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March 29, 2024

Experts urge exemption for startups from new VAC bill to curb red tape

PUBLISHED : January 17, 2019 - 16:45

UPDATED : January 17, 2019 - 16:45

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[THE INVESTOR] Experts in Korea on Jan. 17 called on the government to amend the bill aimed at value-added carriers operating here to report their business activities starting 2021, citing its potential “reverse discrimination” against startups. 

Participants at the parliamentary panel session discuss repercussions from the revision of the Telecommunications Business Act on Jan. 17.
Startup Alliance

The bill requires some 16,000 VACs -- including internet giants at home and abroad such as Google, Netflix, Naver and Kakao -- to submit documents and data related to their business operations, so that the Ministry of Science and ICT can keep track of them. It was passed by parliament in November.

Contrary to the government’s goal to check market domination, many startups view the revision of the Telecommunications Business Act as additional red tape, experts said during a panel session at the National Assembly.

Kim Hyun-kyung, a professor at Seoul National Univesity of Science and Technology, demanded that startups should be exempt from such a requirement, saying most of them here fall in the category of VACs and are subject to reverse discrimination.

“Startups are usually small in size in terms of capital and workforce to deal with administrative tasks, and responding to the government’s frequent calls to hand in documents would be a big a burden,” said Kim, who also heads a nonprofit organization Best Regulatory Reform Forum.

She called the bill “ex-ante regulation” that would add to the current set of regulations that have deterred the growth of startups.

The bill will also likely expose startups to threats of confidential information leak to competitors, said Lim Jung-wook, managing director of advocacy group Startup Alliance, adding that startups may have to reveal information like market share, revenue from online business, online transactions and commission fees.

“This could pose a burden to fast-growing startups that are not obliged to disclose their business activities,” Lim said, arguing that maintaining confidentiality was essential for the growth of global tech giants such as Amazon and Google.

A working-level government official at the panel session hinted that startups may not be subject to the new requirement.

“We haven’t started discussing requirements yet, but startups are unlikely to be subject to the new law,” said Ministry of Science and ICT Director Lee Jin-soo.

By Son Ji-hyoung (consnow@heraldcorp.com)

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