The Fifth PCNC MeetingThe Fifth PCNC Meeting

Resolving Business DifficultiesResolving Business Difficulties

July 24, 2008July 24, 2008

- Achievements and Measures -- Achievements and Measures -

SMBA / MOSF / MKE / MLTM / PCNCSMBA / MOSF / MKE / MLTM / PCNC

BackgroundBackground

Resolving biz difficultiesResolving biz difficulties

Achievements and Measures for ImprovementAchievements and Measures for Improvement

Expected EffectsExpected Effects

Future PlansFuture Plans

Institutional Reform

Institutional Reform

LocalDifficulty

Resolution

LocalDifficulty

Resolution

Gatherings of regulatory reform taskforce between public and private sectors

Gatherings of regulatory reform taskforce between public and private sectors

PCNC PCNC

Each Govt Agencysuch as SMBAEach Govt Agencysuch as SMBA

PM’s Office

Each Ministry

PCNC

PM’s Office

Each Ministry

PCNC

Selecting and resolving tasks for regulatory reform

Selecting and resolving tasks for regulatory reform

Field visitField visit

Improved biz environment and enhanced sentiment about regulatory reformImproved biz environment and enhanced sentiment about regulatory reform

I. Background

11

II. Resolving biz difficulties

PCNC gatheringPCNC gathering

Field visits by regional offices of SMBAField visits by regional offices of SMBA

identified and resolved chronic business difficultiesidentified and resolved chronic business difficulties

11 regional offices resolved about 1,500 business difficulties

through 『 1357 on-site task force 』 (157 employees)

11 regional offices resolved about 1,500 business difficulties

through 『 1357 on-site task force 』 (157 employees)

- focused on biz difficulties in subordinate regulations- focused on biz difficulties in subordinate regulations and public servants’ passivismand public servants’ passivism

88

45improvements

45improvements

2424

1313

22

K-BizK-Biz KITAKITA FKIFKI

Types of Business DifficultiesTypes of Business Difficulties

Regulatory difficulties suggested at gatherings

Regulatory difficulties suggested at gatherings

Local difficulties identified

during visits to companiesLocal difficulties identified

during visits to companies

1. Ineffective regulations1. Ineffective regulations

2. Administration- convenient regulations2. Administration- convenient regulations

3. Failure to catch up with changes in biz environment3. Failure to catch up with changes in biz environment

4. Distrust in businesses4. Distrust in businesses

1. Irrational subordinate regulations1. Irrational subordinate regulations

2. Passive legal interpretation2. Passive legal interpretation

3. Lack of knowledge about work3. Lack of knowledge about work

4. Lack of professionals & equipment4. Lack of professionals & equipment

33

44

1. Revising ineffective regulations1. Revising ineffective regulations1. Revising ineffective regulations1. Revising ineffective regulations

BeforeBefore AfterAfter

III. Achievements and Measures for Improvement

Example

Companies are required to have 10% of products for small packaging.

Since Company A’s demand for small packaging was less than 10%,

it had to leave the stocks amounting to $4M annually.

Companies are required to have 10% of products for small packaging.

Since Company A’s demand for small packaging was less than 10%,

it had to leave the stocks amounting to $4M annually.

Low-priced medicines arenot applied. For others, stocks are taken into account (annual savings of $250M)

Low-priced medicines arenot applied. For others, stocks are taken into account (annual savings of $250M)

Eased requirement on small packaging of medicines Eased requirement on small packaging of medicines (KFDA, Jul.’08)(KFDA, Jul.’08)Eased requirement on small packaging of medicines Eased requirement on small packaging of medicines (KFDA, Jul.’08)(KFDA, Jul.’08)

Small packaging was required for more than 10% of annual medical supplies

Small packaging was required for more than 10% of annual medical supplies

1. Revising ineffective regulations1. Revising ineffective regulations1. Revising ineffective regulations1. Revising ineffective regulations

Expanded technicians’ presence for small construction worksExpanded technicians’ presence for small construction works(MLTM, July.’08)(MLTM, July.’08)Expanded technicians’ presence for small construction worksExpanded technicians’ presence for small construction works(MLTM, July.’08)(MLTM, July.’08)

