SEJIN KIM AND HODAN OMAAR |SEPTEMBER 2025 By uniting strategy, promotion, and regulation in a single law, South Korea has given itself apowerful instrument to shape AI—but its blunt regulatory mandates threaten to drag down thevery strengths that make the act ambitious. KEY TAKEAWAYS South Korea’s AI Framework Act is the first in the world to combine strategy, industrialpromotion, and regulation into a single statute, magnifying both its strengths and itsflaws. South Korea’s promotion agenda—data infrastructure, clusters, talent, andinternationalization—is strong and forward leaning, putting it at the leading edge amongpeers. The act gets strategy and industrial policy broadly right, but it undermines them withblunt regulatory provisions that misdiagnose AI’s risks. Overly broad definitions, rigid R&D mandates, and SME-first rules risk stifling the scaleand flexibility South Korea needs for global competitiveness. Heavy-handed tools such as labeling requirements, compute thresholds, and process-heavy reporting will waste resources without delivering real accountability. Fixing the act requires two levels of adjustment: structural amendments by the NationalAssembly and balanced, practical implementation through MSIT’s Enforcement Decrees. CONTENTS Key Takeaways ................................................................................................................. 1Introduction ..................................................................................................................... 3Overview of the Act ........................................................................................................... 6Chapter 1: General Provisions ............................................................................................ 7Analysis: The Definition of an AI System Is Too Broad........................................................ 8Recommendation........................................................................................................... 9Chapter 2: Governance for Sound AI Development and Trust.................................................. 9Analysis: Keep the Master Plan, Lose the Master Regulator .............................................. 10Recommendation......................................................................................................... 10Chapter 3: Policies for AI Development and Industry Promotion ........................................... 10Innovation Polices to Support South Korea’s AI Industry .................................................. 10Analysis: South Korea’s Prescriptive Innovation Policies Risks Stifling AI ........................... 11Recommendations ....................................................................................................... 12Industrial Policies to Support South Korea’s AI Industry................................................... 12Analysis: Industrial Policy Measures Should Be Size-Neutral ............................................ 13Recommendations ....................................................................................................... 14Chapter 4: AI Ethics and Trustworthiness .......................................................................... 14Soft-Law, AI Safety-Oriented Measures........................................................................... 14Hard-Law, Regulatory Obligations for AI ......................................................................... 14Analysis: A Light-Touch Vision for AI Governance Undone by Heavy-Handed Rules.............. 15Recommendations ....................................................................................................... 17Chapter 5: Supplementary Provisions ................................................................................ 18Analysis: Broad Data Demands Risk Regulatory Overreach................................................ 18Recommendation......................................................................................................... 19Chapter 6: Penalties........................................................................................................ 19Analysis: Penalties Should Be Proportionate to Risk and Harm.......................................... 19Recommendations ....................................................................................................... 19Conclusion..................................................................................................................... 19Appendix: AI Act Summary .............................................................................................. 20Chapter 1: General Provisions (총칙).............................................................................. 20Chapter 2: Promotion System for the Sound Development and Trust-Based Foundationof AI (인공지능의건전한발전과신뢰기반조성을위한추진체계)................................... 20 Chapter 3: AI Technology Development and Industry Promotion (인공지능