Mega-Regional Special Zone Act Introduced by Lawmaker with About Two Months Until 'Year-End Enactment' Deadline… Number of Special Exceptions Inconsistent Between 'About 300' and 'About 320'

SEOUL

The Special Megaregional Zones Act, which the government promised to enact within this year, finally reached the National Assembly on October 20, leaving barely over two months before the deadline. Rather than a government-submitted bill, it was sponsored by Representative Park Sang-hyuk. In conjunction with the second plenary meeting of the Regulatory Rationalization Committee held at the Cheong Wa Dae State Guest House on the 23rd, the government announced that this bill incorporates "about 320 menu-style regulatory exemptions, the largest in history for a single piece of legislation." However, in a Policy Briefing article published the same day reporting on remarks by President Lee Jae-myung, the same exemptions were counted as about 300. The government's released materials contain no figures on how many special zones will be designated or the extent of fiscal and tax support.

Government Promised 'Enactment Within the Year' in April, but Bill Only Reaches National Assembly on Oct. 20

Special megaregional zones originally started under the name "mega special zones." Their debut was the first meeting of the Regulatory Rationalization Committee, chaired by the President on the morning of April 15 at Cheong Wa Dae's Chungmu Room. Reference materials released that day by the Ministry of Trade, Industry and Energy stated, "The plan is to enact the tentatively named 'Special Act on Mega Special Zones' within the year '26 through consultations with the National Assembly." The same material noted, "Following the enactment of the law, the designation of mega special zones will be pursued expeditiously." Mega special zones were introduced as "large-scale core growth hubs to foster regional economic growth and national strategic industries in connection with the 5 Poles and 3 Special Zones." The April plan put forward an approach where a small number of core strategic industries would be designated at the metropolitan and megaregional levels, and enterprises and regions would design them directly to reflect on-the-ground demand.

A press release on May 28 by the Ministry of Trade, Industry and Energy outlining achievements marking the first anniversary of the administration's launch also merely stated that it was "scheduled to enact" the tentatively titled "Special Act on the Designation and Management of Mega Special Zones." The same release said it would "prepare a pan-governmental support package to back this alongside the selection of growth engines for the 5 Poles and 3 Special Zones." On July 22, when reports emerged regarding exemption details such as extending the period of employment for fixed-term workers and exempting R&D personnel from the 52-hour workweek cap, the Ministry of Trade, Industry and Energy issued an explanatory brief. The ministry stated, "We are in the process of gathering various opinions regarding regulatory exemptions and support measures to promote regional growth and investment," and added, "As specific details have not yet been finalized, please exercise prudence in reporting."

The definition released by the government on October 23 is as follows: A special megaregional zone is "a core hub comprehensively providing the highest level of regulatory exemptions and pan-governmental policy support demanded by businesses and regions to foster growth engines for the 5 Poles and 3 Special Zones and attract large-scale corporate investment." The twin pillars from the April mega special zone description—"the highest level of regulatory exemptions" and pan-governmental support—were included intact.

The day the bill was actually introduced was Tuesday, October 20. According to reference materials from the Ministry of Employment and Labor, the formal title is the "Special Bill on the Designation and Operation of Megaregional Strategic Industry Special Zones for Locally Driven Growth," sponsored by Representative Park Sang-hyuk. The Policy Briefing article used the government as the grammatical subject, stating, "On the 20th, [the government] introduced the Special Megaregional Zones Act." The April promise can only be kept if the National Assembly completes standing committee deliberations and plenary passage within this year.

Number of Exemptions Diverges Between 'About 320' and 'About 300' Even Across Government Outlets on the Same Day

On the 23rd, Policy Briefing headlined its report on the government's announcement: "Government Pursues 'Enactment of Special Megaregional Zones Act'… To Include Record-High ~320 Regulatory Exemptions." In the body, it stated that these exemptions provide "all-around support for corporate activities, including infrastructure development, installation of production facilities, talent attraction, and residential conditions."

However, another article summarizing the president's remarks published by Policy Briefing on the same day reported that President Lee introduced the Special Megaregional Zones Act as containing about 300 regulatory exemptions—the largest in history for a single law—and called for swift and thorough review by the National Assembly. Two articles from a government media outlet presented differing figures regarding a single meeting.

