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Cost in, Cost out

Concept and Necessity of Cost-in, Cost-out

Cost-in, Cost-out is the system to keep the total amount of net regulation cost at certain level through abolition and relaxation corresponding to this when creating or reinforcing regulation.
○ Raise regulation quality through analysis of regulation cost and benefits and comparison of multiple alternatives
○ Continuously improve existing regulations that give unnecessary burdens on the regulated party.

Cost-In, Cost-Out

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Cost-in, Cost-out Pilot Project

Cost-in, Cost-out Pilot Project has been carried out on 8 government departments such as Ministry of Land, Infrastructure and Transport, Ministry of Culture, Sports and Tourism, Ministry of Oceans and Fisheries, Ministry of Trade, Industry and Energy, Ministry of Environment, Ministry of Agriculture, Food and Rural Affairs, Small and Medium Business Administration and Korea Forest Service since July 2014.

1) Target of Applications
Cost-in, Cost-out is applied to the regulation under the Framework Act on Administrative Regulation which causes direct benefits or cost to the entities of profit activities such as person or non-profit corporation.
As an exception, however, Cost-in, Cost-out is not applied to the following cases after the deliberation of Regulatory Reform Committee.

△ Regulations necessary for urgent response to national crisis
△ Regulations required for implementation of treaty or international agreement
△ Regulations directly related to life and safety of people

2) Method of Application
When enacting or reinforcing regulations, the government department calculates net regulation cost incurred to regulated parties separately. Net regulatory cost means the deduction of direct benefit from direct cost of regulation.
Net regulatory cost from new establishment, reinforcement, abolishment and relaxation of regulations are analyzed and net regulatory costs are exchanged. Then, the remaining amount after the exchange are deposited and used later. But, if it is difficult to analyze how much cost the regulation incurs in terms of currency, similar regulations will be abolished and relaxed after taking into account the nature, strength, and ripple effects of the regulations.

3) Evaluation and Disclosure
Performance results of cost-in, cost-out of each department will be evaluated and disclosed on regulatory information portal.

Future Plan

We plan to add more departments and to expand pilot project in 2015. The government will continue to make efforts to relieve actual burden on the regulated party with cost-oriented management, rather than carrying out simple management of a number of regulations.