[City Without Regulation, Mega Sandbox]⑫Jeju Mega Special Zone as a Cautionary Tale: "Success Requires More Targeted Support"

Legal and Institutional Overhaul Essential for Mega Sandbox Realization
A Comprehensive Special Law Covering Regulation, Administration, and Finance
Securing Momentum with a Presidential Control Tower

In order to realize a mega sandbox in Korea, it is essential to overhaul laws and institutions. There is growing support for the argument that, rather than simply easing individual regulations divided among ministries, a comprehensive special law should be enacted to establish an integrated control tower, with the head of government granted the authority to lead policy.

As seen in cases such as Wuhan in China, Singapore, and Dubai in the United Arab Emirates (UAE), attempts to turn an entire city into a massive laboratory-a mega special zone-have not been entirely absent in Korea. Jeju Island is a representative example. In the early 2000s, a goal was set to transform Jeju into a 'Northeast Asian hub for free trade, business, and tourism,' and with the launch of the Jeju Special Self-Governing Province in 2006, the Jeju Special Act was implemented. This was not merely a regulatory exception law, but a comprehensive national framework law encompassing administrative system reform, investment promotion, and individual industry exceptions in areas such as education, environment, and healthcare.

Lessons from Jeju's Challenge... The Need for a Comprehensive Special Law

Looking at the results after about 20 years, it is difficult to evaluate this experiment as a success. Although a special law was enacted, the promised national financial support was not provided consistently, and conflict management-such as addressing local residents' opposition-was insufficient. To move beyond the limitations of regulatory sandboxes, as seen in Jeju's challenge, and to create a 'city-level special zone,' the relevant law must also include comprehensive regulatory exceptions, an administrative management system, and sustainable financial support.

Jung Byungkyu, Director of Regulatory Innovation Planning at the Office for Government Policy Coordination, stated, "At the time, Jeju changed the appointment of heads of basic local governments such as Jeju City and Seogwipo City to be designated by the governor due to issues of redundancy and efficiency in the existing system," adding, "Even such detailed administrative matters should be included in the special law." He further emphasized, "Financial support should not be expressed ambiguously as 'the state may provide financial support,' but rather, the law should establish a structure that can stably generate revenue and income."

Park Hyunggon, Partner at Deloitte Consulting, said, "The essence of this system is selection and concentration," stressing that "strategic focus should be placed on one or two locations based on global competitiveness." He added, "The government should abandon the idea of shouldering all resources and instead design a structure in which private and foreign capital can participate as investors."

Securing Sustainability and Driving Force with a Strong Administrative Control Tower

Participants agreed that, ultimately, the realization of a mega sandbox requires both a strong administrative control tower and a sustainable institutional design.

According to a report by Lee Hyukwoo, Professor of Public Administration at Paichai University and a regulatory expert, commissioned by the Federation of Korean Industries in June this year, Japan introduced the concept of a 'National Strategic Special Zone' in 2013. Launched with the goal of 'creating the world's best business environment,' the number of zones increased to 16 as of the first half of this year. They are evenly distributed across the country, including the capital area and major cities, and have achieved a total of 513 recognized projects (actual utilization of exceptions).

Professor Lee cited the direct control tower under the Prime Minister and the creation of new, demand-driven regulatory exceptions as key success factors. In particular, in Japan, a 'National Strategic Special Zone Advisory Council' chaired by the Prime Minister was established, and a minister in charge of special zones was appointed within the Cabinet Office, thereby establishing a strong top-down implementation system by the central government. This control tower was granted the authority to request necessary actions from relevant ministries, thus securing both driving force and coordination capabilities.

Professor Lee stated, "Instead of dispersing special zone management authority among individual ministries and committees such as the Ministry of SMEs and Startups, a control tower capable of coordinating complex regulatory interests-such as a presidential agency-should be established."

There are also calls for detailed institutional improvements tailored to the characteristics and circumstances of each region. Kim Mina, Team Leader at Deloitte Consulting, categorized the institutional environment in non-capital regions into three types: ▲ the absence or inadequacy of the system itself; ▲ excessive strictness or complexity of the system, which restricts business activities; and ▲ a lax management system, resulting in low effectiveness.

This aligns with the findings of a 2021 Korea Chamber of Commerce and Industry survey, in which a majority of companies entering new industries cited the 'absence or inadequacy of relevant laws and regulations' as a problem. This means that it is difficult to find standards or support systems for promoting new industries.

Kim stated, "Conversely, there are many cases where excessive restrictions make it difficult to pursue business, or where unclear roles and responsibilities in administrative processes make coordination between ministries challenging," adding, "Ultimately, it is necessary to establish clear systems where none exist and to flexibly adjust overly complex systems."

The Government Is Preparing a Research Project for the Mega Sandbox

Ultimately, experts agree that the success or failure of the mega sandbox depends on the combination of a strong control tower, a sustainable administrative and financial system, and institutional design that reflects regional characteristics.

The mega sandbox is a concept that expands beyond existing regulatory sandboxes or regulatory free zones to allow experimentation with entire industries at the city level. The key is to design a system that enables the integrated testing of new industries-such as autonomous driving and physical artificial intelligence (AI)-in accordance with the characteristics and capabilities of each region. The government is preparing a special law for the mega sandbox, aiming not merely for regulatory relaxation, but for a model in which the local economy, employment, and population inflow form a virtuous cycle.

Director Jung said, "We are preparing a research project to propose a special law for the mega sandbox or mega special zone," adding, "This is not just about easing a few regulations, but about pursuing a model where the local economy is revitalized, the population increases, and even small business owners benefit through a trickle-down effect." He further emphasized, "The mega sandbox requires a dedicated institution for risk management and consistent policy implementation."