Language:
Search
 

Frontier Technology Policy Experimentation and Regulatory Sandboxes

  Capacity Building  /  Projects  /  Frontier Technology Policy Experimentation and Regulatory Sandboxes
DA2124B Project: Frontier Technology Policy Experimentation and Regulatory Sandboxes in Asia and the Pacific

Brief Description: Frontier technologies carry a promise to fast track the Sustainable Development Goals (SDGs) through supporting innovative, forwarding-looking policies and solutions. There are, however, numerous risks and complexities of digital technologies that come along with those opportunities, as well as policy and regulatory challenges. In 2020, the COVID-19 pandemic has not only brought about unprecedented challenges to sustainable development, but have also accelerated digital government and digital transformation in many areas. At the same time, the pandemic has exposed harsh fragilities and digital divides especially for countries in special situations.

 

Objective/Purpose of Project: The overall purpose of the project is to enhance the institutional capacity of selected countries in special situations, namely the: (i) least developed countries (LDCs); (ii) landlocked developing countries (LLDC); and (iii) small island developing States (SIDS). The specific focus of the project is to conceptualize, develop and implement policy experimentation and/or regulatory sandboxes on new technologies, as an innovative and catalytic approach to accelerate the progress of the 2030 Agenda for Sustainable Development.

 

Key Accomplishments: The evidence of the result, if achieved, will include the following aspects:

(i) Enhanced institutional capacity of selected countries to identify opportunities and gaps (institutional, policy, regulatory, and infrastructure support) on policy experimentation and regulatory sandboxes in new technologies, and where relevant, in support of COVID-19 response and/or recovery;

(ii) Improved capacity of target countries to conceptualize and implement pragmatic solutions on operationalizing policy experimentation and regulatory sandboxes in new technologies, in specific areas/sectors related to SDG targets, and COVID-19 recovery, where appropriate; and

(iii) Enhanced global and regional dialogue and cooperation among countries and stakeholders on policy experimentation and regulatory sandboxes in new technologies; for possible scale-up and replication in other countries.

 

Partners: UN DESA, UN ESCAP

Time Frame: January 2021 - December 2024

Focus Countries: Bangladesh (LDC), Kazakhstan (LLDC), Maldives (SIDS)

Bangladesh

  • Bangladesh gave support and interest to be involved with the project on the margins of the of the Committee on ICT and Science, Technology and Innovation on 29-30 August 2020. Through its past capacity development efforts, DESA has also developed a close working relationship with the Ministry of Posts, Telecommunications and Information Technology, the Office of the SDG Principal Coordinator (under the Prime Minister’s Office), as well as its Access-to-Information (a2i) Office.

     

    Through two separate bilateral meetings with DESA, H.E. Minister Mustafa Jabbar expressed appreciation and requested DESA’s continued support in providing technical assistance to its “Digital Bangladesh” national strategy. Resident Coordinator Ms. Mia Seppo indicated that digital exclusion continues to be a concern for Bangladesh, but an enabling policy and regulatory environment for innovation will support the post-COVID-19 recovery and growth of the Bangladesh economy.

     

    Though regular virtual meeting with the Government (fortnightly since March 2011), the following areas are identified for implementation: capacity development, market access and financial access of the cottage, micro, small and medium enterprises (CMSMEs) which form the backbone of the economy and broadband equity and leaving no one behind

  • The cottage, micro, small and medium enterprises (CMSMEs) suffered the most during the COVID-19 pandemic because they had poor market access and were not digitally enabled, despite Government relief measures such as large subsidies in the form of low-interest loans. To tackle this issue, the Project will explore experiments and sandboxes around policy and regulatory reforms, ensuring CMSMEs’ access to information about new businesses, new types of skills, markets (especially digital markets), finance, technology and innovation, and business support services. In addition, a CMSME Hub for Digital Acceleration was built to implement the policy reforms, leaves no business behind.

     

    ● Virtual Workshop on CMSMEs in Bangladesh

     

    The virtual workshop on CMSMEs in Bangladesh was held on 13 June 2022, aiming to engage stakeholders from different agencies to discuss the existing challenges and opportunities for the digitalization of CMSMEs in four areas: (a) Access to Market; (b) Access to Service; (c) Access to Finance and (d) Access to Skills.

