'54.9% Reduction in Startup Documents' Includes Existing Shared Documents as Business Conditions Slip to 53rd in IMD Ranking

SEOUL

Documents already shared under the administrative information joint use system were included in the reduction figure released by the government, which announced it would abolish, exempt, or simplify 2,756 administrative documents (54.9%) required of startup companies. The Ministry of SMEs and Startups and the Office for Government Policy Coordination submitted the "Startup Company Regulatory Rationalization Plan" and a plan to redesign administrative documents for startups to the 2nd plenary meeting of the Presidential Regulatory Rationalization Committee, held at the Cheong Wa Dae State Guest House on October 23 and presided over by President Lee Jae-myung. They explained they would accelerate the "transition to an era of national startups" through 10 tasks, including a special exception extending the startup support period by up to five years for founders whose management was interrupted by military service or childbirth. The plan cited Korea ranking "32nd in business environment" as background, but South Korea's ranking for business conditions fell from 50th to 53rd in the International Institute for Management Development (IMD) assessment released by the Ministry of Economy and Finance in June.

Existing Shared Documents Also Included in 2,756 Reduction Figure

The government's explanation published on Policy Briefing stated that "out of 5,021 administrative documents that startups must submit, 2,756 documents (54.9%), including existing documents shared through administrative information joint use, will be abolished, exempted, or simplified." The government itself acknowledged that shared documents were included in the reduction count. However, the only figures presented in the government data were three: the population of 5,021, the total sum of 2,756, and the proportion of 54.9%. The portion accounted for by shared documents and the specific breakdown among the three categories—abolition, exemption, and simplification—were bundled into a single total.

Three methods for reduction were introduced. Documents that do not affect the selection of business operators will be eliminated, similar or overlapping documents will be consolidated into one, and submission levels will vary depending on the submission timing and risk level. Consent forms and pledges will be replaced with electronic consent checked online. Examples presented included abolishing personal identification documents of representatives when applying to the Ministry of Agriculture, Food and Rural Affairs' "K-Food Startup Academy," and exempting the submission of six documents, including the Standard Financial Statement Certificate and Small and Medium Enterprise Confirmation, when applying to move into the Ministry of Culture, Sports and Tourism's Global Game Hub Center.

Announcements on document reductions came twice in four days. The Ministry of the Interior and Safety announced on October 19 that it had "simplified submission documents for 1,658 administrative services across central ministries and local governments" and that the simplification was "completed." The means employed were "computer networks such as administrative information joint use and Public MyData," while the targets for reduction included "services tangible to the public, such as those for small business owners and entrepreneurs, people with disabilities, the elderly, vulnerable groups, and everyday fee discounts." The figures cited as achievements by the Ministry of the Interior and Safety were 1,658 services and "a cumulative total of over 100 million information inquiries since 2024." Among the simplified services, the share belonging to local governments such as cities, counties, and districts was 55.6%, and the ministry stated that it "plans to continue document simplification going forward by continuously identifying information eligible for administrative information joint use and expanding network utilization." The Ministry of the Interior and Safety highlighted 1,658 services, while the Ministry of SMEs and Startups and the Office for Government Policy Coordination highlighted 2,756 documents. While both announcements relied on administrative information joint use as a core instrument, it is impossible to determine from each side's respective numbers which portions of documents targeting business operators overlap.

10 Tasks Require Revisions to Decrees and Agreements to Reach the Field

The regulatory rationalization tasks for startup companies presented by the Ministry of SMEs and Startups consist of 10 items in three packages. The first package improves startup support criteria. If a management hiatus occurs due to a representative's military service or childbirth, a special exception will be created allowing startup support for up to five additional years beyond the seven-year business age that the Support for Small and Medium Enterprises Establishment Act considers a startup. For startups operating for less than three years, rather than filtering them out beforehand based on financial soundness criteria such as debt-to-equity ratios or capital impairment when applying for government research and development (R&D) projects, these will be replaced with selection and evaluation criteria. Companies founded on the venture studio model will be recognized as startups even if an accelerator (AC) holds an investment stake of 50% or more.

