Organizing Government for an Effective PSD Strategy - A Case of Regulatory Reform in Korea

1. Organizing Government for an Effective PSD Strategy - A Case of Regulatory Reformin Korea Presentation by Prof. Jong Seok Kim Professor of Economics, Hong Ik University & Member of Korean Regulatory Reform Committee 19 April 2005

2. Key Messages • Keys to effective PSD strategies: • Strong government leadership • Good coordination • Clear accountability • An effective institutional PSD mechanism should: • Coordinate strategies ACROSS ministries • Coordinate strategies between LEVELS of government • Provide continuity in the face of political change

3. The Regulatory Challenge in Korea - Before 1997 • Korean economy had become heavily regulated during its rapid growth • Drive for reform out of popular demand from business since the early 1980s • Early attempts at reform were insufficient • 1997 financial crisis created new impetus

4. The Challenge of Leadership • Establish clear rules and structure • The Basic Act on Administrative Regulation, 1997 • Hold government accountable • Require regulatory impact analysis (RIA) • Register all existing regulations • Centralize coordination • Presidential Regulatory Reform Committee (RRC), formed in 1998

5. The Presidential Regulatory Reform Committee • Reporting to the President • Co-chaired by the Prime Minister and a private • sector co-chair • Consists of 20 members • 7 cabinet ministers • 13 from the private sector, appointed on a 2-year term • Has a secretariat in the Prime Minister’s • office

6. Initial Results • President ordered 50% of 11,125 existing regulations eliminated • Each ministry had to prove the need for its regulations before RRC during the process • Within 2 years: 43% of regulations eliminated and 22% revised • Virtually all areas of Korean economy and life were affected

7. Coordination Across Ministries • Basic policy guidelines established across the government • Quality control and reform guidelines, e.g. RIA • Each ministry must propose new regulations and improvements through RRC • RRC pursues all ministries and agencies for compliance

8. Providing Continuity • RRC functions became a normal part of government • Integrated into all government institutions through administrative processes • Combination of stakeholder and cabinet appointees, on separate term cycles • Independent and publicly accountable

9. Results - After Six Years • Permanent system for regulatory reform firmly installed • Regulatory design not an exclusive function of regulating ministries any longer • Initial reform drive lost momentum as political support waned • Coordination between RRC and the provincial governments was insufficient • Quality of RIA is still low

10. Lessons Learned • Independence and political support essential to credible role of coordinating the reform • Accountability links to ministries and local government needed to enforce change • Implementation requires plenty of expert support, at several levels of government • Make changes visible at local government level to keep up momentum

11. Conclusion • Keep political leadership visible and strong • Make the policy and its coordinating agency a permanent part of government • Maintain consistent reform principles across the government • Build coalition for the reform within society

12. For More Information Prof. Jong Seok Kim Email: jskim@hongik.ac.kr RETA website: http://www.adb.org/Projects/Supporting-PSD-Strategies