Have you ever heard of a regulatory sandbox? Smartcitizens who are actively involved in technology development may already be familiar with that concept. A regulatory sandboxis a testing environment designed to trial products, services, or technologies of the organiser. The testing is conducted in a safe and controlled manner.

Technology innovation is progressing rapidly in today's digital era. Therefore, a regulatory sandbox is necessary to facilitate various innovative developments. On July 14, 2023, Jakarta Smart City provided an in-depth experience on the regulatory sandbox through JSCLab Sharing #6. The event focused on the theme "Understanding Regulatory Sandbox and Its Utilisation in Several Cities Worldwide" featuring Prasetya Dwicahya. If you missed the event, you can catch up on it here!

Learning About Regulatory Sandbox

Prasetya Dwicahya is the Co-founder and Chief Operating Officer (COO) of Think Policy. As a social enterprise, Think Policy is responsible for improving Indonesia's public policy-making process to tackle more complex challenges. Examples of those complex challenges are climate change, digital transformation, and social inclusion. Think Policy involves the public in the development process in a participatory and inclusive manner.

Prasetya translates the term "regulatory sandbox" into Indonesian as "ruang aman" (safe space). He quoted a brief definition of the regulatory sandbox from the Government of Canada, stating that it is a safe space for businesses to innovate while the government oversees the process, collaboratively creating policies, rules, and guidelines to ensure that the innovation is safe, beneficial, and impactful for society.

The regulatory sandbox is useful for regulators to capture innovations that meet market and societal needs while maintaining appropriate regulations and policies. Prasetya also emphasizes that sometimes boundless innovation can lead to dangerous outcomes. For instance, he mentioned the case of OceanGate's submarine tourism attempting to explore the wreckage of the Titanic. It tragically resulted in the death of passengers inside the submarine.

"We can't allow that to happen in society, but we also can't hinder people from innovating because without that, there won't be new products, there won't be new services," Prasetya explains. That is why regulatory sandbox exists to address this challenge.

Five Key Success Factors of the Regulatory Sandbox:

The regulatory sandbox can be considered successful if it can provide a space for innovation and maintain appropriate protection. This protection is useful for safeguarding consumers and preserving the integrity of the regulatory framework. Prasetya also explained the five key success factors of the regulatory sandbox:

1. Clear objectives: Objectives or goals must be defined and communicated clearly to regulators, innovators, and consumers.

2. Financial Conduct Authority (FCA) in the United Kingdom: involves regulatory engagement, the opportunity to test unique models with real customers, and increased market credibility.