BeforeBefore AfterAfterThe number of sites has

increased from 2 to 3,

thus achieving labor cost

savings of $300M annually

The number of sites has

increased from 2 to 3,

thus achieving labor cost

savings of $300M annually

Eased requirement on small packaging of medicines Eased requirement on small packaging of medicines (KFDA, Jul.’08)(KFDA, Jul.’08)Eased requirement on small packaging of medicines Eased requirement on small packaging of medicines (KFDA, Jul.’08)(KFDA, Jul.’08)

BeforeBefore AfterAfterSmall packaging was required for more than 10% of annual medical supplies

Small packaging was required for more than 10% of annual medical supplies

A technician managed up to 2 sites in case of works valued below $0.5M

A technician managed up to 2 sites in case of works valued below $0.5M

44

III. Achievements and Measures for Improvement

Low-priced medicines arenot applied. For others, stocks are taken into account (annual savings of $250M)

Low-priced medicines arenot applied. For others, stocks are taken into account (annual savings of $250M)

2. Radically removing administration-convenient regulations2. Radically removing administration-convenient regulations2. Radically removing administration-convenient regulations2. Radically removing administration-convenient regulations

Easing regulation on rack installment in logistics centerEasing regulation on rack installment in logistics center(MLTM, Aug.’08)(MLTM, Aug.’08)Easing regulation on rack installment in logistics centerEasing regulation on rack installment in logistics center(MLTM, Aug.’08)(MLTM, Aug.’08)

Due to ambiguous concept about logistics storage space, a rack was regulated as an illegal structure

Due to ambiguous concept about logistics storage space, a rack was regulated as an illegal structure

Legalize racks and include them in the scope of logistics storage space

Legalize racks and include them in the scope of logistics storage space

Before AfterAfter

Illegal Legal

•Rack : Structure installed just below the ceiling to create more space•Rack : Structure installed just below the ceiling to create more space

Expected Effect Expected Effect

Exempt from rack removalExempt from rack removal& penal punishment& penal punishment

55

Expand storage space Expand storage space (924,000(924,000 ㎡㎡ , 105 racks) , 105 racks)

The distance from road incase of structureinstallment and expansionincreased from 1.5 to3 meters in May, ’06

The distance from road incase of structureinstallment and expansionincreased from 1.5 to3 meters in May, ’06

Vertical expansion is allowed by applying previous regulation on structure expansion

Vertical expansion is allowed by applying previous regulation on structure expansion

Relaxing requirement on structure expansion (MLTM, latter half of ’08)Relaxing requirement on structure expansion (MLTM, latter half of ’08)

BeforeBefore AfterAfter

Example: Ujeongbu Cheil Market

35% increase35% increasein parking areain parking area

$8.5M savings of costs for $8.5M savings of costs for acquiring alternative lotacquiring alternative lot

$0.2M savings of costs for $0.2M savings of costs for installing separate poleinstalling separate pole

66

Levied tax at once for relocating factory in same industrial site

Levied tax at once for relocating factory in same industrial site

3. 3. Improving regulations to reflect changes in biz environmentImproving regulations to reflect changes in biz environment3. 3. Improving regulations to reflect changes in biz environmentImproving regulations to reflect changes in biz environment

Providing tax benefits for relocating factories withinsame industrial site (MSF, Dec.’08)

Providing tax benefits for relocating factories withinsame industrial site (MSF, Dec.’08)

Map out tax measures

on the sale of old factory

Map out tax measures

on the sale of old factory

Expanding scope of natural gas-powered vehicles (MKE, Dec.’08)Expanding scope of natural gas-powered vehicles (MKE, Dec.’08)

Natural gas engines were not allowed for vehicles other than buses or garbage trucks

Natural gas engines were not allowed for vehicles other than buses or garbage trucks

Natural gas engines are

installed in fork-lift trucks (annual export increase of

$30M)

Natural gas engines are

installed in fork-lift trucks (annual export increase of

$30M)

