The Korea Herald


[Contribution] Time for 'regulatory break' for SMEs

By Byun Hye-jin

Published : Sept. 6, 2023 - 16:10

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SMEs and Startups Vice Minister Oh Kee-woong (SMEs and Startups Ministry) SMEs and Startups Vice Minister Oh Kee-woong (SMEs and Startups Ministry)

By Oh Kee-woong

Last weekend, my family and I went to a pet-friendly coffee shop near our house. It was heartwarming to see dogs and cats playing around while we enjoyed a cup of coffee. But under the current law, many pet-friendly cafes in South Korea are actually illegal, except for five places that have been granted as “special cases for demonstration.”

According to current laws, even if you ordered a puppucino -- caffeine-free beverage for pets -- for your dog in illegal cafes, it is likely that the product has failed to be approved by the government for sale. It is because if you mix two products to make a puppucino, you need a license for manufacturing feed. Many small-business owners do not have any knowledge about such regulations. Even if they do, it is challenging for them to be install feed manufacturing equipment in the store.

In the Fourth Industrial Revolution era, we face such excessive and unnecessary regulations that control our daily lives.

This is why the Ministry of SMEs and Startups started a new approach to deregulation called “regulatory breaking.” Many stakeholders such as regulatory agencies and businesses have discussed ways to improve regulations, but it has been demanding to settle such issues. The public also has felt little need for deregulation.

Regulatory breaking aims to address public feedback and concerns on daily inconveniences caused by regulations. The goal is to let people learn about regulations and encourage them to actively participate in the deregulation process.

There are three types of regulations that can hinder business activities and cause disruption.

Firstly, although several regulations have been lifted, key rules have remained untouched, causing challenges for forming a new business.

A recent example is the case of cosmetic refill stations. Under the current law, operating refill stations requires the presence of professionals specialized in cosmetic formulation, distribution and management. Most people believe that having the expert where customers refill nonfunctional cosmetics like body wash, which are less likely to deteriorate quickly, is unnecessary. Since January 2022, the Ministry of Food and Drug Safety has allowed seven stores to sell four product types including shampoo without such professionals.

Secondly, there are regulations bound by traditional rules, even though more convenient options have been available due to technological advancements.

Currently, 11 types of over-the-counter medications are allowed to be sold from vending machines during weekdays from 10 p.m. to 6 a.m. under a “special cases for demonstration” grant. But the number of medications are limited and it requires the vending machine operator to keep records of the manufacturing code and quantity of the medicines and the information on the pharmacist who sold them.

Lastly, there are cases where there are no standards or regulations for a newly developed product, which paradoxically results in forming a regulation.

Like in major cities in Europe and the US, Korea is developing electric cargo bicycles as an eco-friendly logistics solution to meet the restrictions on international combustion engine motorcycles in the cities and delivery vans access in apartment complexes.

However, electric bicycles here must weigh under 30 kilograms following the rules for passenger bicycles because there are no separate criteria for e-bikes. It not only blocks the commercialization of e-bikes in the country but pushes the business owners to go abroad to carry out tests on verifying the performance and safety of the product before exporting them.

Like these cases, we come across a wide range of regulations in our daily lives. Gradually unraveling such rules is challenging and time-consuming for the public, so we must get rid of the regulations of all at once.

Regulatory breaking aims to eliminate unnecessary regulations through public consensus. I hope our deregulation efforts could minimize daily inconveniences and become a driving force for regulatory innovation by removing the obstacles that have hindered the growth of SMEs and startups.

Oh Kee-woong is the vice minister of SMEs and startups. Views expressed in this column are his own. – Ed.