Government plans specified in laws are made on regular basis and updated periodically. Also the way a government plan is made and implemented is very similar with each other as they follow a stereotyped form. Usually a typical government plan is made and reviewed by a committee in which several experts and/or people representing diverse interest groups are participating. More often than not such a committee plays the role of regulatory market. Korean government plans are not similar to the French style indicative plan or that of Scandinavian countries that plays the role of ‘forecast’. However, Korean government plans are very similar to those of Japan as Korean government used to refer to Japanese laws when drafting a legislative bill.

Korean government plans are likely to distort market economy as follows. First, there might be an issue of conflict of interests as many public institutes and/or public firms that are competing with private sector are participating through committees in the process of drafting government plans. Moreover, participating public firms could represent their own interests through the process. Second, participating public institutes and public firms could preempt the relevant market through government plans. Third, many cross subsidizations among consumers, industries, and regions implemented by Korean government are reflected in government plans. However, these cross subsidizations hinders market signals and could seriously distort resource allocation resulting serious inefficiency. Fourth, government plans tend to serve to enlarge public sectors and strengthen the power of government, causing big government. Government plans specified in laws help government bodies and related public sectors to secure proper staff and budget due to their mandatory nature.

To review the distinctive features and potential problems of Korean government plans this report analyzes the case of Power Development Plan and Housing Development Plan. In case of Power Development Plan the function of harmonizing demand and supply of generation facilities, one of the most important purpose of the plan, could be harmed due to the preemption effect from large generation facilities of public sector such as nuclear power plants because the market share of gas plants that can raise the flexibility of the Plan through short construction period are limited. on the other hand, various government plans and regulations regarding the use of land and construction invalidate the effectiveness of Housing Development Plan. Consequently, Housing Development Plan cannot effectively control the demand of housing neither expand the its supply capabilities.

Reviewing Korean government plans should serve as a good opportunity to look back and reconsider the way we handle regulatory reform. We need to utilize various methods of regulatory reform which, so far, has been driven to meet a quantitative target, for instance, the number of regulations. We may need to extend the gate keeping method of reviewing the regulatory clauses in new legislative bill to reviewing government plans and budget proposal.