Cap system on corporate regulations to be enacted

In a bid to ensure effectiveness of a cap system on corporate regulations that President Park Geun-hye announced in her New Year’s press conference, the government has decided to revise related laws to prepare legal basis, and impose strong penalty to ministries that fail to follow the system. The measure is taken to avoid the mistake of the Roh Moo-hyun administration 10 years ago, which introduced the system without creating provisions in related laws and thus failed to achieve the goals due to lack of cooperation and negligence by certain ministries.

A source at the Office for Government Policy Coordination under the Prime Minister’s Office said on Sunday, “In order to ensure effectiveness of the cap system on corporate regulations, the government is considering revising the basic act on administrative regulations,” adding, “Since the system was mentioned by the president in person, the government judges that a revision to the law is necessary to secure its lasting effect, rather than fizzling out as was the case 10 years ago.”

A revision bill will reportedly include provisions that define the cap system on corporate regulations for respective ministries at a certain point in time as the baseline, and accordingly oblige ministries to follow the restriction. A source at the Office for Government Policy Coordination said, “If ministries fail to follow even after legal ground is put in place, penalty will be naturally given,” hinting at strict enforcement of the measure.

In late 2003 under the Roh Moo-hyun administration, the Office for Government Policy Coordination introduced a cap system on corporate regulations. However, certain ministries were not cooperative in execution, questioning why they had to follow amid a lack of legal ground. As a result, the system was nullified two years later even before the total volume of regulations per ministry was defined.

Experts say that if the regulatory system is to succeed, the government should examine the failure of the past, and learn lessons. This is because there are many challenges to overcome, including dearth of examples of the system anywhere in the world, and the question of whether laws enacted by lawmakers will also be included in regulations.

“If a disaster or an accident occurs, the media will criticize lack of regulations, and the political circle will naturally make move to correct,” said Choi Byeong-seon, former chairman of the Regulatory Reform Committee. “Only when the government is determined to follow under any circumstance, then will the cap system on corporate regulations be properly implemented.”