Section of Korean SMEs Regulatory Status and Reorganizing Program

The Korean government has put lots of efforts on reforming regulations, but it does not still have much less influence on the industry field in small and medium enterprises(SMEs). The results of analysis show that the regulations reduce the investments and affect the management of corporations. For instance, the management regulations affect moderately such industries as working environments, human resources, and labors. But they have the most severe effect on the investment in plant and equipment. The result indicates that if regulations are not improved, a number of SMEs consider cutting down, shutdown, overseas transfers, or sale of their business. Therefore, it comes out that what most of the SMEs request is to reduce such regulations as complicated administrative procedures (red tapes). While appropriate regulations lead to desirable economic development of our society, excessive regulations disturb the corporations’ profit pursuit, deteriorate the entrepreneurship, and disturb creativity. SMEs’ weak countermeasure ability toward regulations and excessive regulations make serious damages to them. As a result, these adverse factors result in cost increase, investment shrinking, and reluctance to launch new businesses of SMEs. To strengthen the competitiveness of SMEs, epochal regulatory reform is most needed through the idea of conversion. Current positive regulatory approaching method, ‘Prohibited in principle, allowed in exceptional cases,’ should be transferred to negative method, ‘Accepted in principle, prohibited exceptions.’ We should make a good environment for corporation-friendly management by reducing unnecessary regulations, and encouraging the creativity and challenge of SMEs. Continuous and institutional regulatory reduction must be provided instead of partial and temporary regulatory reform by government. The SMEs’ efforts are important in itself. It is the right times that voluntary efforts to overcome regulations are most needed to avoid the passive actions past traditional purpose of the business.