regulatory review department conducts its examination based on this document. In 2024, the Regulatory Reform Committee reviewed 842 regulations, withdrawing or improving 86 cases, or 10.2% of the total. Improvements mainly involve adjusting regulatory scope or standards to ease excessive burdens. While there have been achievements, areas for supplementation remain.

Since the ministry designing the regulation is also the analysis subject, there is a tendency to calculate benefits high and costs low to emphasize regulatory necessity. From the regulated party's perspective, it is urgent that costs and concerns be accurately incorporated when detailed standards are set. Measures to ensure this are needed, but structural limitations of the current system will continue, and regulatory review bodies also face constraints in personnel and time. Ultimately, those who are thirsty must dig their own wells. I propose three practical actions for regulated parties.

First, set up antennas for regulatory forecasts and respond preemptively. Companies should constantly monitor regulatory authorities' movements through associations and organizations, conveying corporate positions from the early stages when Regulatory Impact Analyses are being drafted. Modifications become much more difficult after internal ministry decision-making is complete.

Second, persuade regulatory review authorities with numbers. Realistically explain the practical constraints of regulatory introduction, and present concrete figures for additional labor costs, facility investment costs, and administrative burdens that regulations would add. Accurate evidence should also be demanded regarding benefits. Reviewers respond more sensitively to quantified costs and effects than to abstract concerns.

Third, become a partner who presents alternatives rather than an opponent. While sympathizing with regulatory intent, companies should first propose third-way solutions or phased implementation approaches that can achieve objectives while reducing burdens. Presenting flexible alternatives becomes a decisive factor in increasing acceptability during the regulatory review process.

Whether newly created regulations become medicine or poison is determined in the details. Both the devil and the answer lie there. Maximum proactive response is most effective.

AI-translated from Korean. Quotes from foreign sources are based on Korean-language reports and may not reflect exact original wording.