SEOUL, Jan 22 — South Korea introduced today what it called the world’s first comprehensive set of laws regulating artificial intelligence (AI), aimed at strengthening trust and safety in the sector, but startups fretted that compliance could hold them back.
Aiming to become one of the world’s top three AI powerhouses, South Korea is hoping that its new AI Basic Act will help position the country as a leader in the field. The laws in their entirety have taken effect sooner than the EU’s AI Act, which is being applied in phases through 2027.
Global divisions remain over how to regulate AI, with the US favouring a lighter touch to avoid stifling innovation. China has introduced some rules and proposed creating a body to coordinate global regulation.
Under South Korea’s laws, companies must ensure there is human oversight in so-called “high-impact” AI, which includes fields like nuclear safety, the production of drinking water, transport, healthcare and financial uses such as credit evaluation and loan screening.
Other rules stipulate that companies must give users advance notice about products or services using high-impact or generative AI, and provide clear labelling when AI-generated output is difficult to distinguish from reality.
The Science and ICT Ministry has said the legal framework was designed to promote AI adoption while building a foundation of safety and trust.
It said the bill was prepared after extensive consultation, and companies will be given a grace period of at least a year before authorities begin imposing administrative fines for infractions.
The penalties can be hefty. A failure to label generative AI in South Korea, for example, could leave a company facing a fine of up to ₩30 million (RM82,507.35).
That said, potential penalties in the EU are much higher. Non-compliance with rules there can result in fines that range from as much as 1 per cent of global turnover for smaller violations to as much as 7 per cent for breaking bans on the use of high-risk AI.
Global AI power
Lim Jung-wook, co-head of South Korea’s Startup Alliance, said many founders were frustrated that key details of the law remain unsettled.
“There’s a bit of resentment — why do we have to be the first to do this?” he said.
One concern of the group is that the law’s language is vague and companies may default to safe but less innovative approaches to avoid regulatory risk.
President Lee Jae Myung today expressed sympathy for such concerns. He urged policymakers to listen to the concerns of industry and ensure venture companies and startups have enough support.
“It is essential to maximise the industry’s potential through institutional support, while pre-emptively managing anticipated side effects,” Lee said during a meeting with aides.
The Science and ICT Ministry is planning a guidance platform and dedicated support centre for companies during the grace period.
“We will continue to review measures to minimise the burden on industry,” a ministry spokesperson said, adding that authorities are looking at extending the grace period if domestic and overseas industry conditions warrant such a measure.
