"Korea has many world-class companies in manufacturing sectors such as semiconductors, automobiles and shipbuilding, but in services we still have no global company to speak of." That was Bahk Jae-wan, then minister of strategy and finance, speaking at a ministerial meeting on external economic affairs in July 2011. He stressed that raising the competitiveness of the service industry was essential to clearing the final steep slope into the ranks of advanced economies. Five months later, the Lee Myung-bak administration submitted the Service Industry Development Framework Act to the National Assembly. The bill has yet to clear the legislature 15 years on, blocked by resistance from the medical community and politicians who raised concerns about the privatization of health care. Economic policy chiefs and business groups have called for its passage with each change of government, only to see the effort collapse each time. Of the 12 bills introduced over that period, eight have been scrapped and four are now pending before a subcommittee of the National Assembly's Finance and Economic Planning Committee.
The Lee Jae-myung administration appears to be picking up the pace again on strengthening service-sector competitiveness. Lee Hyoung-il, deputy prime minister and minister of finance and economy, asked the National Assembly on the 14th to enact the law this year, saying the country needs "second and third runners to drive growth alongside semiconductors." The act is a framework law intended to foster service industries such as finance, retail and tourism at the whole-of-government level. The main pending bills provide the legal basis for five-year master plans, an interagency coordination body, research and development, workforce training and export support. Where existing laws and rules governing services have leaned toward regulation rather than promotion of new businesses, the framework act is centered on shifting from a positive regulatory system, in which activity is prohibited unless permitted, to a negative one, in which activity is allowed unless specifically banned.
Tada, a ride-hailing service built on rental cars, suspended its core Tada Basic offering in 2020 after a so-called Tada ban law passed, following resistance from the taxi industry and an indictment by prosecutors in 2018. The company won an acquittal at the Supreme Court in 2023, but by then the path to commercialization had already closed. Lawtalk, a legal services platform, was similarly pushed to the brink by opposition from the Korean Bar Association and disciplinary action against 123 lawyers registered on the platform, narrowly surviving after the Ministry of Justice overturned the penalties in 2023. The framework act carries the expectation that when new services collide with existing rules and struggle to reach the market, interagency coordination and institutional reform can open a way forward.
The service industry is already a central pillar supporting output and employment in the Korean economy. According to the Bank of Korea, private services accounted for 44% of nominal gross domestic product in 2024 and 65% of all employed workers. Manufacturing, by contrast, made up 27% of GDP and 16% of employment. The problem is that growth and productivity lag behind that scale. While manufacturing grew 4.3% in 2024 and 2.0% in 2025, the service industry as a whole expanded just 1.6% and 1.7% over the same years. Real labor productivity per worker in private services has also remained at about 40% of the manufacturing level for the past two decades. Without changing the underlying structure of an industry that accounts for two-thirds of all employment, it will be difficult to broaden the base for growth. That is why the government is again putting its weight behind the bill.
The biggest obstacle to the legislation has long been concern over damage to the public interest in health care. But three of the four bills now pending in the National Assembly would exclude from the law's scope matters governed by five health-related statutes, including the Medical Service Act and the Nursing Act. The government says it has no objection to that approach. In effect, common ground has emerged to resolve a long-running legislative standoff. Excluding only matters covered by those five statutes will not, of course, eliminate every concern about the public nature of health care. Areas with blurred boundaries, such as the use of medical data or linked services, can be refined during parliamentary deliberation. Health care should no longer be used as a pretext to hold the bill hostage.
With artificial intelligence and data erasing the boundaries between industries, services are a future growth engine that can combine with manufacturing's technological strength to lift exports and create quality jobs. The framework act is the legal foundation for pursuing that upheaval as an integrated national strategy rather than through individual ministries. How much longer will enactment be delayed at the mercy of sectoral and professional self-interest? There must be no more cases like Tada or Lawtalk. The ruling and opposition parties should resolve to pass the bill this year, with the extraordinary determination required to prepare for the era after semiconductors. The government, for its part, should use the law as a springboard to break down barriers between ministries and bundle regulatory innovation with financial and export support, laying out a field on which service companies can compete.