Regulatory Sandbox Allows 184 Businesses to Start Off by Overcoming ‘Galapagos Regulations’

The United States, Germany and Japan are scrambling to develop precision maps essential for self-driving technology.

Each country is assisting in the development of such maps by divulging state-owned geospatial information to the private sector, but in Korea, there is no legal ground to do so.

The government approved a project to verify the provision of geospatial information to the private sector after finishing a security review via the regulatory sandbox.

That move led to the revision of a related act in March, allowing high-precision aviation aerial photos and 3D geospatial information, built by the central and local governments, to be utilized by the private sector.

Regulatory sandbox is a regime in which special privilege is offered to businesses whose innovation is blocked by outdated laws and systems.

KCCI’s Sandbox Support Center has come forward to help the private sector obtain approval via the regulatory sandbox since May 2020. Another example is a shared kitchen business model.

A shared kitchen is a kitchen, outfitted with cooking facilities, that has been allowed for use by several business operators.

The shared kitchen business model is in place in about 30 countries, but in Korea, there is no legal foundation, and a shared kitchen is impossible since it does not comply with the conventional business standards.

Several firms knocked on the door of KCCI’s Sandbox Support Center for help, and they successfully launched a pilot project.

The successful implementation of the pilot project on a shared kitchen led to a legal foundation in the Food Sanitation Act, approved by the Ministry of Food and Drug Safety (MFDS).

The Korea Chamber of Commerce and Industry’s (KCCI) Sandbox Support Center released a report on regulatory sandbox approval tasks and the current status of regulations on Oct. 31.

The report was based on the analysis of 184 cases which got the regulatory sandbox nod via the KCCI’s Sandbox Support Center during the period between May 2020 and October 2022.

The report said that KCCI’s Sandbox Support Center is evaluated to play a troubleshooter for ”Galapagos regulations,” existing only in Korea.

According to the report, out of 194 cases which obtained regulatory sandbox approval, 88 percent or 162, were business models that were allowed in foreign countries, but not in Korea.

It said some business models could not be attempted due to regulatory barriers not corresponding to global trends, and the regulatory sandbox was applied to businesses which had begun to open their doors, but were interrupted, allowing them to jump into global competition.

Non-face-to-face medical care, launched in the United States, UK and European countries, attracted global attention in the wake of the COVID pandemic, but such a system was impossible in Korea due to regulations.

The regulatory sandbox allowed Korean medical staff to offer non-face-to-face medical care targeting Koreans staying in foreign countries.

Businesses, such as home self-testing for venereal diseases causing bacterium and “Smart Glove, Smart Rehab-Robot,” a rehab service at home, have just started.

In the mobility sector, there were lots of cases which were allowed by overcoming “Galapagos regulations.” Services, such as Over-the-Air (OTA) service designed to update vehicular software via wireless, were in place in the United States and Germany, but they were impossible in Korea.

Peer-to-peer service, designed to share cars with others, and Non-Emergency Medical Transportation Service (NEMT) have already been classified into a list of business models that can be put into service in foreign countries, but the regulatory sandbox has allowed such services to be launched in Korea.

Choi Hyun-jong, head of KCCI’s Sandbox Support Center, said, “There were lots of requests for special privileges in the mobility sector in which new startups find it hard to enter new businesses due to opposition by stakeholders and lots of regulations and the medical field.”

There were also lots of examples of businesses who had turned to the regulatory sandbox due to irrational regulations in the shared economy, in which new businesses spring up, Choi said.