     

    Access to Market - Participants came up with solutions that emphasis on open networks, open source, opening up the network and digital public goods: Open Network for Digital Commerce (ONDC) Model; Central Complaint Management System; Online to Offline E-commerce System; and Public Procurement Rules (PPR)

    Access to Service - Participants mainly discussed the current state of the CMSMEs in accessing different types of public services and the challenges in receiving these services, and the role of the government and private sectors in mitigating the challenges.

    Access to Finance - Participants stressed the four main challenges of CMSMEs' access to Finance, including the disorganization of financial system, the complicated documentation process, the loan limitation and the barriers of the current policy and regulatory framework.

    Access to Skills - Participants discussed existing initiatives to enable skills development for the CMSME entrepreneurs, existing major barriers in the skills development landscape and recommendations to strengthen the country’s CMSME sector.

     

    ● Physical Workshop on CMSMEs in Bangladesh

     

    The physical workshop on CMSMEs in Bangladesh was held from 22 June to 23 June, aiming to engage the stakeholders and facilitate official dialogue and knowledge sharing on policy experimentation, including but not limited to identifying the gaps and opportunities as well as partaking in the mapping of the policy experimentation framework to tackle them.

     

    Through three brainstorming sessions throughout the workshop, participants developed six regulatory sandboxes to help support CMSMEs across four distinct areas:

    Access to Market: Participants developed two sandbox ideas to develop CMSMEs’ access to market - (a)Open Network for Digital Commerce (ONDC) Model, which is an open network protocol to bring all types of sellers together on one platform; and the implementation of a compulsory Unique Business ID (UBID) for all e-commerce trading on digital platforms to increase trust, credibility, and transparency.

    Access to Finance: Participants developed a regulatory sandbox to implement a central Know-Your-Customer (KYC) system which would incorporate data from MFIs, MFS, as well as banks and NBFIs, along with a central credit database to form a comprehensive credit footprint for CMSMEs to access loans and finance better.

    Access to Skills: Discussions involved the challenges leading to the inadequate provisions for skills development for CMSMEs, and the scope for public-private interventions to cultivate entrepreneurship knowledge to drive a better business environment.

    Access to Service: Participants developed sandbox ideas for public and private initiatives to increase CMSMEs’ access to service. Recommendations included further developments of the myGov platform, as well as sandboxing to experiment with artificial intelligence, frontier technologies, and streamlined policymaking to further access to service.

     

    ● Focus Group Discussions (FGDs)

     

    As a follow-up to the results from the workshops,a Focus Group Discussion (FGD) series on “Regulatory Sandboxes to Help Support Bangladesh’s CMSMEs” was launched to to develop the capacities of Bangladesh for promoting the implementation of the proposed six regulatory sandboxes.

     

    The first session was held on 13 September 2022, to ideate effective implementation of regulatory sandboxes to support CMSMEs’ access to finance. Through an engaging discussion, stakeholders considered the practical implications of creating a single identification number, to reduce the burden of bureaucratic processes for CMSMEs. In particular, participants considered how the development of such systems can be made inclusive, while paying equal attention to data privacy. Leading fintech players and development organizations shared their experiences of working with CMSMEs and the need for an incentive structure to align different stakeholders to collaborate on a central database.

     

    The second session that emphasised on CMSMEs' Access to Market, was held on 18 October 2022, to discuss the viability and the implementation strategies for a regulatory sandbox on Open Network for Digital Commerce (ONDC) Model in Bangladesh. Participants aligned on whether the e-commerce industry had the financial and logistical capacities to support such an ONDC model, as well as how such a model would impact the nascent e-commerce market in Bangladesh.

     

  • Document

    Background Document: Digital Acceleration of CMSMEs, Leaving no business behind, Bangladesh by Mr. Anir Chowdhury Policy Advisor, a2i ICT Division/Cabinet Division/UNDP Bangladesh

    Virtual Workshop Report

    Physical Workshop Result Report

    FGD Result Report - Session 1: Access to Finance

  • The second area is on broadband equity and leaving no one behind. This issue has become a lifeline for all citizens during the COVID-19 pandemic. 43 million students and 1 million teachers need Internet access for online or remote learning; the use of telehealth services has increased by up to 300%; the e-commerce market is currently worth 2 billion USD with 200 e-commerce sites. However, because of the significant digital connectivity gap, 65% of secondary and 80% of primary school students do not have access to affordable and reliable Internet and citizens in the rural areas are unable to access telehealth and e-commerce services. To deal with this issue, the Project would explore experiments and sandboxes around technology pilots to leverage different technologies to reliably cover underserved areas in certain districts; policy experimentation to ensure equitable broadband for all including social obligation funds and other innovative funding schemes for one-time fixed costs and recurring monthly charges for data; and a regulatory sandbox for innovation PPP arrangements and business models to make broadband affordable, including partnerships with global initiatives.

