"Need for Regulatory Improvement for Domestic Startups in Telemedicine, Legal Tech, and AI Fields"

'2020 Startup Korea!' Policy Proposal Report Presentation

[Asia Economy Reporter Kim Cheol-hyun] It has been revealed that fields such as non-face-to-face medical care, legal tech, and artificial intelligence (AI) in the domestic startup ecosystem are lagging behind global startups. It is pointed out that policy changes must accompany efforts for domestic startups in these fields to leap forward as global leading companies.

On the 5th, the Asan Nanum Foundation, together with Amazon Web Services (AWS), Startup Alliance, and Korea Startup Forum, announced the '2020 Startup Korea!' report. Since the first report was published in 2017, this is the fourth annual report issued this year. It evaluated that as the government’s efforts to revitalize the domestic startup ecosystem continue, some startups have established their own revenue models and have grown as prominent players in the domestic market. The sectors identified as lagging behind the global market include non-face-to-face medical care, legal tech, and AI. The report analyzed the domestic status and conducted case studies of leading countries and startups overseas to derive directions for improving the domestic business environment.

◆ Introduction of public apps hinders innovation will = According to the report, the transaction amount in the O2O (Online to Offline) market, one of the online platform markets, reached 100 trillion won last year, establishing itself as an industry that supports a pillar of the Korean economy. The domestic O2O industry has grown at an average annual rate of over 20% in sales over the past five years, and there are as many as five unicorns with global competitiveness, including Woowa Brothers and Yanolja.

Nevertheless, the report pointed out concerns about weakening industrial competitiveness due to regulations that are among the strictest in the world. It diagnosed that there is a problem of hindering innovation will, such as introducing public apps into markets that startups have painstakingly built. To improve this, it is necessary to closely review the scope and level of regulations and supplement procedural steps for social consensus during the legislative process. The report further explained that in areas where private apps have established themselves, it is important to allow the market to grow through indirect methods such as policy direction establishment rather than direct intervention through public apps.

Additionally, although the fintech sector started later than advanced countries, it has grown rapidly. However, the report pointed out that stringent financial business licensing regulations by industry hinder the domestic introduction and development of 'embedded finance,' which is attracting attention as the next-generation trend in fintech. The network separation regulation also lowers development environment productivity and fosters a passive security investment culture, urging institutional changes.

◆ Non-face-to-face medical care gaining importance due to COVID-19 but banned in Korea = The report emphasized the importance of non-face-to-face medical care, citing evidence that its activation can reduce health insurance expenditures by up to 8%, contributing to alleviating the deterioration of health insurance finances, and can also reduce hospital waiting times by 70 million hours annually. However, in Korea, non-face-to-face medical care is currently completely banned due to regulations. Among the top 15 countries by global GDP, Korea is the only country where non-face-to-face medical care is entirely prohibited, and Korean companies are absent from the global non-face-to-face medical care market worth 40 trillion won. Therefore, the report proposed that to introduce non-face-to-face medical care, it is necessary to support evidence-gathering activities, derive detailed policy guidelines led by medical service providers, and establish a roadmap for stakeholder consensus.

Legal tech, despite having high growth potential, was pointed out to have problems such as a lack of judgment document data and the absence of a legal AI-based electronic discovery system market. Solutions suggested include significantly expanding the level of judgment document disclosure, providing judgment documents in machine-readable data formats, and introducing a 'Korean-style discovery system.'

◆ Only 1.4% of global AI core personnel are Korean = Securing AI competitiveness is essential for the sustained growth of startups, including platforms, fintech, non-face-to-face medical care, and legal tech. Despite government efforts to nurture talent, only 1.4% of global AI core personnel are of Korean origin. From a startup perspective, there is a shortage of practical talent who possess both business planning and AI technology utilization capabilities, as included in the report.

The report stated that online platforms, fintech, non-face-to-face medical care, and legal tech are areas that should be nurtured with interest not only from the perspective of supporting startups but also in terms of industrial growth potential and social utility. It emphasized that the government must make greater efforts to accelerate startup growth to face the crises and new opportunities brought about by the Fourth Industrial Revolution and the COVID-19 pandemic.

Han Jeong-hwa, chairman of the Asan Nanum Foundation, said, "Although the economic growth rates of countries around the world recorded negative figures due to COVID-19, domestic startups are showing tremendous performance even amid the pandemic." He added, "Through the Startup Korea! policy proposal presentation, which has been held for four years to revitalize the domestic startup ecosystem, I hope that the experiments and challenges of domestic startups will act as growth engines to overcome the current situation and bring the future forward."

This content was produced with the assistance of AI translation services.