Announcement of the Regional Specialized Development Zone System Reform Plan
The Ministry of SMEs and Startups announced on November 6 a plan to reform the Regional Specialized Development Zone system, aiming to foster these zones as “grassroots regional growth hubs.” This reform plan reflects on-the-ground feedback that the specialized zone system, first introduced in 2004, needs to be strengthened and the effectiveness of regulatory exemptions improved.
First, the specialized zones will be classified into three types for tailored support: value-added advancement, convergence innovation, and challenge leap. For the value-added advancement type (mid-sized and traditional industries), such as the Gongju Chestnut Zone, the ministry will support collaboration at each stage of the value chain, including production, processing, distribution, and sales within the zone. In addition, the ministry will expand connections with its own commercial district development projects and government-funded projects from other ministries.
For the convergence innovation type (mid-sized and new industries), such as digital history and culture zones that require the adoption of new technologies, the ministry will actively identify new regulatory exemptions. If requested by local governments, “individual recognition exemptions” that apply only to the relevant zone will be allowed, or the limits of existing exemptions will be expanded by ordinance. For the challenge leap type (small-scale and depopulated areas), a new approach will be introduced in which private sector experts, such as local creators and commercial district planners, form consortia with local governments to directly implement specialized projects. Furthermore, a new “professional coaching model” will be launched, in which private sector experts and regional SME offices collaborate closely throughout the entire cycle-from project planning to the application of exemptions-for hands-on support.
A performance-based management system will also be introduced. The performance evaluation will be subdivided into five grades, with “excellent” and “outstanding” zones receiving incentives such as linkage to government projects, while the proportion of “underperforming” zones will be increased up to 10 percent, thereby strengthening restructuring efforts. In addition, regional SME offices will play a central role in providing close support at every stage, including planning, operation, and evaluation of the zones. From the initial planning stage, regional offices will provide consulting together with the private sector, while continuously gathering feedback from the field and jointly monitoring progress during the operation phase to strengthen communication.
The legal framework will be improved by setting a maximum designation period for new zones and establishing a legal basis for government financial support for the commercialization of outstanding zones. Among zones in similar fields, operational know-how will be shared, joint projects will be promoted, and regular networking will be established. A “Specialized Zone Strategy Council” will also be launched to enhance communication between central and local governments.
Hansung Sook, Minister of SMEs and Startups, stated, “Amid the crisis of regional extinction, specialized zones must act as a catalyst to turn locally discovered growth engines into revitalized commercial districts.” She added, “Through this reform, the private sector and local governments will become a ‘one team,’ and we will establish a performance-based reward and penalty system to lay the foundation for a ‘real era of local empowerment.’”
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