KCCI Proposes Improvements to 14 'Killer Regulations' Related to Advanced Industries

KCCI Proposes 42 Tasks for Advanced Industry Regulation Improvement
Including Tax Reform and New Industry Revitalization

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

In the midst of intense global competition in advanced industries, the business community has called for regulatory innovation and policy support to enhance corporate competitiveness and stimulate investment.

The Korea Chamber of Commerce and Industry (KCCI) announced on the 24th that it had submitted a "Proposal for Regulatory and Institutional Improvements to Strengthen Competitiveness in Advanced Industries" to the government. This proposal includes 42 key issues surveyed from 251 companies in six major advanced industries: semiconductors, secondary batteries, displays, bio, future cars, and robots. The issues are categorized as ▲tax system improvements (5 items) ▲new industry activation (5 items) ▲rationalization of environmental regulations (14 items) ▲utilization and protection of core technologies (4 items) ▲and other matters such as easing management burdens (14 items). It also includes 14 so-called "killer regulations." The six advanced industries refer to the six sectors?semiconductors, secondary batteries, displays, bio, future cars, and robots?announced by the government as part of the national advanced industry development strategy.

A KCCI official stated, "Despite the government's efforts to foster advanced industries, companies are struggling due to fierce global competition and domestic and international uncertainties," adding, "We hope that improvement measures will be promptly prepared in response to the bold regulatory innovations and policy support requests from the field."

Proposal to Introduce Korea's Version of 'Direct Pay' (Direct Tax Credit Refund) for Investment Virtuous Cycle

The proposal first emphasized the need for bold tax and financial support to improve investment conditions in advanced industries and urged the introduction of 'Direct Pay' (direct tax credit refund) related to the national strategic technology investment tax credit. Under current Korean law, tax credits can only be claimed if profits are generated, but in advanced industries, large-scale initial investments take a considerable time before profits are realized, making timely tax credit claims difficult. The introduction of a direct tax credit refund system is expected not only to promote investment but also to create a virtuous cycle by reinvesting secured resources into technology, personnel, and facilities.

In the United States, the Inflation Reduction Act (IRA) has already introduced a system that refunds tax credits in cash, and Canada has supported clean technology equipment investments through refundable tax credits. The EU is also discussing ways to strengthen cash support for corporate investments. In Korea, a bill has been proposed to allow cash refunds of investment tax credits for national strategic technologies.

The proposal also called for the establishment of subsidies for investments in production facilities in advanced industries such as semiconductors. While major countries like the U.S., Japan, and China provide subsidies, Korea currently only supports budgets for some infrastructure such as water, electricity, and roads, putting it at a relative disadvantage. It is necessary to strengthen various forms of financial support, including subsidies for production facilities, to stimulate investment in production facilities. The proposal also includes other measures to improve investment conditions for advanced industry companies, such as easing support requirements for U-turn companies and relaxing building coverage ratio limits in production green zones for advanced industries.

Proactive Regulatory Reforms Requested to Activate New Industries Such as Battery-Based Value-Added Services, Patrol and Disinfection Robots

Regarding new technologies and services, the proposal requested legal and institutional improvements such as recognizing separate ownership rights for electric vehicles and electric vehicle batteries (secondary batteries). Overseas, including China, battery swap businesses operate where depleted batteries are exchanged for fully charged ones at electric vehicle battery swap stations. However, in Korea, there are no regulations allowing separate registration of electric vehicles and batteries, making it difficult to create value-added services such as electric vehicle battery subscription services and used battery recycling.

For the robotics industry, the proposal requested proactive legal and institutional reforms to activate the service robot market, such as allowing patrol robots to be used as police equipment and enabling the issuance of disinfection certificates when using robots for disinfection. Patrol robots are already used in countries like the U.S. and China, but their use is difficult domestically due to insufficient legal grounds. Disinfection robots also face obstacles because they do not meet the requirements for issuing income certificates, hindering the activation of service robots.

Requests to Rationalize Environmental Regulations and Ease Corporate Regulatory Burdens Including Core Technology Protection and Utilization

Meanwhile, advanced industries such as semiconductors, secondary batteries, and displays frequently change and relocate manufacturing equipment and handle various chemicals, so they requested improvements to related regulations considering the actual conditions at corporate sites. The proposal includes easing the permit and reporting standards for changes in emission facilities subject to total pollutant load management. Currently, if a facility emits pollutants above a certain threshold, any changes (new installation, relocation, demolition, etc.) require a permit or reporting. Large-scale process industries frequently install and close production facilities, with some sites experiencing about 400 facility changes annually, imposing a significant burden on companies.

They also requested narrowing the scope of hazardous chemical worker training to personnel who enter hazardous chemical handling facilities. Currently, all workers in the workplace are required to receive training, including those working in unrelated convenience facilities such as banks and cafes.

For the utilization and protection of core technologies, the proposal requested improvements to export declaration procedures. When exporting national core technologies abroad, prior approval or declaration is required, but cases such as patent litigation, patent negotiations, or sending technical data to overseas business sites, which are difficult to consider as general exports, are also included, causing difficulties in responding to patent disputes or business promotion. With increasing patent disputes involving Korean companies in the U.S., the corporate burden is growing, and following export procedures makes rapid response difficult. The proposal suggested simplifying procedures or allowing post-reporting for types with low risk of technology leakage and those difficult to consider as exports. Additionally, it requested strengthening criminal penalties for the leakage of important technologies to enhance the effectiveness of punishment.

Lee Sang-heon, head of the KCCI Regulatory Innovation Team, said, "To secure a competitive edge for our companies in the fiercely competitive global advanced industry sector, more bold regulatory relaxation and policy support must be urgently implemented," adding, "We hope that the difficulties and proposals from the field will be reviewed proactively and that improvement measures will be promptly prepared."

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