The second package involves finance and investment. It involves standardizing shared guidelines so that conditions for lifting limit-restricted accounts for early-stage startups are identical across all banks, and adding verification by credible institutions—such as a history of selection in startup support projects—as grounds for lifting restrictions. For sub-funds invested in by the Fund of Funds, standard agreements will be revised so their duration can be extended with a certain level of investor consent, without requiring unanimous consent from all investors as is currently the case. The types of accredited investment institutions used for venture business certification will be expanded from 21 to 23 types. For dual evaluations under special technology listing, common submission materials and standard forms across evaluation agencies will be established.

The third package centers on re-challenging. The faithful management evaluation ("faithful failure" system) will be expanded pan-governmentally, and its criteria will be shifted to "focus on sincerity (efforts toward business recovery)." The Enforcement Decree of the Support for Small and Medium Enterprises Establishment Act will be amended so that cases where an individual proprietor starts an additional, different type of individual business, or where an executive of an existing corporation establishes a corporation holding more than a 50% stake alone, will also be recognized as a startup. A "(tentatively named) Challenge and Startup Career Certificate," detailing a corporate representative's career and startup preparation background, will also be newly created.

For these tasks to take effect on the ground, the Enforcement Decree of the Act on Special Measures for the Promotion of Venture Businesses, the Enforcement Decree of the Support for Small and Medium Enterprises Establishment Act, guidelines for operating specialized evaluation systems, and the standard agreements of the Fund of Funds must be amended in sequence. Regarding the special exception for faithful failure, the ministry stated it would "first be applied across the board to Ministry of SMEs and Startups projects" and expanded to other ministries through consultations. Expanding eligible investment institutions to include asset management companies remains at the stage of "reviewing phased expansion to asset management companies in the future."

Government Emphasizes Relief for Childbirth and Military Service Gaps and Support for Re-challenging

The government explained that the latest measures targeted unreasonableness in the field. The Ministry of SMEs and Startups stated that currently, "even if unavoidable management gaps occur due to a representative's military service or childbirth, there are no exceptions when calculating business age," causing businesses to be pushed out of support. Policy Briefing reported that the purpose of the special exception is to ease burdens on young female entrepreneurs experiencing childbirth and encourage early business establishment among prospective entrepreneurs prior to fulfilling military service. The problem where companies with an AC stake of 50% or more were "excluded from support" because they were not recognized as startups, and the issue where a corporate representative's background was "unsearchable," were also cited directly by the government as reasons for improvement.

The Ministry of SMEs and Startups also pointed out problems in current systems regarding other tasks. Financial soundness application restrictions for government R&D vary across ministries, and under the special technology listing system, companies must prepare materials separately for each evaluation agency because "data requirements and evaluation criteria differ by agency." Investments made through financial investment companies and general collective investment vehicles have not been recognized as investment track records for venture business certification. The government also explained it would resolve cases where establishing a business in an industry different from an existing business was "excluded from being considered a startup if judged as a continuation or expansion of the existing business." The government regarded these criteria as "uniform and rigid," naming its first package of improvements after this issue.

Mechanisms to continuously identify regulations were also introduced. The Ministry of SMEs and Startups said it would "broadly uncover regulations hindering startups" through private business association regulatory innovation networks and regulatory screening for the "Everyone's Startup Project." Under the Regulatory Rationalization Committee, a new "Startup and Venture Regulatory Innovation Committee"—where private experts and related ministries discuss together—will be established, while demonstration channels such as startup joint regulatory demonstration projects and regionally linked regulation-free special zones will also be expanded.

President Lee Says "How Much Investment, Startups, and Jobs" Were Created Is Also Important

President Lee Jae-myung said at the meeting, "Outdated, inconvenient regulations or those hindering the development of new technologies and emerging industries must be improved quickly and boldly." In his opening remarks, he stated, "Regulatory rationalization is an essential task to create an irreplaceable Republic of Korea." Regarding startups, he said, "The era of national startups is an opportunity for anyone with a fresh idea to succeed, and nationally, it allows us to enjoy the effects of economic growth and job creation," adding, "Yet when one actually tries to start a business, there are many difficulties, including a lack of information, complex regulations, and numerous documents to submit." He continued, "There is a need to boldly eliminate conventional regulations that are non-essential and exist merely for administrative convenience." At the same time, he added, "Regulations to protect the lives, safety, and property of the people, and to secure fairness and transparency, are absolutely necessary."

