Korean Sandbox is a national pride

The Sandbox Project in South Korea is a matter of national pride, and for good reasons: 410 projects to drive digital development and regulatory reform have led to more than 1 billion EUR in investments and almost 2 900 jobs. At least as...

The Sandbox Project in South Korea is a matter of national pride, and for good reasons: 410 projects to drive digital development and regulatory reform have led to more than 1 billion EUR in investments and almost 2 900 jobs. At least as important for the long term, is a more modern economy that is receptive to innovation and entrepreneurship.  

This blog reported about Sandbox in Korea last time in November 2019. The acts and bills that was taken to enable this reform, are available in English translations from this website, and use these titles to find them:

  • Framework act on administrative regulations
  • Special act of information and communications technology
  • Industrial convergence promotion act
  • Special act on support for financial innovation
  • Act on special cases concerning the regulation of regulation-free special zones and special economic zones for specialized regional development
  • Act on the Promotion of Smart City Development and Industry
  • Special act on promotion of special research and development zones

The initial 4 areas were extended with Smart City in February 2020, and Special R&D zones in December 2020. The last two titles above are the two most recent acts taken for these.

The Korean system often require legal knowledge to introduce innovations to the Korean market. Under the sandboxing program, companies can place questions to an email service and get a response no later than 30 days if the proposal is regulated. If there is regulation that stands in conflict, the applicant may be able to get a temporary permission or a regulatory exception for demonstrations, or a declining answer if there are for example issues relating to safety that is not possible to resolve.

The temporary permissions are for 2 years and can be renewed for another 2 years. If there are regulatory improvements initiated, they can get additional extension until the relevant regulation is revised.

By February 2021, there were 410 cases approved (2019: 195, 2020: 209, 2021: 6). Of these, 48 are given temporary permissions, 332 exemptions for demonstrations, and 30 cases are solved by government officers engaging proactively with policy recommendations (for example the authorities change in internal guidelines before the issue is presented before a deliberative committee to make the decision or give advice).

 ProjectsInvestments (million EUR)Personnel
Financial innovation137 (33%)431 (41%)743 (26%)
Industry convergence102 (25%)47 (4%)96 (3%)
ICT Convergence90 (22%)34 (3%)714 (25%)
Special zones65 (16%)536 (51%)1255 (44%)
Smart city16 (4%)3 (0%)57 (2%)
Special R&D zonesNANANA
Total41010512865
Sandbox projects and effects from 2019 to February 2021

The economic effects in December 2020, are 2 865 persons employed and investments in the order of 1 billion EUR.

The investments appear high in relation to the number of projects and employed staff. From what we can deduce it include real estate, infrastructure and vehicles in the Special zone’s projects, and financial instruments in the Fintech projects.

Looking forward, the Korean government is implementing measures to avoid adverse effects for the applicants resulting from not being able to update the regulation in time. This is overseen by the Prime Ministers Regulatory Reform Office, that is making information available on all forms of regulatory reform that is taking place and how they are proceeding.

The responsible agency take pride in delivering a response in an average of 44 days and claim that is faster and more accurate than the 180 days in Japan and UK.

The Sandbox application team is available for consulting before an application is submitted, for legal advice and to make sure the application is managed by the correct department given the area for application.

For further information there is a booklet available with case descriptions of several projects, data about support systems and some statistics. It is unfortunately only available in Korean, but the European Chamber of Commerce in Korea have made some translations of it and gathered the most pertinent data in a few slides available here.