KCCI: "Sandbox Regulation Easing Progressing Smoothly... 24 Tasks Including Shared Kitchens Completed"

24 Improvements Out of 137 Tasks... Shared Kitchens, Electric Vehicle Battery Recycling, and More

Seoul Jung-gu Korea Chamber of Commerce and Industry. / Photo by Jinhyung Kang aymsdream@

[Asia Economy Reporter Moon Chaeseok]

#Shared kitchen services were only possible as pilot projects, but regulatory easing has opened the door of opportunity to all companies. With the implementation of the revised Food Sanitation Act last month, shared kitchens have spread nationwide to areas such as Gangnam in Seoul, Gwangmyeong, and Busan, providing opportunities to more than 200 young entrepreneurs.

#The electric vehicle (EV) used battery recycling business was previously allowed only for certain companies. With the amendment of the Air Quality Preservation Act at the end of the year before last, which abolished the obligation to return used batteries to local governments, opportunities have expanded. Companies are reinventing these batteries as camping power packs or energy storage systems (ESS) for EV charging.

The Korea Chamber of Commerce and Industry (KCCI) Sandbox Support Center’s regulatory exemption approval system has been shown to lead to improvements in legal systems. On the 26th, KCCI reviewed achievements and urged follow-up legal improvements through its 'Analysis of Sandbox Legal System Improvement Status.' KCCI stated, "Although many innovations have become possible through the sandbox, legal system improvements are essential for the benefits of the system to spread across the entire industry," emphasizing, "The completion of the sandbox is the revision of laws and regulations."

The sandbox provides innovative businesses with a 2+2 year demonstration test period. It enables businesses that were impossible under existing systems, earning the nickname 'innovation bypass.' Korea’s legal system is mainly a 'positive' system that only permits what is explicitly allowed, but the sandbox fills regulatory loopholes to provide innovation opportunities to companies, KCCI explained. Especially since May 2020, when Korea’s first private sandbox organization, the 'KCCI Sandbox Support Center,' was launched, 137 innovative products and services have received exemptions.

KCCI: "24 out of 137 Sandbox Tasks Have Completed Improvements"

KCCI emphasized that 24 tasks, including shared kitchens and EV used battery recycling, have led to the passage of legislative amendments in the National Assembly. These tasks were approved through the KCCI Sandbox Support Center. The shared kitchen amendment was the first to pass the National Assembly. Previously, only one operator could run a business in one kitchen, but through the sandbox, safety was verified and significant social and economic ripple effects were identified, leading to legal improvements by the Ministry of Food and Drug Safety, the competent authority. In December 2020, the Food Sanitation Act amendment establishing the concept of shared kitchens passed the plenary session of the National Assembly. Subsequently, related subordinate laws such as facility and hygiene standards were revised, and the shared kitchen system was officially implemented as of December 30 last year.

The effects of regulatory easing were clear. The number of companies with shared kitchen experience was about 214 as of the end of last year, more than 50 times higher than two years ago. According to the industry, it is expected to exceed 600 within five years. The initial investment cost saved through shared kitchens is approximately 19.3 billion KRW. Lee Seunghwan, CEO of KitchenX, who received special approval for shared kitchen services, said, "I was worried that the business might stop after the demonstration period expired, but thanks to proactive legal improvements, I am relieved," adding, "I hope this legalization of shared kitchens will serve as a model case for follow-up legal improvements after the sandbox."

The same applies to EV used batteries. Until now, used batteries had to be returned to local governments, and private businesses could only engage in recycling through the sandbox. However, the amendment to the Air Quality Preservation Act in December 2020 abolished the return obligation. Used batteries have been reborn as camping power banks, solar streetlights, and more. This achievement would have been impossible without regulatory improvements. Nam Junhee, CEO of Goodbye Car, who received special approval through the KCCI center, said, "This system improvement has laid the foundation for the development of the EV used battery recycling industry," and added, "I hope related laws and regulations, such as safety standards for used batteries, will be improved quickly."

Experts: "Prompt Legal Improvements Needed for Safety-Verified Tasks"

KCCI revealed that many approved tasks through the center still require improvements. Tasks that do not apply 'active interpretation,' where the competent authorities flexibly apply existing regulations to allow innovative business, require follow-up legal changes in the National Assembly and elsewhere to enable businesses to operate without the sandbox.

Experts called for prompt legal improvements. Song Woo-kyung, Director of Regional Policy at the Korea Institute for Industrial Economics and Trade, said, "For tasks with verified safety, the government and National Assembly should promptly pursue legal improvements to alleviate concerns about business discontinuation and to promote the spread of innovation." Dr. Won Soyeon of the Korea Institute of Public Administration also said, "As the sandbox system continues to expand, there is a need to establish a system at the government level to oversee and coordinate legal improvements."

KCCI announced plans to continuously propose prompt legal revisions to the Presidential Transition Committee, scheduled to launch in March. They plan to prioritize tasks requiring urgent revision due to the large number of approved companies or significant social and economic ripple effects. Representative tasks under review include vehicle over-the-air (OTA) update services approved by leading domestic and international automakers such as Hyundai Motor Company, Volvo, and Mercedes-Benz, as well as shared beauty salons that support entrepreneurship for early-career hair designers.

Additionally, KCCI plans to use post-management support data from sandbox-approved tasks to accelerate legal improvements. Kang Minjae, head of the KCCI Sandbox Management Team, said, "It is a time when active roles from related ministries and the National Assembly are needed for prompt legal improvements," adding, "We plan to explore ways such as proposals to the transition committee after the presidential election to ensure that the momentum for legal improvements continues in the next government."

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