Kazakhstan

  • H.E. Mr. Ospanov Ablaykhan Yesenovich, Vice Minister, Ministry of Digital Development, Innovation and Aerospace Industry, of Kazakhstan supported the project idea and confirmed the interest of Kazakhstan to be part of the project during bilateral meetings held with Vincenzo Aquaro, Chief of Digital Government, Division for Public Institutions and Digital Government, UNDESA, and Tiziana Bonapace, Director, ICT and DRR Division, ESCAP, during the Digital Almaty Forum, of the Ministry of Digital Development, Innovations and Aerospace Industry of the Republic of Kazakhstan, on 30-31 January 2020. Kazakhstan is in the process of developing an international technopark of IT startups (Astana Hub) which is well aligned with the project.

     

    Since June 2021 regular weekly meetings were set up with government counterparts in Kazakhstan to start implementation of the DA project. A working group was established representing a number of stakeholders from the government, public and private entities to advance regulatory sandboxes initiatives.

     

    Through weekly meetings,two focus areas are identified for implementation: (i) the possibility of a regulatory sandbox for autonomous vehicles in public transport and (ii) to assist Kazakhstan in achieving three broader goals - Decentralization, Digitalization, and Decarbonization in energy sector.

  • The first focus area is on the possibility of a regulatory sandbox for autonomous vehicles in public transport as policy base for which is rooted in the principles of developing innovation as part of the implementation of domestic IT solutions by the business community and start-up projects, eliminating of administrative barriers in the implementing of innovative projects, and attracting domestic and international investors. Through this proposed sandbox, the Government seeks to utilize autonomous vehicles as taxis available for public use as part of creating a more inclusive society, particularly with accessibility to the aging population in mind, as delivery vehicles for medicine and food, and as a mode of both long and short-distance shipping with the expectation of bringing about a reduction in the number of vehicle accidents, improve the efficiency of road use, increase the investment attractiveness of Kazakhstan, and increase transport accessibility for people with disabilities. It is expected that the use of autonomous vehicles will be met with approval given that the government will develop legal norms for the operation of such vehicles, that such vehicles improve road safety through speed abuse and drunk driving exceptions and the reduction of the volume and number of traffic jams in megacities. Furthermore, through the acceptance of the usage of autonomous vehicles it is expected that cities and other human settlements will be made more inclusive, safe, resilient, and sustainable.

     

  • Document
  • Regulatory sandbox for autonomous vehicles

  • The second project area is in energy sector, seeking to assist Kazakhstan in achieving three broader goals: Decentralization, Digitalization, and Decarbonization. In the past, there has been a lack of interest on the part of energy-producing organisations in the introduction of energy-efficient and energy saving technologies. There has also existed a high level of amortisation of electrical networks and shortages in electrical grid capacity in a number of regions. On the part of the Government, there is a lack of a separate regulatory framework that allows the Government to form an effective state policy in the field of heat supply and to regulate the relationship of subjects of district heat supply markets. Moreover, the insufficient level of automation of the energy industry poses an obstacle to accessing accurate operational data. With these problems being taken into consideration, the following policy directions will serve as the foci of the regulatory sandbox for the energy sector. In order to achieve decentralisation, electricity generation sources are to be decentralised and network infrastructure will be developed. In order to achieve digitalisation, a centre of technological competence will be created and the information security of modernised trading platforms will be strengthened. In order to achieve decarbonisation, the focus will be on both the decarbonisation of the energy generation sector as well as the development of the renewable and alternative energy sources sectors.

     

  • Document
  • Decentralization, Digitalization, and Decarbonization
Maldives

  • With regard to the specific demand of Maldives, H.E. Mr. Mohamed Maleeh Jamal, Minister of Communication, Science and Technology, supported the project initiative in the margins of the Committee on ICT and Science, Technology and Innovation on 29-30 August 2020. Mr. Mohamed Shareef, Permanent Secretary, Ministry of Communication, Science and Technology was consulted as well and has given support and interest for the Maldives to be involved in the project, in recognizing the potential for the Maldives to identifying gaps and developing innovative policies and strategies to successfully foster technological growth and accelerate the achievement of the 2030 Agenda.

