South Korean Government put out ‘direction for 2020 strategic investments’ that will support its original strategy to spread and accelerate innovative growth. Its plan is to look over its past policies on innovative growth and supplement areas that are lacking as President Moon Jae-in reached the halfway point of his term. Direction for 2020 strategic investments focuses on modifying support systems and expanding financial investments. South Korean Government’s plan is to prioritize its support through next year’s budget and to reorganize areas that need to be concentrated. However, there is no drastic change that catches one’s eye even though South Korean Government’s newest strategy is an upgrade to its current policy on innovative growth. Even though innovative growth is an important method to restore current recession, some say that it will be difficult to expect many positive effects from South Korean Government’s latest strategy.
◊Current support systems lacking results
South Korean Government announced many policies for innovative growth in the past two years. Although Ministry of Economy and Finance (MOEF) is the department that is mainly responsible for innovative growth, support systems have become disordered as other departments such as Ministry of Science and ICT (MSIT) have more important roles and the Blue House is also directly concerned with such policies.
Areas that South Korean Government announced about its plans to support are 3+1 strategic investment (data, AI, hydrogen economy + talented individuals), eight leading projects (smart factory and complex, future car, FinTech, bio-health, energy, smart city, smart farm, drone), three priority projects (system semiconductor, bio and health, future car), and 13 driving forces for innovative growth (Big Data, next-generation telecommunication, AI, self-driving car, drone, personalized healthcare, smart city, AR and VR, intelligent robot, intelligent semiconductor, state-of-the-art material, innovative new drug, renewable energy).
Some criticized the fact that many items are overlapping and that it is difficult to differentiate these items.
Even South Korean Government stated that people in charge do not know the difference and mutual relation between these areas.
Lack of visible results and slow progress of support are also seen as major problems.
Although President Moon pointed out lack of visible results for innovative growth many times, South Korean Government has not yet made meaningful changes. Many new projects were stalled due to unnecessary regulations. Finding of future sources for profits has been slow as well. Delay in improvement of laws and systems related to innovative growth, creating results in only certain areas, and lack of support throughout the society are seen as ongoing problems.
“Despite quantitative results from certain areas, there have been limitations to strengthening competitive edge of entire industries and innovating support systems throughout entire economy and society.” said South Korean Government when it announced its latest strategy.
◊South Korean Government to invest more into six new industries
South Korean Government partially changed political system on innovative growth from its two strategies. It changed ‘3+1 strategic investment’ into ‘data, 5G, AI + hydrogen economy’ and raised the level of strategies on how each area is propelled.
Industries see addition of 5G as a positive because it shows South Korean Government’s will to put its priority on supporting 5G industry that is being led by private companies. However, they would have liked to see South Korean Government change other areas well.
South Korean Government is going to invest $3.92 billion (4.71 trillion KRW), which is 45% more than the amount of investment this year, into six new projects next year.
It is going to invest $1.42 billion (1.71 trillion KRW), which is 47% more than the amount of investment this year ($964 million (1.1589 trillion KRW)), into so-called ‘D.N.A’ that stands for data, network (5G), and AI. Within data and AI industries, it is going to invest $599 million (720 billion KRW), $158 million (190 billion KRW), and $116 million (140 billion KRW) into vitalization of data value chain, formation of AI ecosystem, and convergence and utilization of data and AI respectively. Within 5G industry, it is going to invest $83.2 million (100 billion KRW), $266 million (320 billion KRW), and $183 million (220 billion KRW) into public-led investment, priming water for private investment, and formation of the foundation for 5G industry respectively.
It is calling system semiconductor, bio-health, and future car as ‘Big 3’ and it is going to invest $2.50 billion (3 trillion KRW) that is 44% more than the amount of investment this year ($1.74 billion (2.0956 trillion KRW)). It is planning to invest $191 million (230 billion KRW), $1.06 billion (1.28 trillion KRW), and $1.24 billion (1.49 trillion KRW) into system semiconductor, bio-healthy, and future car respectively. Through these investments, it is going to push for many new projects such as development of next-generation intelligent semiconductor technology, R&D on medical devices, and development of hydrogen and electric cars technology next year.
South Korean Government’s goal is to train more than 200,000 talented individuals for the next five years.
“Although it is important to train and promote younger generations, some have talked about focusing on re-educating people who are in their late 30s and 40s in the software industry on AI.” said Vice-Minister Bang Ki-seon of MOEF regarding training of talented individuals. “We believe that government support will focus on younger generations and older generations who need re-education.”
◊Critics still feel unsatisfied with South Korean Government’s measure
Fact that South Korean Government stated its will to support innovative growth is seen as a positive because some were wondering about South Korean Government being negligent with innovative growth out of three economic policies (income-led growth, innovative growth, fair economy) the most.
However, there is not any other drastic alternative that catches one’s eye other than increased 2020 budget. Because next year’s budget is estimated to be around $433 billion (520 trillion KRW), some believe that $3.92 billion (4.71 trillion KRW) that will be invested into six new projects is not enough.
Critics point out that South Korean Government did not improve complicated support systems in general and that it has yet to put out any effective alternative related to improving relevant laws and systems. Regarding Personal Information Protection Act, Information Telecommunication Network Act, and Credit Information Act that are currently pending within the National Assembly, South Korean Government only stated that it is pushing for revision. South Korean Government has also yet to present any plan regarding laws on vitalization of hydrogen economy that are motioned to the National Assembly. However, it stated that it would establish ‘Hydrogen Economy Promotion and Hydrogen Safety Management Act’ in 2020.
South Korean Government has yet to put out detailed alternatives regarding ‘lack of visible results’ issue that has been pointed out the most.
“We are going to establish a project execution inspection system so that there can be actual visible results on sites.” said South Korean Government. “Whether projects are executed will be examined and evaluated periodically and the results from inspections will be brought and discussed.”
Some believe that South Korean Government’s measure is greatly insufficient to bring vitality back to South Korean economy that is going through a difficult time due to weak domestic demand. Some say that there needs to be more decisive measures on regulatory innovation to promote corporate investments especially.
“We are going to accelerate the process of regulatory innovation by utilizing currently established systems such as regulatory sandbox, Regulation Verification Responsibility System, and inclusive negative.” said South Korean Government regarding regulatory innovation.
Staff Reporter Yoo, Seonil | email@example.com