Regulatory Free Zones and Demonstration Exceptions May Now Be Appealed After Rejection

Amendment to the Enforcement Decree of the Special Regulatory Act Approved at Cabinet Meeting
Ministry of SMEs and Startups: "Special Zones Will Lead Regional Balanced Development"

If a demonstration exemption is rejected in a Regulatory Sandbox Special Zone, an objection can be filed.

Minister Oh Young-joo of the Ministry of SMEs and Startups [Photo by Yonhap News]

The Ministry of SMEs and Startups announced on the 23rd that the partial amendment to the Enforcement Decree of the Act on Special Cases Concerning the Regulation-Free Special Zones and Regional Specialized Development Zones, aimed at improving the Regulatory Sandbox Special Zone system, was approved at the Cabinet meeting.

The Regulatory Sandbox Special Zone is an area where menu-type exemptions, rapid regulatory confirmation, demonstration exemptions, and temporary permits are applied to foster innovative or strategic industries by local governments. The menu-type exemptions refer to the 203 exemptions stipulated in the Regional Special Zone Act. Since its first implementation in 2019, a total of 43 special zones have been designated in 14 non-metropolitan cities and provinces, with 37 zones currently in operation.

Through this amendment, an objection procedure will be established in case demonstration exemptions or temporary permits are rejected. This allows for the protection of rights for companies applying for demonstration exemptions or temporary permits.

Additionally, the amendment specifies the schedule for legal revisions by regulatory authorities and the necessary items for legal revision plans to strengthen the implementation capacity of regulatory authorities in legal revisions. For the stabilization of the special zone system, it is necessary for the relevant regulatory authorities to revise laws once safety is proven through demonstrations. The Ministry of SMEs and Startups expects prompt legal revisions and regulatory relief through this enforcement decree amendment.

Other changes include system adjustments following the legal amendment, such as expanding the eligibility to apply for special zones from heads of metropolitan local governments to heads of basic local governments.

Oh Young-joo, Minister of SMEs and Startups, stated, “The Regulatory Sandbox Special Zone aims to foster strategic industries and innovative projects reflecting the characteristics of various regions, and regulatory relief is important as an outcome of this. Through the amendment of the enforcement decree, we will establish effective policies so that the Regulatory Sandbox Special Zone will lead regional balanced development and innovative and strategic growth of the regions.”