Research Report
Identify and Analysis of Regulatory Improvement Tasks followed by Regulatory Sandbox
Ⅰ· Backgrounds and Purposes
○ Regulatory Sandbox refers to not applying all or part of the current regulations so that business operators can test and verify new products and services using new technologies by first launching them on the market under certain conditions (period, location, and scale restrictions)· It is a system that rationally improves regulations based on data collected in the process·
○ As a useful method and means of regulatory innovation, the regulatory sandbox should not be limited to individual special cases as a one-off and should ultimately be accompanied by legislative improvement of related regulations·
- Considering that the validity period of the regulatory sandbox is temporary and limited, it is imperative to follow up on the revision of laws so that the effect of regulatory improvement can extend to entire industries·
- In addition, as the achievement of the regulatory sandbox is not limited to individual companies and it is necessary to actively promote the amendment of laws so that all related companies can benefit from it, systematic research is needed to draw up measures to improve the laws as a follow-up measure to the regulatory sandbox·
○ This study is a study on the improvement of regulatory laws related to the regulatory sandbox case, which is the second attempt following the 「Study on Regulatory Improvement followed by Regulatory Sandbox」 conducted in 2020·
- The 2020 study provides an overview of the background and expected effects of regulatory sandbox approval for tasks in the land, transportation, and food sanitation fields, among a total of 138 regulatory sandbox cases passed from the introduction of the regulatory sandbox system to December 31, 2019· analyzes relevant laws and legal issues, and reviews the approval of specific regulatory sandboxes·
- This study is an attempt to discover tasks for legislative amendment for essential regulatory innovation in the regulatory sandbox case by focusing on the energy and medical fields, By examining and analyzing the overall status of regulatory sandbox cases in the energy and medical fields, basic data for improving the regulatory sandbox laws in major fields are obtained and utilize them to comprehensively analyze the performance of the regulatory sandbox on energy and medical fields·
Ⅱ· Major Content
▶ Regulatory Sandbox System Operation Status
○ In Chapter 2, Before analyzing the regulatory issues related to improvement targets by field of the regulatory sandbox system, Analyzes the current status of regulatory sandbox special cases (Demonstrative special case, temporary permits, active administration), which are the basis for identifying practical problems revealed in the process of operation and deriving improvements to the overall system·
- Analyze cases approved from 2019 to May 2021 based on the regulatory sandbox status data managed by the Office for Government Policy Coordination·
○ A total of 449 regulatory sandbox tasks were approved as a result of analyzing data on special cases approved by May 2021 since the regulatory sandbox system was implemented·
- By type of special case, demonstrative special cases accounted for the most, with 367 cases (81%), followed by temporary permit 50 cases (11%) and active administration 32 cases (7%)·
○ Looking at the approval status by industry, the financial industry had the most with 143 cases (31·85%), followed by the manufacturing industry (20·27%), the service industry (10·91%), the telecommunication industry (10·24%), and the mobility (9·8%)·
- The financial industry seems to have a high proportion of approvals due to the Financial Services Commission's high number of regulatory sandbox approval tasks·
- In addition, the fact that the manufacturing industry also showed a high proportion in the approval of special cases for the use of new technologies can be seen as an accomplishment of the Korean regulatory sandbox system, which is distinguished from other countries' regulatory sandbox systems that mainly operate in the financial sector·
○ Looking at the metropolitan area (Seoul/Gyeonggi), 320 projects were approved, accounting for 71·27% of the total, confirming that special approval of the regulatory sandbox system is concentrated in the metropolitan area·
○ By company size, the proportion of small businesses was 252, which accounted for 56·12% of the total number of approvals, followed by 120 large companies (26·73%) and 56 mid-sized companies (12·47%)·
- When grouped and analyzed by small and medium-sized businesses, which mainly venture companies and startups, a total of 308 approvals were obtained, accounting for 68·59% of the total·
○ As a result of analyzing the approval status by new industry classified in the data from the Office for Government Policy Coordination, the energy field had the most with 46 cases (18·62%), followed by the IoT field with 39 cases (15·79%), the medical-bio field with 34 cases (13·77%), and 34 cases (13·77%) in the big data field appeared in the order·
- In particular, out of a total of 247 cases approved in the new industry field, 195 cases, or 78·95%, were found to have been approved for demonstrative special cases·
- This seems to be related to the characteristics of the new industrial field, where most of the tasks require demonstration for verification of safety·
○ The total number of regulations related to tasks approved as a special regulatory sandbox case is 733, of which 79 regulations have been revised, and the total regulatory amendment rate is 10·77%·
