South Korea has introduced what it calls the world’s first comprehensive legal framework governing artificial intelligence, aiming to balance innovation with accountability. The new AI Basic Act, announced on Thursday, seeks to establish a trusted environment for AI development while ensuring public safety. However, many local startups have voiced concerns that strict compliance could hinder innovation and competitiveness.
South Korea Aims to Lead in AI Governance
Seoul hopes the AI Basic Act will help position the country among the global leaders in artificial intelligence. The law has come into force ahead of the European Union’s AI Act, which will be phased in through 2027. By acting early, South Korea intends to set international standards for safe and responsible AI use.
The global debate over AI regulation remains divided. The United States continues to favour a light-touch approach, prioritising innovation, while China has rolled out limited rules and suggested forming a body to coordinate international oversight.
Human Oversight and Transparency Requirements
A central provision of the new law requires companies to ensure human supervision in “high-impact” AI applications. These include areas such as nuclear safety, water production, transportation, healthcare, and financial services like credit assessment and loan approval.
Firms must also inform users when they are interacting with products or services that use either high-impact or generative AI. Additionally, they must clearly label AI-generated content that could be mistaken for real human output. The Ministry of Science and ICT said the legislation was crafted to encourage the responsible use of AI while reinforcing trust between businesses and consumers.
Companies will benefit from a grace period of at least one year before regulators begin imposing penalties. Nonetheless, fines could be steep: failure to label AI-generated content may cost a firm up to 30 million won ($20,400).
Balancing Regulation and Innovation
Science Minister Bae Kyung-hoon, formerly head of AI research at LG, described the new framework as a “critical institutional foundation” for South Korea’s ambition to become one of the world’s top three AI powers.
Yet, not all are convinced. Lim Jung-wook, co-head of the Startup Alliance, said many entrepreneurs were uneasy about unclear guidelines. “There’s a bit of resentment — why do we have to be the first to do this?” he remarked.
Senior researcher Jeong Joo-yeon echoed these concerns, saying that vague legal language could push companies to adopt overly cautious approaches to avoid penalties.
To ease these worries, the ministry announced plans for a guidance platform and a dedicated support centre during the transition period. A spokesperson added that the government would continue reviewing options to “minimise the burden on industry,” including the possibility of extending the grace period depending on market conditions.
with inputs from Reuters
