REGULATORY SANDBOX EXEMPTIONS

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A regulatory sandbox exempts businesses from regulations or postpones their application so that companies can do business freely when releasing innovative products or services. But there are many hurdles to overcome even after obtaining government permits, which is also not easy.

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This company cooks and sells food made for pets. Normally, animal feed must be sold dried or frozen, but this business was given the green light to sell its food products at its stores without a manufacturing permit. However, it took the store nearly a year to launch its business. With no precedents of cooking and selling pet food, there were no regulations on such store facilities, service or even business registration. When it came to facilities, this pet food business had to follow guidelines designed for shared kitchens. As for service, it had to abide by regulations for dining businesses. And when registering its business, regulations for manufacturing and service businesses were applied.

[Soundbite] Choi Sang-ho(CEO of Pet Food Maker) : "We had to figure out how to notify tax offices and delivery platforms of this temporary benefit and how to label our products differently from those of manufacturing firms."

This shared accommodation firm received a permit to serve domestic customers as well. But its plans hit a snag because of liability insurance. There were no insurance products available for this new kind of business. It took eight months to find an alternative and finally launch the business.

[Soundbite] Cho San-koo(CEO of Shared Accommodation Firm) : "Because of stronger regulations, potential investors just gave up."

All this happens because businesses face too many regulations even after obtaining permits. Some just give up mid-process of applying for business permits.

[Soundbite] Lim Jun-ho(CEO of Pet Identification Firm) : "We cannot hire staff to deal with something that takes a long time to process. We have no choice but to do business overseas."

More than a third of some 670 businesses that have received regulatory sandbox benefits have yet to start their operations. A survey conducted by the Korea Chamber of Commerce and Industry on some 250 firms that have received regulatory sandbox approvals shows that 80 percent of them need more support and eased regulations.