Korean government to introduce bold deregulation measures for tech companies

SMEs and Startups Minister Lee Young speaks during a press conference held in Seoul on May 8. [Photo by Yonhap]

The South Korean government is set to introduce bold deregulation measures to boost the growth of future industries, including artificial intelligence (AI) and biotech, amid complaints that regulatory requirements and lack of relevant legislations deter the growth of unicorns, or promising startups valued over one trillion won.

The Ministry of SMEs and Startups said on Monday that it will create a regulation-free zone where industry players can test technologies without any barriers unless they are prohibited by law.

The announcement came as industry insiders call for a uniform support framework. Korea has implemented a regulation sandbox that enables technology firms to test innovative concepts under minimized regulatory requirements but the framework has been accused of being inefficient because the conditions applied under the framework vary, causing confusion among the companies.

The special zone will allow participants to test innovations as long as they comply with a series of explicit rules and restraints. Testing of new technology in a real-life environment will be possible even as the technologies are not fully compliant with the current law or there is no standard or regulatory requirement to support them.

“The ministry plans to pilot the special zone by developing two to three tech clusters participated by universities, research institutions, and global companies, with the aim of increasing the number of clusters to ten by 2027,” said one official from the ministry.

“There is no time for argument, and unnecessary regulations need to be removed,” said SMEs and Startups Minister Lee Young.

Real-life experiments with data from self-driving cars will likely be allowed in the special zone.

“Local companies cannot use video data of driving on the road because license plates and pedestrians’ faces belong to the private information protected by the law,” said the official. “However, testing will be possible unless it’s an explicit prohibition.”

The ministry will also allow startups to conduct tests in overseas sites if domestic experiments are difficult. The ministry will work with overseas verification agencies such as UL Solutions to provide local tech startups with live testing opportunities in the U.S.

UL Solutions is an America-based certification services provider that signed a memorandum of understanding with the Korean government during the state visit by President Yoon Suk Yeol to Washington.

Korean biotech firms will be allowed for technology experiments in LabCentral, Boston, which offers a network of laboratory spaces to biotech startups.

“We will partner with Shonan Health Innovation Park, a science-specific science complex in Japan, to develop a trilateral bio-cluster between Korea, the U.S., and Japan,” said the ministry’s official.

The ministry will also build a global certification center, which engages international certification companies, to ensure local firms can get advice on every stage from product planning to inspection.