Korea to open law services market in 2006

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Korea to open law services market in 2006

 

April 12, 2005


South Korea will open its legal service market to foreigners next year to advance the nation's high value-added services industry, the Ministry of Finance and Economy (MOFE) said.

The government will allow local law firms to set up joint venture law firms with foreign counterparts here from as early as next year, the ministry said.

The decision came at the first ministerial meeting to boost the nation's service sector, chaired by Prime Minister Lee Hae-chan, to improve the nation's economic structure. At the meeting, economic ministers discussed plans to improve 27 major service industry sectors, including finance, law, medical and design, with details for each sector to be introduced in May.

To advance the legal service industry, the government decided to allow local law firms to do business in partnerships and set up a joint law firm with foreign lawyers. It also plans to develop a new legal business alliance model that enables domestic law firms to provide a one-stop service offering both domestic and foreign legal services through cooperation with foreign law firms.

Under current law, Korean law firms are not allowed to employ foreign lawyers or form a business alliance with foreign law firms. They hire foreign lawyers as legal advisors, not lawyers. "This is the liberalization of the domestic legal service market," a MOFE official said. "It will serve as the catalyst for boosting the nation's service industry."

Moreover, the government decided to encourage more private funds to invest in the medical service sector, while easing regulations on the establishment of profit-making hospitals. At the same time, the government will also develop leisure development zones focused on skiing and golf. For small independent businesses, the government decided to give them priority to open shops at new discount outlets.

The government's comprehensive long-term service industry improvement plan came as it has faced growing calls for shifting the focus of its economic policy to the service industry from the manufacturing industry.

Experts have said that the government should encourage fresh investment in the service sector through deregulation to sustain high economic growth. They insist that Korea should focus on developing knowledge-based service industries, such as finance, and accounting, law and medical service. "To succeed in the global economy, Korea should transform the economy into a service economy," Mauro F. Guillen, professor of the Wharton School of the University of Pennsylvania, said. He said that the global economy is primarily a service economy and countries that do not succeed in services are doomed to fall behind.

"[Korea's] biggest problem is over-investment in the manufacturing of commodity-type industrial products," Guillen said, stressing that Korea must look for higher value-added activities not just in manufacturing but also in services.

According to the MOFE, the portion of the nation's service industry to GDP came to 57 percent in 2003, well below Japan's 69 percent, France's 73 percent and the U.S.' 77 percent. And the nation's workforce in the service industry accounted for 65 percent of the total in 2004, compared with France's 74 percent and the U.S.' 79 percent.

 

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