- The regulatory amendment rates for the demonstrative special case and temporary permission are 10·12% and 10·81%, respectively, which are not significantly different from the overall regulatory amendment rate, among the tasks of active administration, it can be seen that the regulations we're resolved in 5 out of the 7 tasks with related regulation·
○ It was found that it takes an average of 53 days for a demonstrative special case and an average of 78·6 days for a temporary permit·
- In the case of active administration, which checks the existence of unclear regulations, interprets, and replies, the average processing time is 102·9 days, which is relatively long·
▶ Case Study of the regulatory sandbox in Energy field
○ In the energy field, a total of 47 regulatory sandbox approval cases were analyzed, including 31 cases hosted by the Ministry of SMEs and Startups, 11 cases by the Ministry of Trade, Industry and Energy, 3 cases by the Ministry of Land, Infrastructure, and Transport, and 2 cases by the Ministry of Science and ICT· As a result of the special deliberation, most of the projects were granted as demonstrative special cases and 3 cases were active administration·
- Look at the notable types in the energy field, 11 hydrogen-related cases, 11 charging-related cases (including 3 hydrogen charging), 7 electric vehicle driving demonstration-related cases, 6 energy storage system (ESS)-related cases, and 6 used battery-related cases·
- Regulations In the energy field showed high interest in the use of spent batteries and energy storage system (ESS) business to support the establishment of hydrogen economy infrastructure and efficient use of energy by reflecting the growing social interest in clean energy and renewable energy·
- At the same time, the project to increase the spread and convenience of e-mobility can show tangible results to users, so attention is focused on the local governments' Regulation-Free Special Zone·
- To increase the utilization of renewable energy, a demonstrative special case or active administration is recognized for a business that intends to recycle the spent battery or graft it to the energy storage system (ESS)·
- Based on the verification results of the regulatory sandbox in the energy field, 「Electric Utility Act」, 「Telecommunications Business Act」, 「High-Pressure Gas Safety Control Act」 for building hydrogen infrastructure, 「Occupational Safety and Health Act」, 「Clean Air Conservation Act」 related to battery recycling, 「Act On Management Of Firefighting Equipment」 related to the use of hydrogen energy and composite materials, 「Fishing Vessel Act」, and 「Ship Safety Act」 are expected to emerge as system improvement tasks·
▶ Case study of the regulatory sandbox in the medical field
○ In the medical field, among the most the Ministry of SMEs and Startups hosted 15 cases, the Ministry of Trade, Industry, and Energy has 11 cases, the Ministry of Land, Infrastructure and Transport 4 cases, and the Ministry of Science and ICT 4 cases were analyzed for a total of 34 regulatory sandbox approval cases· As a result of the special deliberation, 25 demonstrative special cases were granted, a temporary permit was granted to 3 cases, and active administration was granted according to the conclusion that there was no regulation in 6 cases·
- Look at the notable types in the medical field· 6 health care service-related cases, 5 medical device-related cases, 4 DTC gene-related cases, 3 telemedicine-related cases, etc·
- The notable thing in the medical field is the technology and services related to health care services, which were expected due to the increase of the elderly population in the society along with the development of wearable devices, IoT, and the mobile Internet and it will continue to develop rapidly and expand the market·
- Consider the following in the regulation of the medical field, special projects have been carried out in many areas such as telemedicine, human biological material, and drug management, which have been subject to very strict regulations so far, and combined with IoT Internet of Things(wearable smart devices, Lifelogs, smart shoes, etc), autonomous driving (electric wheelchair, medical scooter), blockchain, etc·, which are already being actively industrialized, and the participation of various actors such as large corporations, SMEs and university research institutes in special regional zones·
- Based on the verification results of the regulatory sandbox in the medical field, future 「Medical Service Act」, 「Medical Device Act」, 「Personal Information Protection Act」, 「Infectious Disease Control And Prevention Act」, 「Narcotics Control Act」, 「Bioethics and Safety Act」, 「Wastes Control Act」 and subordinate administrative rules are expected to emerge as a legislative task as to whether to improve or not·
Ⅲ· Expected Effects
○ Overall, regulatory innovation tasks that utilize the regulatory sandbox to realize various services are continuously increasing, which shows that the regulatory sandbox system has institutional usefulness as a starting point for regulatory innovation·
○ This study is the second research study targeting individual cases of the regulatory sandbox, following the 「Study on Regulatory Improvement followed by Regulatory Sandbox」 conducted in 2020· It is expected that the beneficiaries of the regulatory sandbox will not be limited to a small number of applicants but will be used as basic data for the development of institutional improvement policies to expand throughout the industry·