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- The Korea Herald
- Jan. 10, 2005


The administration is reportedly moving to open up the nation's educational, medical, legal and other service markets to foreign competition. Finance Minister Lee Hun-jai said on Friday that a comprehensive market-opening plan would be worked out in the second half of the year.

The move is well-advised. In fact, the government should have started earlier to liberalize such high-value-added sectors as education and medical service. These sectors are not competitive because of underinvestment and the lack of competition. Because of the poor quality of education, medical and other services at home, rich people go abroad to satisfy their needs. The result is a drop in domestic consumption of these services amid a rapid growth in overseas consumption. For instance, the nation's deficit in the educational service trade alone reached $2.2 billion last year through November, surpassing $1.8 billion for the whole of 2003.

Opening up the domestic service sector to foreign competition is sure to improve its productivity and competitiveness. However, it will be a tough task because of the expected strong resistance from domestic service companies and organizations. To figure out how difficult it will be, it is enough to see the slow progress in building a free economic zone in Incheon.

The creation of an FEZ in Incheon constitutes the centerpiece of the incumbent government's vision of making Korea the business hub of Northeast Asia. However, progress has been slow due to controversies over foreign educational and medical institutions.

A bill on foreign schools in the FEZ has been on the table at the National Assembly for more than eight months due to opposition among lawmakers of the ruling Uri Party to the proposal that Korean students be admitted to the foreign schools. The rationale of the proposal is that extending admission to Korean students would make it easier to attract world-famous foreign schools by ensuring that they can operate profitably.

But the lawmakers and the Korea Teachers & Educational Workers' Union behind them have been adamantly opposed to the idea out of fear it would ultimately undermine the foundation of the national education system.

In promoting the market-opening for the service sector, therefore, the key lies in forming a consensus among the parties involved. To improve the productivity of the entire economy, it is essential to introduce competition in the service sector. We hope the government draws up a liberalization plan that can persuade domestic service providers.