Prime Minister Han Seong-sook pledged a step-by-step approach to easing regulations for smaller companies, telling a forum on regulatory reform for small and medium-sized enterprises (SMEs), ventures and startups that the government would "improve things one by one, starting with what can be changed."
The forum drew a stream of appeals from the field to ease rules ranging from the market-capitalization threshold for delisting on the KOSDAQ to the regulatory sandbox and the use of personal data to train artificial intelligence (AI). The area is familiar territory for Han, a former IT executive who served as minister of SMEs and startups until June.
The government said it would create a Startup and Venture Regulatory Reform Committee dedicated to rules in new industries and technologies, and would review demands from the field to speed up regulatory improvements.
Strengthening the Startup Ecosystem, Tied to Megaproject Success
According to the Prime Minister's Office on the 13th, Han held the forum the previous day at the Korea Federation of SMEs in Yeongdeungpo, Seoul. "For startups and ventures in new industries and technologies, a Startup and Venture Regulatory Reform Committee will soon be created under the presidential Regulatory Rationalization Committee," Han said, describing the aim as improving rules related to startups and ventures with a sense of speed.
"When improvements are needed in new industries and technologies and interests collide, it will serve as a body dedicated to startup and venture regulation, listing up the rules that hinder new ventures and second attempts and setting priorities on what to resolve first," Han said.
Improving startup and venture rules is also linked to the success of megaprojects. "For a megaproject to succeed, SMEs must play an important role as part of the ecosystem, creating a virtuous cycle in which investment returns lead to growth for everyone," Han said. "I will listen at this forum and prepare measures on how SMEs and large companies can build win-win cooperation, how they can work together on balanced regional development, and how the capital market can be used."
The forum was attended by about a dozen government officials, including Han, and 110 figures from the SME sector, including Kim Ki-mun, chairman of the Korea Federation of SMEs, and the leadership of the Council of SME Organizations. Industry participants raised a range of views, from easing the market-capitalization threshold for KOSDAQ delisting to the regulatory sandbox and AI-related rules.
Song Byung-jun, chairman of the Korea Venture Business Association, addressed the government's plan to tighten the market-capitalization threshold for KOSDAQ delisting. "I agree with the principle of quickly removing troubled companies and creating a dynamic market where innovative firms can grow," he said, "but market cap fluctuates with market supply and demand, investor sentiment toward sectors, the degree of institutional participation and liquidity, so a market-cap-centered standard is not a reasonable basis for screening out troubled companies."
The government currently designates as administrative-issue stocks any company whose market cap stays below 20 billion won for 30 consecutive trading days, as part of its market-capitalization rules for KOSDAQ delisting. It plans to raise that threshold to 30 billion won starting next year. Song asked the government to grant a one-year grace period on the 30 billion won standard set to take effect next year.
Kwon Dae-young, vice chairman of the Financial Services Commission (FSC), took a cautious stance on easing the delisting rules. "The industry's proposal is worth considering," he said, "but we have to make the hard decision to clean things up at least once. If good companies and deteriorating companies are mixed in the market, the market itself loses trust."
KOSDAQ Delisting Rules, AI Special Legislation Among Expected Improvements
Kim Jae-won, chair of the Korea Startup Forum, said, "The government should amend laws in a timely manner based on the results of regulatory sandbox trials, but there are many cases where this is delayed or not carried out." Kim asked that laws be revised so that when a ministry fails to reply with a plan for handling a matter, the regulatory item is deemed to have been temporarily approved. "Because the regulatory sandbox is run separately by six ministries across eight fields under individual laws, startups are left unsure of where to apply, and the criteria differ, making it difficult," Kim said.
Son Dong-kyun, head of the Office for Government Policy Coordination's regulatory coordination division, addressed the fragmented operation of the sandbox. "If a special law integrating the regulatory sandbox passes in the second half of this year, an integrated operation center will be run within the Prime Minister's Office," Son said. "From application to legal revision, the Office for Government Policy Coordination will oversee it in a one-stop manner." Son added, "Automatically granting temporary approval for the regulatory sandbox is difficult when the public's life and safety are considered," but pledged, "We will improve the system so that plans for legal revision are prepared from the trial stage."
Jung Kwang-cheon, chairman of Innobiz, said, "In physical AI fields such as robotics, current restrictions on the use of video under the Personal Information Protection Act make AI training difficult." He added, "A related amendment recently passed the National Assembly's Legislation and Judiciary Committee, but it still requires prior review on a case-by-case basis, which makes it hard for companies to develop services quickly."
Lee Jung-ryeol, vice chairman of the Personal Information Protection Commission, replied, "Last year we proposed AI special legislation to the National Assembly's National Policy Committee and established a basis for using original data in processing unstructured data such as video, images and audio." He added, "It passed the Legislation and Judiciary Committee last month and is awaiting passage at a plenary session. We will also complete revisions to the enforcement decree within six months."
"We cannot solve everything at once, but we will improve things one by one, starting with what can be changed," Han said. "Using this occasion as a link, and making active use of the Regulatory Rationalization Committee and others, I will see it through to the end."
