Commencement of Performance Evaluation for 14 Regulatory Free Zones Operations

Insufficient Evaluation Special Zones Face Penalties Including Deregistration and Exclusion from New Designations

[Asia Economy Reporter Kim Cheol-hyun] The Ministry of SMEs and Startups (Minister Park Young-sun, hereinafter referred to as the Ministry) announced on the 29th that it plans to evaluate the performance of 14 regulatory free zones, including the Busan Blockchain Special Zone designated last year, over the course of this year.

The evaluation of special zone operations is stipulated under the Regional Special Zone Act, which requires an annual performance assessment in the first half of the year for zones that have received financial support, focusing on regional economic revitalization and utilization of regulatory exemptions. This evaluation is the second to be conducted since the designation of the zones.

This year, evaluations were conducted for seven zones, including the Jeonnam e-Mobility Special Zone, which was the first to be designated since the introduction of the special zone system. As it was the first year of evaluation, the focus was on spreading best practices. Two outstanding zones were selected: the Busan Blockchain and the Gyeongbuk Waste Battery Recycling zones, with no zones deemed insufficient.

Next year, a 'Regulatory Free Zone Operation Performance Evaluation Plan' including evaluation factors, methods, and utilization plans will be established and communicated to the local governments overseeing the zones to ensure fair and reliable evaluations of all 14 zones. After local governments conduct self-assessments and submit performance reports for each zone to the Ministry by the end of March next year, a Central Evaluation Committee composed of private experts will conduct the final evaluation. The results will be reported to the 'Regulatory Free Zone Committee' scheduled to be held in the first half of next year.

Through this performance evaluation, the Ministry plans to disclose the results, provide incentives such as prize money, commendations, and promotion of best practices to high-performing zones, and take measures such as revoking zone designations or excluding poorly performing zones from future new designations. Kim Hee-cheon, head of the Ministry’s Regulatory Free Zone Planning Division, stated, "The designation of a special zone is not the end; it is important to ensure the safety of special zone projects while achieving policy goals. We will lead regional innovation growth by generating business outcomes through on-site inspections and performance evaluations."

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