Tight regulations continue to discourage business growth in South Korea
- 6 years ago
"Peter Pan Syndrome" is a psychological concept where adults do not want or feel unprepared to grow up.
Experts say this trend can be seen in South Korea's business sector as there's a tendency for some small-and-medium sized companies to actively avoid growing due to the extra regulations and taxes they will be hit with when they make the step up.
Won Jung-hwan reports.
Despite years of government efforts to remove red tape that hinders investment and employment,… a web of regulations continues to hamper business activities in South Korea, some even discouraging local firms from expanding.
When smaller enterprises grow to become mid-sized enterprises they face some difficulties in terms of losing state support and face increased regulations,... prompting some to actively take steps to avoid expanding.
According to the CEO of a local company, which became a mid-sized enterprise in April,… government support has dried up, tax breaks have evaporated and regulations have become much more restrictive.
"Tax benefits for investment in equipment and R&D expenditure have changed... and the amount of state support we receive has dropped sharply. It has also become more difficult to hire new people as we're no longer allowed to hire more replaced-duty military personnel who work for a specific industry."
Data indicates it takes an average of 20 years for domestic SMEs to grow into mid-standing companies,… but due to various regulations related to job creation, R&D and investment,... some either self-downsize or resist the temptation to grow at all.
"According to our annual survey, five-point-nine-percent of mid-sized enterprises said they've looked into downsizing to an SME. Most of them said they were considering it due to the sharp reduction in tax benefits."
While Peter Pan Syndrome in the economic sphere indicates there's plenty of foundational support measures for SMEs,… experts say measures should be drawn up to help small businesses grow into mid-sized firms and for medium-sized companies to become conglomerates under a new tax break system as well as further government-led R&D support.
To this end,... Korea's trade ministry has announced a five-year policy plan to nurture more than 80 mid-sized firms.
However, experts say the government needs to seriously consider softening the level of regulations that stifle smaller firms and discourage them from growing,... and thus hiring more people.
Won Jung-hwan, Arirang News.
Experts say this trend can be seen in South Korea's business sector as there's a tendency for some small-and-medium sized companies to actively avoid growing due to the extra regulations and taxes they will be hit with when they make the step up.
Won Jung-hwan reports.
Despite years of government efforts to remove red tape that hinders investment and employment,… a web of regulations continues to hamper business activities in South Korea, some even discouraging local firms from expanding.
When smaller enterprises grow to become mid-sized enterprises they face some difficulties in terms of losing state support and face increased regulations,... prompting some to actively take steps to avoid expanding.
According to the CEO of a local company, which became a mid-sized enterprise in April,… government support has dried up, tax breaks have evaporated and regulations have become much more restrictive.
"Tax benefits for investment in equipment and R&D expenditure have changed... and the amount of state support we receive has dropped sharply. It has also become more difficult to hire new people as we're no longer allowed to hire more replaced-duty military personnel who work for a specific industry."
Data indicates it takes an average of 20 years for domestic SMEs to grow into mid-standing companies,… but due to various regulations related to job creation, R&D and investment,... some either self-downsize or resist the temptation to grow at all.
"According to our annual survey, five-point-nine-percent of mid-sized enterprises said they've looked into downsizing to an SME. Most of them said they were considering it due to the sharp reduction in tax benefits."
While Peter Pan Syndrome in the economic sphere indicates there's plenty of foundational support measures for SMEs,… experts say measures should be drawn up to help small businesses grow into mid-sized firms and for medium-sized companies to become conglomerates under a new tax break system as well as further government-led R&D support.
To this end,... Korea's trade ministry has announced a five-year policy plan to nurture more than 80 mid-sized firms.
However, experts say the government needs to seriously consider softening the level of regulations that stifle smaller firms and discourage them from growing,... and thus hiring more people.
Won Jung-hwan, Arirang News.