Kwon Hyangyeop Proposes Amendment to the Regional Special Zone Act

"Ensuring Transparency in Special Zone Selection for Balanced Regional Development"

Democratic Party lawmaker Kwon Hyangyeop (Suncheon, Gwangyang, Gokseong, Gurye-eul, Jeollanam-do) announced on the 11th that she has proposed the "Amendment to the Regional Special Zone Act" as the lead sponsor, aiming to enhance transparency in the designation of Regulatory Free Zones and to ensure smooth operation of related procedures.

According to the current law, Regulatory Free Zones are areas where regulatory exceptions are applied to foster innovative or strategic industries. The head of a local government may apply for designation, and the Minister of SMEs and Startups (hereinafter referred to as the Ministry of SMEs) may designate the zone after deliberation and resolution by the Regulatory Free Zone Committee.

Kwon Hyangyeop, Member of the National Assembly.

However, there have been criticisms that when an application for designation is rejected, the reasons are not clearly communicated, resulting in insufficient communication with the applying local governments. In addition, there are opinions that the designation process needs to be supplemented by providing guidance and guidelines for the establishment of Regulatory Free Zone plans.

Accordingly, the main points of the bill are to require the distribution of guidelines for establishing Regulatory Free Zone plans that include review criteria, to notify the reasons when rejecting an application for designation, and to allow the Ministry of SMEs to request supplementary materials if the application is incomplete, thereby ensuring smooth operation of the designation procedures for Regulatory Free Zones.

During the 2024 parliamentary audit of the Ministry of SMEs, Kwon pointed out that four out of five Regulatory Free Zones designated in the 9th round were in Yeongnam, criticizing the selection as biased.

Kwon also criticized, "The Ministry of SMEs submitted data stating that eight local governments voluntarily withdrew their applications, but upon confirmation with the respective local governments, they responded that there was no such voluntary withdrawal." She argued that the Ministry of SMEs submitted a false response by claiming the local governments had voluntarily withdrawn their applications when in fact the applications had been rejected by the Ministry.

At the time, Minister of SMEs and Startups Oh Youngju responded, "I was not aware of this matter and will look into it thoroughly." Afterwards, the Ministry of SMEs explained to Kwon's office that it would strengthen communication with local governments to clarify whether special zone plans had been withdrawn voluntarily, and would improve the system to promote strategic and innovative regional growth and balanced regional development in line with the purpose of the "Regional Special Zone Act" in response to concerns about regional bias.

Kwon emphasized, "The purpose of the Regional Special Zone Act is balanced regional development to establish a self-reliant and sustainable growth base for the regions," and added, "To promote balanced regional development in line with the legislative intent, transparency in the selection of Regulatory Free Zones must be ensured to resolve regional bias."