The Korea Chamber of Commerce and Industry (KCCI) argued that excessive regulations on large companies may have reduced South Korea's gross domestic product (GDP) by up to 111 trillion won ($75.2 billion) in 2025, urging the government to ease burdens on expanding firms. The report highlights a 'growth penalty' of added taxes and regulations that hampers Asia's fourth-largest economy. It notes that companies are deliberately limiting growth to avoid thresholds.
The Korea Chamber of Commerce and Industry (KCCI) assessed in a report released on January 20, 2026, that excessive regulations on large companies may have cut South Korea's gross domestic product (GDP) by up to 111 trillion won ($75.2 billion) in 2025. It points to the 'growth penalty'—additional taxes and regulatory burdens as firms expand—that weighs on the growth of Asia's fourth-largest economy.
"South Korean companies are deliberately curbing their growth in response to regulations, limiting their workforce to 50 or 300 employees, or pursuing corporate spin-offs to avoid regulatory thresholds," the KCCI stated. Its research indicates that such distortions in the corporate ecosystem reduced the annual GDP by 4.8 percent in 2025.
For instance, nearly 60 percent of small companies with fewer than 50 employees have stayed the same size for over five years, up sharply from around 40 percent in the 1990s. "This indicates that companies' tendency to maintain the status quo to avoid regulations has become more clear," the KCCI noted.
The likelihood of a small business growing into a mid-sized one is just 2 percent, while the probability of becoming a large conglomerate is a mere 0.05 percent. Park Jung-soo, an economics professor at Sogang University, said in the report: "By proactively revamping regulatory and taxation policies, the government needs to introduce incentives to encourage businesses to improve productivity voluntarily."
The report calls for easing regulations to foster business expansion and boost economic productivity.
