Gov't to invest W2 tril. each year to bolster industrial competitiveness

Finance Minister Hong Nam-ki, second from left, speaks to reporters at a press conference about measures to boost industrial competitiveness of local parts, materials and equipment businesses, at the emergency parts and materials supply center run by the Ministry of Trade, Industry and Energy in Seoul, Friday. Yonhap

By Lee Kyung-min

Finance Minister Hong Nam-ki called for full legal, policy and financial support from both the private and public sectors to help boost competitiveness of local parts, materials and equipment businesses, Friday.

This is part of a broader measure to counter the fallout from the ongoing trade feud with Japan.

The government will make an annual investment of over 2 trillion won ($1.6 billion) over the next five years to stabilize supply of parts and materials needed to produce 100 key export goods including semiconductors and displays.

The measures will focus on 20 goods deemed most vulnerable to external uncertainties and therefore needing immediate contingency plans against possible unforeseeable negative global developments.

This will be supported by technological development with the help of the nation's leading research bodies, supervised by a special committee serving as a government control tower.

“Japanese export curbs are still in place 100 days after they first took effect, which undermines not only bilateral trade relations but also the free trade principle and global value chain,” Hong said at a press conference at the Korea Chamber of Commerce and Industry (KCCI) in Seoul.

“While local manufacturers have yet to see any major supply shortage-driven damages, losses are inevitable for both Korea and Japan if this drags out further.”

The months-long spat, Hong said, could pose a major risk to the economy in the near term, but prove an opportunity for the country to become more self-reliant in the long term.

“About 270 billion won in supplementary budget will be set up to establish a sustainable business model based on cooperation among small- and medium-sized enterprise (SMEs) and large conglomerates. Such across-the-board cooperation goes to the core of making our industry more competitive in the long term,” Hong said.

Some foreigners, he added, have shown interest in the investment project to foster local parts and materials needed for chipmaking, boosting the government's continued efforts to diversity import channels and induce greater investment from the private sector.

“Hydrofluoric acid, one of the key materials needed to make semiconductors, has been secured from China and Taiwan, a move we expect to be bolstered by increased private investment in the coming months,” he said.

Meanwhile, the 29-member decision-making committee, comprised of 15 public officials and 14 from the private sector, will discuss ways to enable closer communication among businesses and research entities.

Revision of relevant laws will be pushed forward within the year to help facilitate effective execution and management of the project.

Corporate tax cuts and tax benefits will be considered to incentivize businesses seeking mergers and acquisitions (M&As) of relevant businesses and investing in business models that help sustainable growth.

Hong said measures on the 20 goods will have tangible results within the next two years.