Choi Taewon: "Cities That Lift Regulations Will Lead the Future"... A New Laboratory for K-Industry [Regulation-Free City, Mega Sandbox] ①

Countries Worldwide Accelerate Deregulation at the City Level, Spurring Industrial Innovation
KCCI Proposes Private Sector-Led "Mega Sandbox" as a Solution for Regional Growth
Government Considers Institutionalizing "Mega Special Zones" and "Korean

Editor's NoteThe world is calling for deregulation. With the rise of new industries such as artificial intelligence (AI), there is a growing sense of crisis that existing rules are no longer sufficient to foster emerging sectors. Cities such as Wuhan in China, Urban City in Japan, Singapore, and Dubai in the United Arab Emirates (UAE) have already loosened regulations at the city level, granting companies greater freedom to operate. In Korea as well, there is increasing demand to boldly lift regulations so that new industries can take root. At the heart of this movement is a sense of urgency that neither industrial growth nor the nation’s future can be expected within the confines of outdated frameworks. Recently, the business community has discussed the concept of a 'Mega Sandbox,' which would integrate industry, infrastructure, education, and policy into a unified platform for city-level experimentation. Unlike previous approaches that offered limited deregulation to individual companies or sectors, this proposal aims to transform entire cities into experimental platforms and lift regulations as a package. The idea is that allowing companies to experiment directly will create a virtuous cycle that attracts jobs and investment. The Asia Business Daily reporting team visited major experimental cities such as Wuhan, Singapore, and Dubai in September to analyze how city-level industrial innovation is being implemented. Ultimately, the solution was found in robust institutional support from governments. Over the next four installments, we will present specific directions for the Korean government based on both the successes and failures observed in other countries.

Choi Tae-won, Chairman of the Korea Chamber of Commerce and Industry, has proposed the regulation-free industrial experimental city, the 'Mega Sandbox,' as a new growth strategy to address Korea’s structural challenges such as regional stagnation, industrial low growth, and the outflow of talent. He believes that a city-level innovation platform integrating deregulation, education, infrastructure, data, and investment environments can create a structure in which regions can achieve self-sustaining growth.

Choi Tae-won, Chairman of the Korea Chamber of Commerce and Industry. Photo by Kim Hyunmin

On October 20, Chairman Choi expressed his support for The Asia Business Daily’s special series, 'Korea’s Great Transformation: Mega Sandbox, the Regulation-Free City,' stating, "The Mega Sandbox can be a comprehensive solution to the complex issues facing regions, such as delayed innovation, restrictive regulations, concentration in the capital area, declining birth rates, and the risk of local extinction." In a message sent to the newspaper, he emphasized, "The foundation of the Mega Sandbox is the private sector. Where companies gather, jobs are created; where jobs are created, people gather; and where people gather, more companies follow, creating a virtuous cycle."

The core of the 'solution' he describes lies in transforming cities into platforms for industrial experimentation. He argues that dispersing resources and opportunities concentrated in the capital region to local areas, and building innovation ecosystems led by companies at the city level, are essential for sustainable growth. To achieve this, the government must go beyond making partial adjustments to individual policies and instead design and boldly open up packages of regulations, infrastructure, and education. Only when the private sector leads experimentation on this foundation will a self-sustaining growth circuit in the regions be completed.

Currently, the Korean economy is facing a combination of challenges: declining competitiveness in manufacturing, a lack of new growth industries, and the risk of regional extinction due to excessive concentration in the capital area. Aging industrial complexes have lost their vitality, and as young talent continues to move to the capital, local industrial ecosystems are shrinking further. The Mega Sandbox concept proposed by Chairman Choi has emerged as a fundamental solution to break through these structural bottlenecks.

The government is also considering institutionalizing city-level industrial experimentation models in response. These include the 'Mega Special Zone,' which grants comprehensive and ongoing deregulation by integrating industry, infrastructure, and policy, and the 'Korean City' concept, which combines new industry demonstration and residential functions next to aging industrial complexes. The government is studying a system in which the Prime Minister’s Office centrally manages deregulation policies that were previously scattered across ministries, and the President directly oversees regulatory reform.

The government’s role goes beyond improving policies to ensuring practical implementation. Looking at international examples, Wuhan in China transformed the entire city into a testing ground for autonomous driving, creating 'roads without regulations.' The government provided insurance and infrastructure so that companies could freely test their technologies. Singapore integrated its downtown into a massive network, enabling simultaneous testing of robotics and logistics systems. Dubai established a Minister of AI and a virtual asset regulatory authority, attracting global capital and technology companies.

Korea’s Regulation-Free Special Zones and general sandbox systems remain limited. The Regulation-Free Special Zones temporarily ease regulations for certain industries in specific regions, focusing on demonstration projects, while the general sandbox system allows companies in sectors like fintech (finance + technology) and mobility to test their services with regulatory exemptions for a set period. Both systems have narrow scopes and are limited in driving comprehensive industrial transformation.

Jung Byungkyu, Director of Regulatory Innovation Planning at the Office for Government Policy Coordination, stated, "The Mega Sandbox is a new policy framework that combines deregulation and infrastructure planning. The government should present a national development strategy and a grand design, while the private sector should take the lead in experimentation and investment within that framework."