Public relations centered on numbers also clashes with the principles the government laid out in April. The materials from April 15 stated that it would move away from quantitative targets such as the number of regulations abolished or eased, shifting its goals toward performance. The same document cited "outcome-oriented regulatory rationalization" as one of five structural reform directions for regulation. The April document described the level of exemptions as "the highest level of regulatory exemptions" without specifying a count. President Lee also stated at the meeting on the 23rd, "While it is important how many regulations were improved, it is also important how much investment, startups, and jobs were generated by changing regulations." Yet the figure highlighted in the headline of that day's announcement was precisely the number of regulatory exemptions.

Without Figures on Zone Counts or Funding, Only 'Designation in First Half of Next Year' Remains

The government announced, "Related procedures will be pursued so that special megaregional zones can be designated across national regions in the first half of next year." Under the designation procedure, local governments and businesses will formulate and apply for a zone plan, followed sequentially by committee deliberation and resolution, approval by the Prime Minister, and designation by the Minister of Trade, Industry and Energy. In the April plan, the prime ministerial approval stage did not exist; the structure had the Regulatory Rationalization Committee deliberate and resolve on regulatory exemptions, while the Presidential Committee for Decentralization and Balanced Development deliberated and resolved on the overall zone plan.

The details of support have not changed significantly since April. The October material stated that a "pan-governmental policy support package covering fiscal, financial, talent, infrastructure, and tax domains" would be provided. The April material also listed a package spanning seven sectors: fiscal, financial, tax, talent, infrastructure, tech startups, and institutional systems. The April document specified monetary amounts, including "establishing a mega-fund worth 1 trillion won" for bio mega special zones. By contrast, the only won figure appearing in the October announcement report was an estimated cost savings of "58.15 billion won in personnel and transportation expenses" resulting from the introduction of remote medical data analysis environments.

Most support items in the April materials were also merely project names. The fiscal category included the creation of a new "growth engine special subsidy" provided for large-scale investments; the talent sector listed the creation of growth engine colleges and nine convergence research institutes at key national universities; and the technology/startup sector included the establishment of 10 startup cities.

The target of designation is "regions nationwide." The government stated, "Alongside the enactment procedure of the Special Megaregional Zones Act, related procedures such as preparing presidential enforcement decrees, consultations on designated sectors by region, and formulating zone plans will be pursued concurrently."

Labor Ministry Says Working-Hour Exemptions Included in Bill; Industry Ministry Says They Are 'Under Review'

Government ministries have offered divergent explanations regarding labor exemptions. On the 20th, the day the bill was introduced, the Ministry of Employment and Labor issued reference material titled: "Labor Exemptions in the 'Special Megaregional Zones Act': We Will Prepare Rational Measures Through Social Dialogue." In this document, the Ministry of Employment and Labor stated that the introduced bill "includes labor-related exemption clauses such as working hours and fixed-term employment within special zones." The ministry also noted that a separate bill excluding the labor exemption clauses is scheduled to be introduced.

The Ministry of Employment and Labor stated that it is conducting "one-point social dialogue" involving labor, management, and relevant ministries. It held a vice-ministerial preparatory meeting on September 18 and subsequently held five director-general-level working-level consultative meetings. The Ministry of Employment and Labor stated that discussions would proceed "without setting a prior deadline for social dialogue." It added that it would consult closely with the National Assembly so that the dialogue's outcome is reflected in parliamentary legislative review. The government's position is that through sufficient discussion, it will devise measures to help strengthen the competitiveness of advanced industries and foster a sustainable working environment.

Three days later, reference material on semiconductor regulatory rationalization released by the Ministry of Trade, Industry and Energy introduced the Special Megaregional Zones Act as a law that "grants extensive regulatory exemptions, such as menu-style regulatory exemptions and demand-responsive regulatory moratoriums, and supports customized inter-agency packages." The same material wrote, "Working-hour exemptions for key semiconductor R&D personnel within special megaregional zones will be reviewed." The working-hour exemptions that the Ministry of Employment and Labor declared were already in the introduced bill remain an item under review in the Ministry of Trade, Industry and Energy's material. The labor exemption provisions of a law promised for enactment this year are tied up in open-ended social dialogue. If a separate bill omitting the working-hour exemptions is also introduced, the National Assembly will have to deliberate on differing bills regarding the same special zones concurrently.

39 Out of 129 Existing Special Zones Identified as Zero-Performance 'Ghost Zones'

Another challenge is ensuring that the new special zones do not repeat the mistakes of existing ones. In a report titled "Measures to Improve Innovative Special Zones for the Promotion of 5-Pole, 3-Special Megaregional Mega Special Zones" published on July 27, the Science and Technology Policy Institute (STEPI) diagnosed: "While existing special zones have surged quantitatively (129 zones, cumulative 2,085 cases), their roles and functions have fallen short of expectations."

