[Free Speech] Let’s Broaden the Sandbox Zone

Much of our lives is changing alongside the development of new technologies and new industries. People can now verify their identity and driving qualifications with a mobile driver’s license, and patients can manage their health using wearable electrocardiographs. This is the world transformed by the introduction of the regulatory sandbox.

The regulatory sandbox system was implemented on January 17, 2019, when the “Act on Promotion of Information and Communications Technology Convergence” and the “Industrial Convergence Promotion Act” took effect. A regulatory sandbox is a system that exempts or defers existing regulations for a certain period of time or within a certain area when new services are introduced in emerging industries. In the current environment, where new industrial sectors are developing rapidly, laws cannot preemptively impose regulations on each and every innovation, and thus the approach of “permit first, regulate later” emerged. With the introduction of this system, new businesses have been able to demonstrate their capabilities and contribute to revitalizing the Korean economy.

All major economic actors—consumers, businesses, and the government—have benefited from this policy. Consumers have gained a wider range of choices in new products and services introduced by companies, along with greater convenience. Furthermore, the implementation of this system has increased jobs in new technology sectors, and over the past two years, 2,865 people were employed by companies approved under the regulatory sandbox. Businesses, for their part, have been able to accelerate new product ventures through deregulation and bring them to market more quickly. This has also led to satisfactory results by reducing both tangible and intangible costs. In particular, in terms of investment attraction by sector, the Regulation-Free Special Zones posted notable achievements, attracting about 730.9 billion won, contributing to total investment attraction of more than 1.4 trillion won. The government, meanwhile, has been able to establish more refined and safer policies in advance by reviewing the results of pilot projects for new products and services.

In Korea’s legal system, where positive regulation predominates, the sandbox constitutes an exception to the usual regulatory method. This is because it effectively suspends the application of existing legal regulations and grants exemptions from them. Under the existing regulatory framework, even when innovative businesses emerge, the priority is often to regulate and suppress them. As a result, it is common for companies to be unable to fully demonstrate their capabilities. This stands in contrast to countries such as the United States and Japan, which, based on negative regulation, freely encourage the entry of new businesses. The regulatory sandbox has shown new potential for overcoming that limitation.

The government must now broaden the range of business sectors to which the regulatory sandbox policy applies. At present, the regulatory sandbox policy is limited to only six areas of new business. As technology continues to advance, regulations should be eased in more fields. Rather than treating the regulatory sandbox as an exception, there is a need to move toward expanding the policy into a general standard. If companies are provided with a business environment as free as that of the regulatory sandbox, business vitality will soon surge.

Kyungmin Noh, Intern Researcher, Center for Free Enterprise (CFE)

Original title: [자유발언대] 샌드박스 영역을 더 넓히자

Author: Kyeong-min Noh

Date: 2022-01-14

Source: https://www.cfe.org/bbs/bbsDetail.php?cid=free_opinion&pn=9&idx=24496