President Lee also directly proposed a yardstick for measuring performance. "While how many regulations were improved is important, how much investment, startups, and jobs were created by changing regulations is also important," he said. In the startup measures submitted to the same meeting, the figures presented were filled with institutional changes, such as reducing 2,756 out of 5,021 documents, extending the support period by up to five years, setting the 50% AC equity threshold, and expanding the types of investment institutions from 21 to 23.

This meeting was the second plenary session held roughly six months after the first plenary meeting on April 15. According to an advance notice from Policy Briefing, attendees were scheduled to include approximately 100 people: three private vice-chairpersons, 25 private members, around 40 business representatives and experts related to the agenda, 17 government officials including the Prime Minister and ministers/vice-ministers of relevant ministries, as well as the Presidential Chief of Staff and the Senior Presidential Secretary for Policy. The meeting was organized into two sessions. In the session on Fostering Super-Gap High-Tech Industries and Regionally Led Growth, the Office for Government Policy Coordination reported on the "Direction of Regulatory Rationalization to Support Mega Projects and 5-Pole 3-Special Growth Engines" and announced plans to resolve regulatory bottlenecks in robotics, semiconductors, AI data centers, autonomous vehicles, and bio industries. The Era of National Startups session was structured around presentations of the Startup Company Regulatory Rationalization Plan and the "Promotion Plan and Key Cases for Redesigning Startup Company Administrative Documents," followed by free discussion.

'32nd in Business Environment' Lacks Source Citation, while MOEF's IMD Tally Shows Business Conditions Fell to 53rd

The press release by the Ministry of SMEs and Startups cited as background for the plan that "our country's overall startup ecosystem ranking is favorable, within the top 20 globally, but the business environment level (32nd) in terms of regulations and administrative procedures requires improvement." It did not disclose which institution's index this 32nd ranking came from, nor for what base year. The only data in the same paragraph accompanied by an institutional name and timeframe was a December 2025 survey by Startup Alliance cited in a footnote. The ministry also presented as grounds for the plan the fact that deregulation ranked second among reform tasks cited by startups in that survey.

The figures in international comparison data directly published by the government differ. In the 2026 World Competitiveness Ranking by the International Institute for Management Development (IMD), announced by the Ministry of Economy and Finance on June 18, South Korea ranked 21st out of 70 countries, up six places from the previous year (27th). However, in the government efficiency sector, it remained unchanged at 31st. Regarding this sector, the ministry noted, "Rankings rose in tax policy (30th → 22nd), institutional framework (24th → 21st), and societal framework (36th → 30th), but drops in public finance (21st → 22nd) and business legislation (50th → 53rd) offset the gains."

In the same evaluation, the business efficiency sector rose significantly from 44th to 34th. The Ministry of Economy and Finance stated that "rankings rose across all sub-factors," including productivity and efficiency (45th → 34th), labor market (53rd → 45th), finance (33rd → 29th), management practices (55th → 49th), and attitudes and values (33rd → 18th). Materials from a June 24 consultation council cited "improved perceptions of the corporate management environment" and stock market revitalization as primary factors behind the rise in business efficiency. While business efficiency jumped 10 places, government efficiency remained stalled at 31st, and business legislation within it fell by three places.

The Ministry of Economy and Finance held a National Competitiveness Policy Consultation Council meeting on June 24 to analyze these results and identified regulatory rationalization and "improving institutions that constrain businesses" as sector-specific tasks. The ranking cited four months later as the basis for the startup regulatory plan was the unsourced 32nd place.

Startups' Top Demand Is Funding, but Financial Tasks Are Filled with Tweaks to Agreements and Decrees

In the Startup Alliance survey (December 2025) cited in the press release by the Ministry of SMEs and Startups, the number-one urgent government reform task selected by startups was "securing funding and invigorating investment." The second was "easing various regulations," and the third was "support for revitalizing M&As and IPOs." Even in the survey cited by the government as evidence, funding issues preceded regulations.

The four finance and investment tasks in the latest plan are: overhauling joint bank guidelines, revising the standard agreement of the Fund of Funds, adding two types of investment institutions under the Enforcement Decree of the Act on Special Measures for the Promotion of Venture Businesses, and standardizing evaluation forms for special technology listings. All four tasks consist of altering procedures and requirements. The Fund of Funds task lowers the requirements for extending the duration of already established sub-funds, and the task touching on M&As and IPOs—ranked third in the survey—is a single item standardizing evaluation documents for special technology listings. The monetary amounts listed in the task list are the daily transfer limits for limit-restricted accounts (1 million won for ATMs, 1 million won for electronic financial transactions, and 3 million won at bank counters). Limit-restricted accounts are a system that imposes daily transaction limits on newly opened accounts to prevent financial fraud such as voice phishing. The Ministry of SMEs and Startups stated that currently, "decisions to lift limits vary by financial firm and branch," and pledged to adjust requirements so that each bank's requirements become "identical and predictable." The extent to which the threshold for lifting limits will actually be lowered can only be assessed once new guidelines are released.