The report pointed out that "39 out of 129 zones (30.2%) are 'ghost zones' with zero track record of designation or operation." Enterprises benefiting from corporate tax reductions totaled 110, or just 7.8% of the 1,337 eligible enterprises. The report analyzed representative innovative zones—Research and Development Special Zones and Regulation-Free Special Zones—from an actor-centered institutionalist perspective. The report noted, "Among empirical-based regulatory improvement projects, only 3 actual statutory revisions took place." The report viewed the decline in special zone effectiveness not as a failure of the system itself, but as stemming from the inability of results to spill over into institutionalization and commercialization. The report proposed that for mega special zones to function as an overarching platform that oversees and links existing special zones, "diagnosing and rectifying the structural limitations of the existing special zone system must come first."

The regulatory sandbox overhaul released concurrently by the government featured "shortening deliberation periods, making empirical testing periods flexible, and streamlining procedures." The focus lies on getting empirical testing started quickly. This targets a different stage from the research institute's criticism that only three empirical testing projects ever progressed to statutory amendments.

The institutional framework is also identical to the April plan. The April materials had already proposed three pillars: "menu-style regulatory exemptions (ready-made)" selected by enterprises and local governments, "demand-responsive regulatory moratoriums (on-demand)" that exclude or ease regulations not on the menu upon request, and an "UPGRADE regulatory sandbox" featuring large-scale empirical testing and shortened review times. The October announcement repeated these three pillars unchanged, merely appending counts of exemptions. The period for suspending regulations not on the menu was described in the October announcement as "a certain period."

The composition of sectors has shifted. The April mega special zone promotion plan cited four sectors as examples: robotics, renewable energy, bio, and AI autonomous vehicles. These included tasks such as permitting direct renewable energy trading, liberalizing self-consumption renewable energy trading, and granting mayors and provincial governors the authority to issue temporary autonomous vehicle operation permits. For robotics, it included allowing unmanned firefighting robots on roadways and allowing outdoor mobile robots to display outdoor advertisements and operate in public parks; for bio, it included easing review procedures for advanced regenerative medicine and providing exemptions for decentralized clinical trials. The industry-specific tasks in the October Policy Briefing article were organized into five sectors: robotics, semiconductors, AI data centers, autonomous vehicles, and bio. While the April plan said it would designate a small number of core strategic industries on a metropolitan and megaregional basis, the October announcement stated that special zones would be designated across "regions nationwide." Determining which industry each region will handle has been kicked down the road to the stage of "consultations on designated sectors by region."

President Emphasizes Regional Balance and 'Preemptive Improvements,' Requesting Assembly Cooperation

The government and the President describe special megaregional zones as a core tool to resolve overcrowding in the capital region. Policy Briefing reported that President Lee presented the three mega projects and special megaregional zones as "vital national core strategies to break the vicious cycle of capital region concentration and regional depopulation." President Lee said, "There are likely things that can be done even prior to legislative enactment," adding, "I hope such matters are improved expeditiously and preemptively by the Regulatory Rationalization Committee."

President Lee stated, "Inconvenient, outdated regulations that block new technologies and the development of new industries must be swiftly and boldly improved," and that "regulatory rationalization is an essential task for making an irreplaceable Republic of Korea." President Lee also remarked, "In the field of regulatory rationalization, the views of regulated entities or those in neutral positions are far more critical than those of the regulators." He also drew a line on deregulation, saying, "Regulations essential to protect the lives, safety, and property of the public, and to ensure fairness and transparency, are indispensable." About 100 people attended the meeting chaired by the President, including the Prime Minister, private-sector committee members, and on-site experts. The government stated that in February of this year, the committee chairmanship was elevated from the Prime Minister to the President for the first time in 28 years. According to the April materials, the committee's name was changed to the Regulatory Rationalization Committee following the revision of the Framework Act on Administrative Regulations, which took effect on February 19. According to the April materials, the member quota was expanded from a maximum of 25 to 50, and 28 private members were assigned to the growth, public livelihood, and regional subcommittees.

