New technology plan cuts a path to rapid progress
The initiation of the so-called regulation-free zone, which the government hopes will speed up the development of leading future growth industries such as hydrogen vehicles, drones and the Internet of Things (IoT) has been pushed three months ahead of its initial schedule as the Korean economic situation at the beginning of the year turned out worse than anticipated.
According to the Ministry of Strategy and Finance on Monday, the Special Act on Regulation-Free Zones proposed by 13 bipartisan lawmakers, including former economics professor and current ruling party lawmaker Kang Seog-hoon was submitted to the National Assembly on Thursday last week. The bill was supposed to be submitted in June, but the government decided to take a shortcut by submitting the bill through lawmakers.
The deregulation bill allows local governments to take a more affirmative role in selecting industries as their future economic growth engines. Under the bill, local governments can request the central government lift some of the regulations that may be holding back the development of such industries and technologies.
This is a huge change from past practices where the central government would assign strategic businesses and industries on different regions.
The Finance Ministry said the bottom-up approach will allow local cities and provinces to come up with more specific plans, as opposed to having the central government telling them what to do.
“Reforming regulations at least for some of the special regions and industries will bring more creative ideas to the table and will help expand business and investment opportunities,” a ministry official said.
The government said that, when it comes to attracting foreign business to the regions or in finding new export markets, the new act will help local governments compete with foreign counterparts rather than compete with other local cities and provinces.
“The goal is to have local cities become something like what the Silicon Valley is in the United States,” the ministry said.
Currently, a total of 14 cities and provinces around the nation have each selected two key industries or business sectors they believe are essential for their economies to grow, and the government will now exempt them from following specific regulations pertaining to these areas.
Daegu, for instance, which has been designated as an autonomous vehicle special zone, can now test vehicles without having to undergo a lengthy review process by the central government.
Busan, Jeju and Gangwon were chosen as tourism zones, and their governments can therefore allow legitimate hotels to operate in school zones, something currently banned across the nation.
These regions may also allow Airbnb, whereby hosts may rent out their rooms and other spaces.
The Daegu government, along with SK Telecom and Samsung Electronics, announced it will begin creating new technology for IoT.
SK Telecom will provide IoT solutions using its cloud storage and big-data analysis technology, while Samsung Electronics will provide related equipment. The mobile carrier hopes to create IoT-exclusive networks and hopefully expand the system throughout the entire city of Daegu by May.
The Finance Ministry said it plans to create a special committee headed by Finance Minister Yoo Il-ho that will oversee the local government’s request.
The committee will be composed of government officials, academics and experts from the private sector, and will exempt stakeholders from following certain regulations in the future.
The central government will also review patents filed by companies operating in regulation-free zones around the nation.
Additionally, requirements for research institutions to be established in special zones will be lowered, and related companies will receive outdoor advertising advantages. These companies can also ask local governments to allow them to shut certain down streets when needed for advertising events.
“All these benefits will help local governments prosper and create quality jobs,” the ministry said.
There are a total of 73 regulation exemption criteria that local governments can freely choose from in the new bill.
The ministry added that Japan initiated a similar policy in 2013 and that it has successfully attracted a large number of business investments in designated regions.
The government said it hopes the bill will be passed by the National Assembly by May. However, it is still unclear whether the bill will be able to go into effect as planned, since a general election is coming up next month and conflict between the Saenuri Party and opposition groups are becoming more hostile.
If the bill fails to pass before the 19th National Assembly comes to a close, it will likely be resubmitted in September. If it passes then, the new bill will be implemented starting next year.
BY KIM YOUNG-NAM [email@example.com]