'Korean New Deal Hub' 3 New Areas Designated as 4th Regulatory Sandbox: Gwangju, Ulsan, and Gyeongnam

Business Expansion in Existing Special Zone Sejong
Expected KRW 110 Billion Sales, 648 New Jobs, and 68 Companies Attracted and Started

Minister Park Young-sun of the Ministry of SMEs and Startups is holding a briefing on the additional designation of regulatory free zones at the Government Seoul Office on the 13th. Photo by the Ministry of SMEs and Startups

[Asia Economy Reporter Kim Heeyoon] The government has designated new regulatory free zones focusing on the Green and Digital New Deal sectors. With this, the total number of regulatory free zones nationwide expands to 24.

The Ministry of SMEs and Startups announced on the 13th that after deliberation on 18 special zone projects, three new zones and one additional project in an existing zone were finally designated by the Special Zone Committee.

The 4th special zones were designated mainly in the two core pillars of the Korean New Deal: the Green sector and the Digital sector. The newly designated zones are Gwangju’s “Green Energy Energy Storage System (ESS) Power Generation,” Ulsan’s “Carbon Dioxide Resource Recycling,” and Gyeongnam’s “5G-based Next-generation Smart Factory,” totaling three zones. Additionally, the existing zone in Sejong added a demonstration project for “Autonomous Outdoor Robot Operation.”

A total of seven demonstration exemptions are granted in this special zone project. These mainly consist of measures to remove barriers to entry for new businesses, such as allowing power generation and electricity trading using energy storage systems, and permitting commercialization of carbon dioxide conversion products that were previously halted due to regulations.

Major Regulatory Exemptions by 4th Regulatory Free Zones. Table = Provided by the Ministry of SMEs and Startups

Gwangju is advancing as an energy self-sufficient city by creating a self-sustaining regional power ecosystem through Korea’s first solar energy integration and direct power trading model. It recognizes power generation through energy storage systems (ESS), which was impossible under current regulations, and allows aggregation of individual solar power production to be stored in large-capacity ESS and traded with electric vehicle charging operators and others. The power system structure, currently dominated by Korea Electric Power Corporation (KEPCO), will be diversified to establish a regional self-sufficient power ecosystem.

Ulsan is being developed into a carbon-neutral city based on carbon dioxide resource recycling. First, recycling of carbon dioxide conversion products (calcium carbonate) is permitted. Special zone operators can capture carbon dioxide emitted from waste incineration plants and sewage treatment facilities to produce calcium carbonate, which can be commercialized into construction materials (blocks, aggregates, etc.) and chemical materials (paper, rubber, etc.). It is expected that a significant portion of calcium carbonate materials, which have been heavily dependent on imports from Japan, can be domestically produced. Ulsan, the city with the highest carbon emissions in Korea, is expected to use this demonstration as a stepping stone to reduce greenhouse gases (carbon dioxide) and accelerate the transition to a carbon-neutral society.

Gyeongnam leads the digitalization of small and medium manufacturing sites by establishing the world’s first unlicensed band 5G smart factory. By raising the radio output standards within factories and applying 5G communication technology characterized by ultra-high speed, ultra-low latency, and ultra-connectivity to smart factories, productivity increases and quality improvements will be achieved, advancing smart factories. The Changwon industrial complex has many automobile parts companies requiring small-lot, multi-product production through smart factories, so it is expected to have a significant effect on revitalizing the regional economy and spreading to other industries such as shipbuilding and other industrial complexes.

Sejong is advancing as an autonomous driving specialized city where robots deliver food and perform COVID-19 disinfection and security patrols. In addition to the existing autonomous vehicle shuttle service demonstration, autonomous driving robot services in non-face-to-face fields such as delivery, security patrol, and disinfection will be additionally demonstrated to diversify the autonomous driving industry. This demonstration features integrated services such as establishing an integrated control system for demonstration robots within the region and developing common charging and driving systems, and it is expected to accelerate the commercialization of autonomous driving through synergy effects utilizing the existing special zone’s autonomous driving infrastructure.

The Ministry of SMEs and Startups expects economic ripple effects such as KRW 110 billion in sales, 648 new jobs, and 68 company attractions and startups during the special zone period following this regulatory free zone designation. Since its launch, regulatory free zones have recorded achievements including about 16% (662) job growth, KRW 316.9 billion in investment attraction, KRW 55.2 billion in venture capital (VC) investment, and attraction of 109 companies.

Investment promotion for innovative companies within the zones will also be pursued. The Ministry recently selected a fund management company for the “Regulatory Free Zone Fund” and plans to raise a fund of about KRW 35 billion by the end of this year to accelerate the creation of regional innovation outcomes. It also plans to consider increasing the dedicated investment ratio according to the investment demand of companies within the zones.

Minister Park Young-sun of the Ministry of SMEs and Startups said at a briefing, “The role of regulatory free zones, which act as catalysts for regional innovation, is more important than anything else to complete the Korean New Deal policy,” adding, “The newly designated digital and green regulatory free zones will become forward bases for creating new industries and new services and will open the era of balanced regional New Deal.”

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