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MOTIE presents work report under new regime 2022-07-12

The Ministry of Trade, Industry and Energy (MOTIE) presented the Ministry’s work report to President Yoon Suk-yeol on July 12, a five-year set of three-fold strategies containing 11 major project tasks.

The three-fold strategies are in bold as follows.

One, the Ministry will pursue a major industrial shift through growth-oriented strategy.

The growth-oriented industrial strategy is built on four key aims.

The first aim is to stimulate private investment through regulatory improvement, investment incentives and better location.

Regarding regulations, there were 53 corporate investment projects impeded by regulations, amounting to KRW 337 trillion. Among them, 26 projects (66 trillion won) have seen a breakthrough in their regulatory problems, while 27 (271 trillion won) remaining are to be tackled through an “Economic Regulatory Innovation TF.”

As for incentives, the range of technologies enjoying investment tax cuts will be increasingly expanded to include new-growth, source, and national strategic technologies. Infrastructure like power and water are to be government-funded.

In terms of better location, the “negative zone,” to which all business types are allowed to move in, will be broadened to 50 percent from the initial 30, and existing business type restrictions will be reconsidered on a regular basis, with certain exceptions like gambling, farming, and construction.

The second aim is to upgrade the innovation system. By innovating the R&D and education systems, technology and people can come together to achieve innovative growth.

In the aspect of industrial R&D, this upgrade requires investments to fully focus on destructive and innovative technologies, and launch 10 “mega impact projects” that can create markets and solve economic and social conundrums at the same time, over a five-year period.

In the aspect of innovative talent, it is crucial to train up creative leaders for future high-tech industries. As part of this outlook, a pan-ministerial roadmap (H1 2023) for nurturing talent that are creative in bio, AI, and nano technology. An “Industrial Digital Convergence Academy” (to be introduced in 2023) can train up persons knowledgeable in software development. A minimum of 10 high-tech industries-specialized universities or graduate schools will be designated by 2027, and short-term practical course programs (in 2023) can produce140,000 high-caliber talent by 2026, for sectors like new industries and carbon neutral.

The third aim is restoring the “stepping stones” in corporations so as to reconnect and accelerate their growth spurts. “Stepping stones” will realign the incentive dynamics hindering companies’ efforts for growth, such as sharp discrepancies in the financial assistance programs allotted to SMEs, middle market companies, and conglomerates.

In addition, a 400 billion won fund will go towards supporting middle market companies in order to develop them into key connecting links within the industrial ecosystem and supply chain.

Simultaneously, efforts will be made to advance the ecosystem to steer the manufacturing industry’s top three mega trends (eco-friendly, digital, servitization) through support for process, technology and business model innovation. Some draft proposals include “developing a gamechanger technology for carbon-intensive industries” and achieving AI-based production innovations via establishment of 50 digital collaboration plants. Servitization means a non-services process becoming a services process, such as convergence with manufacturing to provide digital healthcare.

The fourth aim is to bring about a major industrial shift, as in nurturing high-tech industries and advancing core industries.

As regards high-tech industries, the Government will roll out an full-on support program allowing private companies to make swift, bold investments to continue securing sources of revenue generation.

For semiconductors, this means building sophisticated and competitive infrastructure and providing tax cuts and R&D funding. For displays, certain technologies can be designated as “national high-tech strategic technologies” for preemptive technology procurement. This can involve all-solid-state batteries being next-generation batteries, and for AI robots, South Korea's goal is to become an independent producer of core parts and software.

As regards core industries, South Korea schemes to be a “fast mover” to usher in “digital” and “green.”

Automobiles’ partnerships with batteries and semiconductors will be strengthened, and 1,200 car parts manufacturers will be given assistance in converting to future cars production. For steel, attaining the hydrogen direct-reduction technology will enable the making of high value-added products like hydrogen-transporting steel. For shipbuilding, it is necessary to train up 10,000 in manpower, and the portion of foreign workers is likely to grow.

The second strategy is to strike a balance between national interest and practicality.

During times of supply chain uncertainties, South Korea can benefit from bilateral cooperation with other countries through their respective channels of commerce, mutual investment and technology collaboration.

Follow-up measures subsequent to summit talks with the U.S. or major European countries can be leveraged to promote high-tech and people exchanges to accelerate the innovation of Korean industries.

Partaking in new trade rules discussions involving “green” and “digital” can be a way of fostering a favorable external environment for Korean companies.

As a responsive member of the international community, South Korea can lead discussions on IPEF standards and rules, participate in solving difficulties faced by developing nations, as well as share Korea's own experiences of having undergone industrial development in the past.

The third strategy is to innovate energy supply and demand, and create new industries.

The first aim is to increase the share of nuclear power to over 30 percent and reinforce the national energy mix. Shin-Hanul No. 3 and No. 4 nuclear reactors are to be completed by 2024, along with procedures for continued operation of existing nuclear power plants.

For stable management of summertime power supply, maximum 9.2GW should be additionally secured, with this summer’s power reserve rate forecasted between 5.4-10.0 percent.

Another aim under this strategy is to streamline energy demand and improve the low-efficiency energy system by shifting the current supply-oriented policy to demand-oriented. Efficiency Innovation Agreements are to be signed with 30 energy-intensive companies, accompanied by a nationwide energy cashback policy.

Furthermore, noting the inflation trends, power and gas rates’ accumulated inflation should be factored in gradually, and market principles must be restored through heightened degrees of specialization and independence of the Electricity Regulatory Committee (ERC).

Lastly, the Government will actively nurture the domestic nuclear power industry and energy innovation startups through job creation and exports.

The Ministry will step up efforts to promptly restore the nuclear power industry ecosystem and exports capacity. The initial input for job creation for this year is to increase from 92.5 billion won to 130 billion won.

To attain the goal of exporting 10 nuclear reactors by 2030, all efforts will go toward winning project bids in markets like the Czech Republic and Poland.

Plans are underway for nurturing 5,000 energy innovation startups via a 500 billion won fund, regulatory adjustments, and new market penetrations in tandem with public companies.