Expansion of 'Preferred Guarantee' for Regulatory Special Zones and Sandboxes... Supporting Fundraising

Support Expanded to 'Regulatory Free Zone Location and Demonstration Exception Approved Companies'
Maximum Guarantee Ratio Increased to 95%... Operating Fund Guarantee Amount Raised from 100 Million to 200 Million
So Far, 730.9 Billion Won Investment Attraction... Creation of 1,255 Jobs Achieved

Ministry of SMEs and Startups.
Photo by Asia Economy DB

[Asia Economy Reporter Junhyung Lee] The Ministry of SMEs and Startups announced on the 28th that it will expand the scope of preferential guarantee support for Regulatory Free Zones and Sandbox companies. This is to accelerate the fostering of new industries by helping regulatory sandbox companies, which create economic innovation momentum, secure funding.

The preferential guarantee system for Regulatory Free Zones and Sandboxes was established by the Ministry of SMEs and Startups in 2019 through the Korea Technology Finance Corporation. Through this system, the ministry supports regulatory sandbox companies and others to smoothly secure funding. The support details include ▲expanding the guarantee ratio up to 95% ▲reducing the guarantee fee rate by up to 0.5 percentage points ▲increasing the working capital guarantee amount from 100 million KRW to 200 million KRW (support available regardless of sales performance), among others.

The regulatory sandbox system exempts or defers existing regulations for a certain period for new businesses and new services. It consists of temporary permits, demonstration exceptions, and rapid confirmation.

Companies located in Regulatory Free Zones refer to those that have business sites within the Regulatory Free Zones and operate manufacturing or service businesses in the designated sectors. According to the Ministry of SMEs and Startups, Regulatory Free Zones, designated mainly around regional strategic industries, are expanding their role as forward bases for regional innovation and the Korean New Deal.

Before and after changes to the preferential guarantee targets for Regulatory Free Zones and Sandboxes.
Photo by Ministry of SMEs and Startups

However, the existing preferential guarantee only applied to temporary permit-approved companies, which accounted for just 12% of regulatory sandbox companies. To address the narrow scope of support, the ministry expanded the target to include ▲companies located in Regulatory Free Zones ▲temporary permit-approved companies ▲companies approved for demonstration exceptions (including innovative financial services).

Additionally, the ministry plans to support the expansion of preferential guarantee support to companies located in Regulatory Free Zones so that these zones can serve as hubs for fostering new industries.

Currently, 24 Regulatory Free Zones are designated across 14 non-metropolitan cities and provinces, expected to support balanced national development. According to the ministry, since the first Regulatory Free Zone was designated in August 2019, 162 companies have relocated to these zones, attracting investments of 730.9 billion KRW and creating 1,255 jobs, showing tangible results.

Park Yongsoon, Director of Venture Innovation Policy at the Ministry of SMEs and Startups, said, "With the expansion of the preferential guarantee targets, more regulatory sandbox companies will be able to secure commercialization funds more easily." He added, "We will lead balanced regional growth by expanding guarantee support for companies located in Regulatory Free Zones."

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