Expansion of Faithful Failure Restarts from 'Limited to MSS,' Cited by Government as a Limitation

Regarding the faithful failure system, the Ministry of SMEs and Startups cited as a limitation of the current scheme that "the scope of application is limited to the Ministry of SMEs and Startups and a few institutions." However, the first step of the reform plan is also to "first apply it across the board to Ministry of SMEs and Startups projects," while expanding it to other ministries' projects remains at the level of "planning to expand significantly" through interagency "consultations." Contrary to the task title of pan-governmental expansion, when it will be applied to projects in other ministries depends on the outcome of interagency consultations. The startup career certification remains at the stage of being tentatively named "(tentatively named) Challenge and Startup Career Certificate," and will be linked with the Ministry of Employment and Labor's integrated career verification service.

Operated since 2016, the faithful management evaluation is a system where the Ministry of SMEs and Startups "selects targets for recovery support and provides preferential loans and guarantees," and the reform plan shifts the evaluation criteria from technological and business feasibility to "focusing on sincerity (efforts toward recovery)." The actual impact of the administrative document reduction depends on how many of the 2,756 documents are those founders will actually no longer have to submit versus those that were already shared under existing systems. The newly established Startup and Venture Regulatory Innovation Committee was introduced as a body where "private experts and related ministries discuss regulatory rationalization plans together." Startup company tasks will be handled by the Startup Policy Division of the Ministry of SMEs and Startups, while administrative document reductions will be overseen by the Regulatory Policy Coordination Bureau of the Office for Government Policy Coordination.

Sources (KST)

• Ministry of SMEs and Startups Press Release (Published on Policy Briefing) · 2026-10-23 · Fostering Regulatory Rationalization for Startups to Accelerate the Transition to an Era of National Startups · https://m.korea.kr/briefing/pressReleaseView.do?newsId=156786326&gubun=pressRelease&pageIndex=1&repCode=
• Policy Briefing Policy News (Office for Government Policy Coordination, Ministry of SMEs and Startups) · 2026-10-23 · Startup Support Extended Up to 5 Years for Military Service and Childbirth… Reducing 2,756 Administrative Documents · https://m.korea.kr/news/policyNewsView.do?newsId=148974193&pageIndex=1&cateId=&repCode_P=&smenu=EDS01
• Policy Briefing Policy News · 2026-10-23 · President Lee: "Boldly Improve Outdated Regulations Blocking New Industries… Strengthen Necessary Regulations" · https://m.korea.kr/news/policyNewsView.do?newsId=148974225&pageIndex=1&cateId=&repCode_P=&smenu=EDS01
• Policy Briefing Policy News · 2026-10-20 · President Lee to Preside Over 2nd Regulatory Rationalization Committee on 23rd… Discussing Mega Projects and More · https://m.korea.kr/news/policyNewsView.do?newsId=148973937
• Ministry of Economy and Finance Press Release (Published on KDI Economic Information and Education Center) · 2026-06-18 · 2026 IMD World Competitiveness Ranking Results: Korea Ranks 21st Out of 70 Countries, Up 6 Places · https://eiec.kdi.re.kr/policy/materialView.do?num=282936
• Ministry of Economy and Finance Press Release (Published on KDI Economic Information and Education Center) · 2026-06-24 · National Competitiveness Policy Consultation Council Convened · https://eiec.kdi.re.kr/policy/materialView.do?num=283218
• Ministry of the Interior and Safety Press Release (Published on KDI Economic Information and Education Center) · 2026-10-19 · MOIS Completes Simplification of Submission Documents for 1,658 Administrative Services... Significantly Easing Public Inconvenience · https://eiec.kdi.re.kr/policy/materialView.do?num=288245&pg=&pp=&device=&search_txt=&topic=&type=J&depth1=M0000&depth2=M0100