The Ministry of SMEs and Startups announced on Tuesday that the Cabinet has approved the promulgation of amendments to the Act on Special Cases Concerning the Regulation of Regulation-Free Special Zones and Special Economic Zones for Specialized Regional Development (the Regional Special Zone Act), aimed at easing regulatory burdens on participating companies and revitalizing regionally specialized development zones.  
 
Regulation-Free Zones are designated areas that allow companies to test and commercialize new technologies and services by partially or fully exempting them from existing regulations through special measures such as regulatory sandboxes and temporary approvals. While the system has played a critical role in supporting innovation-led regional growth, participating firms have at times faced difficulties due to additional conditions imposed by regulatory authorities, often on safety-related grounds.
 
Under the revised Act, when a regulatory authority seeks to impose additional conditions on sandbox or temporary approval projects, it must now clearly demonstrate the necessity and proportionality of those conditions. This change is expected to substantially reduce the compliance burden on participating businesses and provide a more predictable environment for regulatory experimentation.
 
The amendment also introduces targeted measures to support regional growth industries. Within Special Development Zones established to promote local specialized industries, the use of foreign-language medical advertising will now be permitted on an exceptional basis. This measure is intended to strengthen Korea’s competitiveness in attracting international medical tourists, a sector that has seen renewed growth in recent years.
 
In addition, the revised Act includes several institutional improvements to enhance the effectiveness and accountability of the Regulation-Free Zone system.
 
First, even after a zone’s designation period has expired or its designation has been lifted, central government agencies and local governments will be authorized to request data and reports related to performance evaluation and post-management of regulatory exemptions. This is designed to ensure continuity in policy learning and outcomes-based management.
 
Second, the government will be able to distribute formal guidelines outlining review criteria for Regulation-Free Zone plans, and applicants will be notified of the reasons if their designation requests are rejected. This aims to improve transparency and procedural clarity for local governments and businesses.
 
Third, to protect individuals affected by accidents arising from sandbox or temporary approval projects, new provisions have been introduced to safeguard compensation for personal injury. Claims and compensation related to personal damages will be non-transferrable and exempt from seizure, ensuring that victims’ basic livelihoods are protected.
 
The amended Act is scheduled to take effect six months after promulgation. MSS stated that, in line with the legislative changes, it will promptly revise subordinate regulations to ensure smooth implementation and maximize the impact of the improved system.
 
“By refining the regulatory framework, we aim to strike a better balance between innovation and safety, while enabling regional economies to fully leverage new technologies,” the Ministry said.
 

For more news and updates on Korea’s SME and startup policies, follow the Ministry’s official LinkedIn page: Ministry of SMEs and Startups, Republic of Korea, 대한민국 중소벤처기업부