Regulatory innovation in Korea
1. Background
Regulatory reform has become one of the substantial policies to overcome the limitation that existing regulations restrictive the development of the fourth industrial technology industry. The Republic of Korea government has announced various new industry policies, including “Innovation Growth 2020 Strategic Investment Direction”, to support new technology industry. In June, the prime minister of the Republic of Korea announced 10 agendas for regulatory innovation for the development of the technology industry. In addition, on August 3, 2020, the 1st Regulatory Innovation Field Dialogue was held to announce a roadmap for the growth of virtual reality (VR) and augmented reality (AR) industries.[1] It is the government’s goal to prioritize industrial growth by improving old-fashioned regulations and presenting new standards or guidelines for unclear regulation.
2. Global trends: Regulatory Sandboxes
Many countries around the world are making regulatory reforms to promote economic growth with technology. Financial authorities in each country implement financial sandboxes as one of the regulatory reforms for FinTech. in October 2014, The Financial Conduct Authority (FCA) in the UK introduced regulatory sandboxes as a part of its ‘Project Innovate’ policy to strengthen the FinTech.[2] Japan introduced regulatory sandboxes for new technology industries in 2018. In addition, some regions in Japan are designated as special national strategic regions to provide regulatory exceptions, and if necessary, tax benefits and financial support.[3] In January 2020, the United States released a ‘Guideline for the Regulations of AI Application’ to emphasize minimizing regulatory barriers that hinder the development and utilization of AI technologies.[4] Monetary Authority of Singapore (MAS) also implemented regulatory sandboxes in June 2016 that allows testing of FinTech services to improve the new FinTech-related business.[5] Bank Negara Malaysia (BNM) has developed the Financial Technology Enabler Group (FTEG), which manages FinTech regulatory sandboxes, to promote innovation in the financial sector.[6] And, Thailand implements FinTech sandboxes in December 2016, and four FinTech companies participating in the sandbox are leading innovation in the blockchain and biometric fields.[7]
3. Regulations that are preventing the growth of the VR, AR industries in Korea
Under the current regulations in Korea, the VR and AR businesses are affected by various regulations such as the utilization of location space data, restriction on remote work, content review, facility regulations, and lack of technical standards. Of the total 35 discovery regulation issues announced by the government, there are 7 explicit regulation, 16 transitional regulations, and 12 unclear regulations.
4. How to reform regulatory for the growth of new technology industries
The main point of the government’s reform is to redesign of the regulatory system to a comprehensive negative regulation system. The current positive regulation system is a way the government to designate products and services that can be released through tight regulation. The disadvantage of this regulatory system is that even if companies develop new technologies, they cannot grow their business because of regulations. On the other hand, comprehensive negative regulation system allows the release of new products or services as much as possible and regulates them later if necessary. This system has the advantage of supporting the new technology business. The government said it would readjust the existing regulatory system that obstructed the growth of the VR and AR technology industries and provide clear guidelines to eliminate regulatory uncertainty.
For example, there is no clear standard for continuous recording, consent procedure, and information utilization of a mobile video-taking devices such as smart glass. Then, companies have limitations in using video information. In response, the government came up with improvement measures to prevent the invasion of privacy and encourage the VR and AR industries by preparing standards for rational utilization of a mobile video-taking devices. In addition to this case, the government said it will support foster industries with preemptive regulatory innovation in education, manufacturing, health care, transportation, culture, and public security.
5. Expectation
Regulatory reform is meaningful in that it not only means redesign old regulations but also it clarifies regulatory standards for supporting new businesses of innovative technologies in new fields. The announcement by the Republic of Korea government showed the need for regulatory reform for the growth of other fourth industrial technologies as well as the VR and AR sectors.
6. Limitation
According to the road map proposed by the government, regulatory reforms are planned according to the year. If companies develop new technologies faster than the speed of government regulatory reform, it must keep pace with the government’s pace.
Furthermore, the strong will and capacity of the legislature are also of great importance. In May 2017, the OCED released a report titled “OECE Regulatory Reform Report-Korea Regulatory Policy” and strongly recommended that “the new Korea government should prioritize regulatory reform,” and pointed out that “regulatory quality management of parliamentary legislation is insufficient compared to the government.” Also, the OECD criticized lawmakers’ legislation for being over-issued without considering regulations, in contrast to the administration’s introduction and control.[8] Therefore, it is important for policymakers to quickly respond to changes in industry and come up with appropriate policies.
Reference
[1] https://www.msit.go.kr/web/msipContents/contentsView.do?cateId=_policycom2&artId=3008738
[2] OECD (2018), Financial Markets, Insurance and Private Pensions: Digitalization and Finance. Available at http://www.oecd.org/finance/Financial-markets-insurance-pensions-digitalisation-and-finance.pdf
[3] OECD(2015), Digital Disruption in Financial Markets—Note by BIAC, DAF/COMP/WD(2019)69 (May 31, 2015), Available at https://www.oecd.org/economy/surveys/Japan-2019-OECD-economic-survey-overview.pdf
[4] https://www.whitehouse.gov/ai/ai-american-values/
[5] OECD (2018), Financial Markets, Insurance and Private Pensions: Digitalization and Finance. Available at http://www.oecd.org/finance/Financial-markets-insurance-pensions-digitalisation-and-finance.pdf
[6] https://www.oecd.org/financial/education/oecd-malaysia-conference-presentations.pdf
[7] https://theaseanpost.com/article/fintech-sandboxes-southeast-asia
[8]https://news.mt.co.kr/mtview.php?no=2017052310021064268&outlink=1&ref=https%3A%2F%2Fsearch.naver.com
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