Reasons for Proposal
Recently, technological innovations such as AI, VR, autonomous driving, and fintech are fundamentally disrupting the industrial landscape, which is changing so rapidly that it is unpredictable. To lead and efficiently respond to the 4th Industrial Revolution brought about by technological innovation, it is becoming an increasingly important challenge to create a business environment where new services and products based on novel technologies are demonstrated and commercialized without regulatory restraints.
In this regard, while many countries around the world are making bold investments and reinventing regulations at the government level to get ahead in different industrial markets, Korea has a relatively vulnerable foundation for new industries due to excessive regulations regarding businesses’ technology development and market entry. While capabilities and resources are heavily concentrated in the Seoul Metropolitan Area, industries in other regions are relatively stagnating, which calls for a system to tackle this situation.
In response to this, regulation-free special zones, also known as the Korean regulatory sandbox, was introduced (on April 17, 2019) to promote and develop new industries by diversifying regional development strategies and reinventing regulations, reinforce regional and national competitiveness, and lead a network competition in the 4th Industrial Revolution.
However, the industry raises their concern that their business may be stopped unless improvements are made in statutes and regulations by the expiration of a special case for demonstration (2 years) upon approval of the regulatory sandbox.
In this context, to address this concern of their business being stopped under the regulatory sandbox, this Act introduces a business entity’s request to improve statutes and regulations before the expiration of a special case for demonstration, specifies the determination of necessity to improve statutes and regulations, and prepares the basis to grant temporary permission if the improvement of statutes and regulations begins as safety has been demonstrated.
Furthermore, as it has been more than 1 year since regulation-free special zones were introduced, this Act aims to supplement shortcomings by simplifying the special zone plan change process.
Details
A. Clarify the scope of regulations by adding a reason to grant a special case for demonstration if it is not clear whether it is regulated or not in an effort to address uncertainty among businesses suffering from ambiguously determined regulations (Article 2)
B. Reflect requests from relevant ministries and increase the number of members in the Committee on Regulation-Free Special Zones from 30 to 40 to flexibly respond to special zone needs in various new technology areas (Article 77 paragraph 2)
C. Require any change in the regulation-free special zone plan and regulation-free special zone designation within the scope of the special zone’s purposes and objectives to be handled by the Deliberation Committee’s deliberation/resolution, and bypass the opinion hearing process including a public announcement if it does not limit residents’ rights or impose any obligations or other applicable laws that require filing for the designation of a regulation-free special zone under this Act (Article 74-2 newly inserted and Articles 79 and 81)
D. Prepare the basis to provide rewards to a special zone which outperforms as a result of the operation evaluation of regulation-free special zones, and add “Demonstration is delayed due to unavoidable reasons” to a reason to extend the validity period to ensure a business's continuity (Article 83 paragraph 5 newly inserted and Article 86)
E. Introduce a business entity’s request to improve statutes and regulations before the expiration of a special case for demonstration, specify the determination of necessity to improve statutes and regulations, and prepare the basis to grant temporary permission if the improvement of statutes and regulations begins as safety has been demonstrated (Article 87 paragraphs 7 through 10 newly inserted)
F. Increase the scope of insurance by allowing for signing up for “deduction,” an alternative means of liability insurance as there is no liability insurance product for new technologies and industries and it is difficult to calculate insurance premiums (Articles 88, 90, and 143)
G. State the cancellation of any special case for demonstration and temporary permission if granted through any false or unfair method, and add the phrase “may order corrective action” in the cancellation of any special case for demonstration and temporary permission to improve work efficiency (Articles 89 and 91)
H. Promote the regulation-free special zone system by delegating to those prescribed by Presidential Decree the right to file for the designation of a special zone (Article 141-3 newly inserted)