Before AfterAfter

Before AfterAfter

77

BeforeBefore AfterAfter

BeforeBefore AfterAfter

4. Strengthening autonomy in private sector4. Strengthening autonomy in private sector4. Strengthening autonomy in private sector4. Strengthening autonomy in private sector

Easing restriction on the rights of importing beansfor food processing (MIFAFF, Dec.’08)Easing restriction on the rights of importing beansfor food processing (MIFAFF, Dec.’08)

KATI had monopoly on bean importation and supplied them to end users

KATI had monopoly on bean importation and supplied them to end users

The importation right is given to end-user groups on condition of import fees (timely importation of law materials)

The importation right is given to end-user groups on condition of import fees (timely importation of law materials)

Easing the requirement of industrial accident reportingby employer (MOLAB, Dec.’08)Easing the requirement of industrial accident reportingby employer (MOLAB, Dec.’08)

Reporting was mandatory in case of accidents that required more than four days of treatment (offenders received fines of less than $0.1M)

Reporting was mandatory in case of accidents that required more than four days of treatment (offenders received fines of less than $0.1M)

Task force of labor, management, govt exempts reporting requirement

Task force of labor, management, govt exempts reporting requirement

88

Resolved difficulty regarding business license for food manufacturing (B city, Apr.’08)

Resolved difficulty regarding business license for food manufacturing (B city, Apr.’08)

BI in university was regarded as educational facility, so manufacturing license was not issued.

BI in university was regarded as educational facility, so manufacturing license was not issued.

Business license was issued by regarding BI as an industrial facility

Business license was issued by regarding BI as an industrial facility

Provided assistance for facility expansion in agriculture protection area (C city, May.’08)

Provided assistance for facility expansion in agriculture protection area (C city, May.’08)

License for expanding LPG storage facility was rejected

License for expanding LPG storage facility was rejected

Facility expansion license was issued after notifying that facilities installed before enactment of revised Farmland Law could be expanded

Facility expansion license was issued after notifying that facilities installed before enactment of revised Farmland Law could be expanded

BeforeBefore AfterAfter

BeforeBefore AfterAfter

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5. Improved behaviors of public servants5. Improved behaviors of public servants5. Improved behaviors of public servants5. Improved behaviors of public servants

Enhance sentiment about regulatory reform in business fieldEnhance sentiment about regulatory reform in business field

Resolved 18 chronic business difficulties by offering the right ofimporting beans to end-user groups, etc.Resolved 18 chronic business difficulties by offering the right ofimporting beans to end-user groups, etc.

Continuously resolve SME difficultiesContinuously resolve SME difficulties

Economic EffectsEconomic Effects

Cost SavingsCost Savings

Export GrowthExport Growth

1010

IV. Expected Effects

Eased requirement on small packaging of medicines ($250M annually)

Expanded the presence of technician for smallconstruction works ($300M annually)

Eased requirement on small packaging of medicines ($250M annually)

Expanded the presence of technician for smallconstruction works ($300M annually)

Increase exports of fork-lift trucks($30M annually, 1,200 trucks)Increase exports of fork-lift trucks($30M annually, 1,200 trucks)

Possibility about similar difficulties in different companies in different areas

Possibility about similar difficulties in different companies in different areas

Continuous regulations

& difficulties

Continuous regulations

& difficulties

Establish a database on resolution of business regulations and difficulties for SMEs, local govt’s, SME support agencies in Sept.’08

Establish a database on resolution of business regulations and difficulties for SMEs, local govt’s, SME support agencies in Sept.’08

Increase awareness about regulatory reform by identifying, disseminating and awarding best practices semi-annually

Increase awareness about regulatory reform by identifying, disseminating and awarding best practices semi-annually

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V. Future Plans

Public servants’ passivismPublic servants’ passivism

Identify and resolve regulations and biz difficulties during continuous gatherings and field visits

Identify and resolve regulations and biz difficulties during continuous gatherings and field visits

We will strive to increase national

competitiveness and build a world-class nation

by continuously identifying

and resolving local business difficulties

from the viewpoint of SMEs.

We will strive to increase national

competitiveness and build a world-class nation

by continuously identifying

and resolving local business difficulties

from the viewpoint of SMEs.