Organizing Government Organizing Government for for

an Effective PSD Strategy an Effective PSD Strategy - A Case of Regulatory - A Case of Regulatory

ReformReform in Koreain Korea

Presentation byPresentation by

Prof. Jong Seok KimProf. Jong Seok KimProfessor of Economics, Hong Ik University &Professor of Economics, Hong Ik University &

Member of Korean Regulatory Reform CommitteeMember of Korean Regulatory Reform Committee

19 April 200519 April 2005

Key MessagesKey Messages• Keys to effective PSD strategies:Keys to effective PSD strategies:

• Strong government leadershipStrong government leadership

• Good coordinationGood coordination

• Clear accountabilityClear accountability

• An effective institutional PSD mechanism should:An effective institutional PSD mechanism should:

• Coordinate strategies ACROSS ministriesCoordinate strategies ACROSS ministries

• Coordinate strategies between LEVELS of governmentCoordinate strategies between LEVELS of government

• Provide continuity in the face of political changeProvide continuity in the face of political change

The Regulatory Challenge The Regulatory Challenge in Korea - Before 1997in Korea - Before 1997

• Korean economy had become heavily Korean economy had become heavily regulated during its rapid growthregulated during its rapid growth

• Drive for reform out of popular demand Drive for reform out of popular demand from business since the early 1980sfrom business since the early 1980s

• Early attempts at reform were insufficientEarly attempts at reform were insufficient

• 1997 financial crisis created new impetus1997 financial crisis created new impetus

The Challenge of The Challenge of LeadershipLeadership

• Establish clear rules and structureEstablish clear rules and structure• The Basic Act on Administrative Regulation, The Basic Act on Administrative Regulation,

19971997

• Hold government accountableHold government accountable• Require regulatory impact analysis (RIA)Require regulatory impact analysis (RIA)

• Register all existing regulationsRegister all existing regulations

• Centralize coordinationCentralize coordination• Presidential Regulatory Reform Committee Presidential Regulatory Reform Committee

(RRC), formed in 1998(RRC), formed in 1998

The Presidential The Presidential Regulatory Reform Regulatory Reform

CommitteeCommittee• Reporting to the President Reporting to the President

• Co-chaired by the Prime Minister and a Co-chaired by the Prime Minister and a privateprivatesector co-chairsector co-chair

• Consists of 20 membersConsists of 20 members

• 7 cabinet ministers7 cabinet ministers

• 13 from the private sector, appointed on a 2-13 from the private sector, appointed on a 2-year termyear term

• Has a secretariat in the Prime Minister’s Has a secretariat in the Prime Minister’s officeoffice

Initial ResultsInitial Results

• President ordered 50% of 11,125 existing President ordered 50% of 11,125 existing regulations eliminatedregulations eliminated

• Each ministry had to prove the need for Each ministry had to prove the need for its regulations before RRC during the its regulations before RRC during the processprocess

• Within 2 years: 43% of regulations Within 2 years: 43% of regulations eliminated eliminated and 22% revisedand 22% revised

• Virtually all areas of Korean economy and Virtually all areas of Korean economy and life were affectedlife were affected

Coordination Across Coordination Across MinistriesMinistries

• Basic policy guidelines established across Basic policy guidelines established across the governmentthe government

• Quality control and reform guidelines, e.g. Quality control and reform guidelines, e.g. RIARIA

• Each ministry must propose new regulations and iEach ministry must propose new regulations and improvements through RRCmprovements through RRC

• RRC pursues all ministries and agencies for RRC pursues all ministries and agencies for compliancecompliance

Providing ContinuityProviding Continuity

• RRC functions became a normal part of RRC functions became a normal part of governmentgovernment

• Integrated into all government Integrated into all government institutions through administrative institutions through administrative processesprocesses

• Combination of stakeholder and cabinet Combination of stakeholder and cabinet appointees, on separate term cyclesappointees, on separate term cycles

• Independent and publicly accountableIndependent and publicly accountable

Results - After Six YearsResults - After Six Years

• Permanent system for regulatory reform Permanent system for regulatory reform firmly installedfirmly installed

• Regulatory design not an exclusive function Regulatory design not an exclusive function of regulating ministries any longerof regulating ministries any longer

• Initial reform drive lost momentum as Initial reform drive lost momentum as political support wanedpolitical support waned

• Coordination between RRC and the provincial governments was insufficient

• Quality of RIA is still lowQuality of RIA is still low

Lessons LearnedLessons Learned

• Independence and political support Independence and political support essential to credible role of coordinating essential to credible role of coordinating the reformthe reform

• Accountability links to ministries and local Accountability links to ministries and local government needed to enforce changegovernment needed to enforce change

• Implementation requires plenty of expert Implementation requires plenty of expert support, at several levels of governmentsupport, at several levels of government

• Make changes visible at local government Make changes visible at local government level to keep up momentumlevel to keep up momentum

ConclusionConclusion

• Keep political leadership visible and strongKeep political leadership visible and strong

• Make the policy and its coordinating Make the policy and its coordinating agency a permanent part of governmentagency a permanent part of government

• Maintain consistent reform principles Maintain consistent reform principles across the governmentacross the government

• Build coalition for the reform within societyBuild coalition for the reform within society

For More InformationFor More Information

Prof. Jong Seok KimProf. Jong Seok KimEmail: jskim@hongik.ac.krEmail: jskim@hongik.ac.kr

RETA website:RETA website:

http://www.adb.org/Projects/Supporting-PSD-Strategies