Apart from legislative enactment, the government also released sector-by-sector tasks. For semiconductor industrial complexes, it will apply a fast-track process that simultaneously accelerates licensing, compensation, and design, thereby "shortening the development period from over 10 years at most to half." Special notifications on high-pressure gas for semiconductor processing will be drawn up by January of next year. Regional semiconductor firms meeting certain requirements will be allowed to transport pre-approved items first and file export declarations in transit. The Ministry of Trade, Industry and Energy said that if a semiconductor cluster is designated as a special megaregional zone, it plans to reflect in the Special Megaregional Zones Act provisions allowing bundled processing of additional permits beyond the deemed approvals under the Special Semiconductor Act.

For AI data centers, permits will be processed in batches, and unmanned facilities will be excluded from size calculations, easing building regulations "to up to one-third." Standards for exempting power grid impact assessments in non-capital areas will also be reviewed. For autonomous vehicles, business-to-business (B2B) sales will be permitted, and international standards (ADS) will be adopted. Through this, the government stated it would create "more than 50,000 new jobs." It will establish a legal framework for unmanned autonomous driving and permit operation outside pilot zones only for exceptional reasons such as charging and depot access. It will institutionalize Level 4 and higher unmanned services and mandate domestic data storage. In robotics, guidelines exempting mobile industrial robots from fence installation requirements will be issued by the first quarter of next year, and humanoid safety guides will be jointly developed by the Ministry of Trade, Industry and Energy and the Ministry of Employment and Labor within this year. Safety standards for outdoor mobile robot operations will also be established.

In the biotechnology sector, standards for remote analysis environments will be created so medical data can be analyzed remotely from outside. The estimated savings of 58.15 billion won was derived from this task. Legal grounds will also be established allowing cells stored in cord blood banks to be used for advanced regenerative medicine clinical research and treatment. AI-assisted pharmaceutical review guidelines will be drawn up within this year. Submission documentation will be streamlined when developing over-the-counter medications that share the same administration route with minor dosage form differences. A significant number of these tasks remain at the stage of formulating guidelines, public notices, and standards.

Sources (KST)

• Policy Briefing Policy News · 2026-10-23 · Government Pursues 'Enactment of Special Megaregional Zones Act'… To Include Record-High ~320 Regulatory Exemptions · https://m.korea.kr/news/policyNewsView.do?newsId=148974194&pageIndex=1&cateId=&repCode_P=&smenu=EDS01
• Policy Briefing Policy News · 2026-10-23 · President Lee: "Boldly Improve Outdated Regulations Blocking New Industries… Strengthen Necessary Regulations" · https://m.korea.kr/news/policyNewsView.do?newsId=148974225&pageIndex=1&cateId=&repCode_P=&smenu=EDS01
• Ministry of Employment and Labor Reference Material · 2026-10-20 · Labor Exemptions in the 'Special Megaregional Zones Act': We Will Prepare Rational Measures Through Social Dialogue · https://www.moel.go.kr/news/enews/report/enewsView.do?news_seq=20118
• Ministry of Trade, Industry and Energy Reference Material · 2026-10-23 · Semiconductor Competition Shifts to a Battle of 'Time': Redesigning Time for Investment, Research, and Support Through Semiconductor Regulatory Rationalization · https://www.motir.go.kr/kor/article/ATCL3f49a5a8c/172327/view?mno=&pageIndex=1
• Ministry of Trade, Industry and Energy Reference Material · 2026-04-15 · Comprehensive Overhaul of the Regulatory Reform System for the First Time in 28 Years; 1st 'Regulatory Rationalization Committee' Chaired by the President Held · https://www.motir.go.kr/kor/article/ATCL3f49a5a8c/171735/view
• Ministry of Trade, Industry and Energy Press Release · 2026-05-28 · Thoroughly Managing Crises, Boldly Preempting Opportunities for Growth · https://www.motir.go.kr/attach/down/e258a4a9a6760923ac9cd310f7a71e4c/2d07cb34f59f6396335756d4bc732fce
• Ministry of Trade, Industry and Energy Clarification Material · 2026-07-22 · Specific Details of the Tentatively Named 'Special Act on Mega Special Zones' Have Not Been Finalized · https://www.motir.go.kr/kor/article/ATCLe0854704d/172040/view
• Science and Technology Policy Institute (Posted on KDI Economic Information and Education Center) · 2026-07-27 · Measures to Improve Innovative Special Zones for the Promotion of 5-Pole, 3-Special Megaregional Mega Special Zones · https://eiec.kdi.re.kr/policy/domesticView.do?ac=0000206480&pg=&pp=&issus=O