Korea seeks to add health and medical sectors to service industry law

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The South Korean government is considering adding the health and medical sectors in the application of the Basic Law on Service Industry Development, which it is pushing anew to enact to promote the service industry.

The bills supporting the law have been dormant at the National Assembly for 12 years since the Lee Myung-bak administration due to the controversy over the law being designed for medical privatization.

According to sources on Wednesday, the government is actively considering including the health and medical sectors in the application of the envisioned law as it believes that excluding specific service sectors from the scope of the law is not consistent with its original purpose. This move by the government is expected to reignite the past controversy in the political arena.

The substance of the law is to establish a basic framework to support the service industry. It includes provisions, such as the establishment of a service industry development committee under the Ministry of Economy and Finance and the formulation of a basic plan for service industry development.

The envisioned law is also expected to introduce new provisions to expand services such as caregiving and healthcare for the aging population and delivery services for the growing number of single-person households.

The law also includes provisions to support joint research and expand personnel exchanges between research institutions when they attempt to converge and integrate industries such as manufacturing and services and to establish a team to support service industry convergence research and development (R&D) innovation that will bring together various research institutes to revitalize the service industry.

The government’s pursuit of the law for the past 12 years reflects the necessity to shift away from the previous focus on supporting the manufacturing industry as the industrial structure changes. The country has been suffering from chronic service account deficits. In November last year, the service account recorded a deficit of $340 million, which widened to a deficit of $3.27 billion in January this year. The deficit continued from February to April as well.

Currently, there are three supporting bills pending at the National Assembly, each proposed by Representatives Lee Won-wook of the Democratic Party of Korea, Yoo Sung-kull and Choo Kyung-ho of the People Power Party. The bills put forth by Lee and Yoo, in principle, exclude the health and medical sectors from the application of the envisioned law.

In contrast, Choo’s bill explicitly states that “if there are special provisions in other laws, such as the Medical Act and the Health Insurance Act, those laws shall apply.” This implies that the health and medical sectors will not be completely excluded from the envisioned law. If the government chooses to amend the existing bills, Choo‘s bill is most likely to be adopted.

Discussions on the envisioned law, which includes measures to support the health and medical sectors, is likely to commence at the National Assembly as early as the middle of this month as the government is pushing for legislation this month. Initially, the government had planned to submit a new bill to the National Assembly in April, but pushed back the plan due to a lack of proper discussions at the National Assembly.

If the legislation, which includes the health and medical sectors, is discussed in earnest at the National Assembly, the ruling and opposition parties is expected to engage in a fierce battle as the opposition Democratic Party is adhering to the position that the health and medical sectors should not be subject to the envisioned law. The ruling and opposition parties have agreed on the need to enact the law to develop the service industry, but have been at odds over including both sectors.