Taiwan’s economy is projected to have expanded by 7.37 percent last year, according to last estimate by the Directorate-General of Budget, Accounting and Statistics, while the Ministry of Trade and Industry on Friday placed preliminary annualized growth of Singapore at 4.8 percent for 2025, accelerated from 4.4 percent in 2024.
The Bank of Korea estimate for South Korea's growth in 2025 despite record exports is at around 1 percent.
The widening gap underscores how differently Asia’s export-driven economies are translating the semiconductor upcycle into broader growth.
“The wide gap in last year’s growth rates for South Korea and Taiwan — 1 percent and 7 percent — largely reflects differences in how aggressively companies invest and the regulatory environment that supports that investment,” said Jang Sang-sik, head of the Institute for International Trade at the Korea International Trade Association, in a survey conducted by Aju Business Daily.
Although South Korea and Taiwan share similar industrial structures and heavy reliance on exports, Taiwan has taken a more proactive role in removing bottlenecks related to land, electricity, water supply and permits, Jang said. He added that Taiwan also enhances policy predictability by giving advance notice of regulatory changes and collecting feedback before implementation.
Regulation weighs on Korea’s growth outlook
Survey respondents to New Year's survey by the Aju Business Daily pointed to South Korea’s regulatory environment as a key factor holding back investment, especially as new technologies converge with traditional industries.
Experts warned that preemptive or overly restrictive regulation in areas such as autonomous driving, artificial intelligence, drones and biotechnology could stifle innovation before it reaches commercial scale. They argued that allowing companies to compete within clearly defined boundaries is more effective than imposing broad preventive controls.
Criticism has also focused on South Korea’s reliance on after-the-fact enforcement. Lee Su-won, a member of the Korea Chamber of Commerce and Industry’s corporate policy team, said uncertainty over legal liability discourages bold investment decisions, mergers and acquisitions, and corporate restructuring, ultimately weakening competitiveness.
Concerns have intensified under the Lee Jae Myung administration as a series of labor and corporate governance reforms move forward.
In the New Year survey conducted on major business organizations, corporate groups and academic experts, respondents overwhelmingly identified the so-called Yellow Envelope Act — revisions to the Trade Union and Labor Relations Adjustment Act — as the most serious risk to corporate management this year.
All respondents said the law would undermine companies’ ability to make independent management decisions, with 42.9 percent saying its impact would be “very large.” The legislation expands bargaining obligations to subcontractors and limits liability for damages related to labor disputes, raising concerns about increased labor conflicts and legal uncertainty.
Business groups also expressed strong reservations about revisions to the Commercial Act, including expanded directors’ fiduciary duties to shareholders, strengthened audit committee rules and mandatory cancellation of treasury shares. More than 70 percent of respondents said the first two revisions would negatively affect corporate management, while a majority also viewed the treasury-share rule unfavorably.
Views were more divided on raising the mandatory retirement age to 65. While many companies said they could adapt through rehiring or internal adjustments, they warned of higher labor costs and reduced flexibility. Experts stressed that any reform should be phased in carefully and tailored by industry and company size.
Call for productivity-led reform
Despite differing views on specific policies, experts broadly agreed that productivity gains — particularly through artificial intelligence — will be critical to sustaining growth as Korea faces demographic decline.
“We need to combine the experience of older workers with efficiency gains driven by AI,” said Yoon Won-joo, a professor at Hankuk University of Foreign Studies, calling for a “productivity revolution through AI collaboration.”
Business groups urged policymakers to slow the pace of regulatory changes and clarify standards before enforcement, warning that uncertainty itself has become a major drag on investment. Several executives said clearer distinctions are needed between intentional wrongdoing and normal business judgment, arguing that excessive legal risk discourages long-term decision-making.
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