Korea’s chemical laws criticized for undermining small businesses

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Two laws concerning chemical regulations in South Korea are facing industry criticism as they are seen to erode the competitiveness of small and medium-sized enterprises.

Under the Korean Act on the Regulation on Registration, Evaluation, Authorization and Restriction of Chemicals (K-Reach) and the Chemicals Control Act (CCA), which have been in effect since 2015, any company intending to manufacture or import new chemical substances weighing over 0.1 tons annually must register the relevant substance’s properties and hazardousness with the National Institute of Environmental Research.

The problem lies in the fact that the cost of registering just one chemical substance can range from tens of millions to hundreds of millions of Korean won. For small businesses, it is difficult to bear such burdensome costs.

Moreover, to register a chemical substance, various documents containing information on its properties and hazardousness must be submitted, with up to 47 different types of required documentation.

Consequently, many domestic chemical manufacturers, who are primarily engaged in producing a wide variety of small quantities of products such as surface treatments, dyes, and pigments, are forced to give up product development due to excessive costs and complex procedures.

A small chemical company in Ansan engaged in the production of dyes and pigments, for example, had to recently abandon a business opportunity.

The company had received a proposal from a Japanese partner for developing new products related to flame retardants, plasticizers, heat stabilizers, and UV blockers.

However, the development had to be abandoned due to the cost of producing test data for new chemical substances, which would require hundreds of millions of Korean won.

“The administrative costs associated with the assessment of hazardousness and registration of test data during the development process may exceed the annual profit from our business, leading us to the conclusion that it is better to give up the entire venture,” said the company’s CEO.

The Korean government is considering relaxing the registration criteria for new chemical substances to align with European standards, increasing the threshold to 1 ton.

It is also exploring the possibility of implementing a standardized toxic substance designation and management system with differentiated application based on toxicity levels.

The Ministry of Environment plans to present the amendment bill for these regulations by the end of this month.