     

    The identified focus area is Central Bank Digital Currency (CBDC).

  • The Maldives has actively engaged in other ESCAP projects including chairing the Drafting Group of the Asia-Pacific Information Superhighway action plan 2022-2026. The action plan outlines a blueprint for regional cooperation on three pillars of connectivity for all, digital technologies and applications, and digital data. Frontier technologies was recognized as one key complement of digital technologies for digital transformation.

     

    The evaluation feedback survey of the meeting found that 68 per cent of the 49 participants that responded to the survey strongly agreed that the meeting has effectively achieved its objectives of this strategic consultation on the opportunities and challenges on “Digital Currency” and “Mobile Wallet. Also, 83 per cent of the 49 participants that responded to the survey strongly agreed that the discussions in this meeting have contributed to identifying policy gaps and regulatory pitfalls on policy experimentation framework and regulatory sandbox in pursuing "Digital Currency" and "Mobile Wallet." Lastly, 83 per cent of the 49 participants that responded to the survey strongly agreed that the key issues discussed in the meeting has enhanced their understanding and capacity on how to approach to pragmatic solutions on operationalizing policy experimentation and regulatory sandboxes on "Digital Currency" or "Central Bank Digital Currency".

     

  • Through the first national consultation, Maldives identified ‘Central Bank Digital currency’ as the project’s focus area following a national consultation on 7 September 2021.As a follow-up to the implementation of the project for the Maldives, DESA, ESCAP, the Maldives Monetary Authority (MMA), and the Ministry of Environment, Climate Change and Technology (MECCT) are co-organising a national workshop with relevant domestic stakeholders. Workshop participants will review the national studies on gaps, opportunities and risks of ‘Central Bank Digital currency’ in the Maldives.

     

    The national workshop was held from 10 August to 11 August to to engage and enhance awareness of relevant domestic stakeholders; discuss and exchange ideas on the opportunities of “Central Bank Digital Currency” for sustainable development; and develop the next course of actions including setting up a regulatory sandbox framework for Central Bank Digital Currency and other frontier technologies.

     

  • Document

    Background Report: Frontier Technology Policy Experimentation and Regulatory Sandboxes in Asia and the Pacific, Maldives

Global Activity

 

  • Frontier technologies carry a promise to fast track the Sustainable Development Goals (SDGs) through supporting innovative, forwarding-looking policies and solutions. There are, however, numerous risks and complexities of digital technologies that come along with those opportunities, such as the widening digital divides as well as policy and regulatory challenges.

     

    In recent years, relatively new approaches of policy experimentation and regulatory sandboxes have emerged among somecountries. These approaches have proven to be effective in creating a more conducive and contained space where governments, in partnerships with relevant stakeholders, can experiment and trial with digital technologies and innovations at the edge or outside of the existing policy space and regulatory framework.

     

    It is in this context that the United Nations Development Account DA2124B project has been conceived, with the objective to enhance the institutional capacitiesof selected countries in special situations2to understand, conceptualize, develop and implement policy experimentation and regulatory sandboxes to accelerate the progress of the 2030 Agenda for Sustainable Development. The Project aims to support recipient countries in building capacity to identify and establish means for policy experimentation and regulatory sandboxes. Concrete project outcomes may be translatedinto policy documents or implementation strategies, including through multistakeholder partnership with the private sector, civil societyand other relevant stakeholders.

     

    The objectives of the kick-off event are to:

     

    (a) engage ministerial participation from target countries, as well as senior officials from UN (Under-Secretary-Generals from UN DESA and UN ESCAP) on the official kick-off of the UN Development Account Project on policy experimentation and regulatory sandboxes;

    (b) share the identified focus areas, gap assessmentsand implementation plans among the three target countries.

     

  • Documents

     

    Agenda

    Concept Note

     

    Presentations

     

    Country Presentation: Maldives by H.E. Mr. Mohamed Shareef, Minister of State Ministry of Environment, Climate Change and Technology, Maldives

    Country Presentation: Bangladesh by Mr. Anir Chowdhury, Policy Advisor Aspire to Innovate (a2i), ICT Division, Bangladesh

    Country Presentation: Kazakhstan by Mr Darkhan Akhmediyev, Director of Information and Communication Technology Development Department, Ministry of Digital Development, Innovations and Aerospace industry, Kazakhstan

Contact Us

Division for Public Institutions and Digital Government (DPIDG), UNDESA.