Gov't ups efforts to nurture local materials, parts, equipment industries

Industry Minister Sung Yun-mo, third from left, poses with provincial governors during a meeting commemorating the establishment of five industrial clusters at the Four Seasons Hotel in central Seoul, Feb. 23. From left, the governors are North Jeolla Province Governor Song Ha-jin, North Chungcheong Province Governor Lee Si-jong, Gyeonggi Province Governor Lee Jae-myung, South Chungcheong Province Governor Yang Seung-jo and South Gyeongsang Province Governor Kim Kyoung-soo. Yonhap

By Baek Byung-yeul

The COVID-19 pandemic has posed challenges to the supply of goods around the world, and the government is rolling up its sleeves to boost the competence of Korea's materials, parts and equipment industries in order to lower the country's dependence on foreign suppliers.

The pandemic also demonstrated to the global industry the importance of global value chains as international trade suffered a severe decline. Even before being hit by the pandemic, the government has been trying to nurture the capabilities of local industries to cut off their heavy reliance on Japanese firms since Tokyo imposed restrictions on high-tech materials in 2019.

The government's efforts to help speed up the localization of domestic industries is still ongoing as the Ministry of Trade Industry and Energy designated five regions as industrial clusters specializing in materials, parts and equipment. Every manufacturing process, ranging from processing materials to completing a product, will be done at the clusters, the minister said.

The five places include Yongin in Gyeonggi Province, which will be specialized as a cluster for the semiconductor industry; Cheongju in North Chungcheong Province for secondary batteries; Cheonan in South Chungcheong Province for displays; Jeonju in North Jeolla Province for carbon materials; and Changwon in South Gyeongsang Province for precision machines.

The industry ministry said these clusters will help boost the competitiveness of each industry by cooperating closely with local research institutions as well as large companies such as chip giant SK hynix in Yongin, battery giant LG Energy Solution in North Chungcheong Province, display giant Samsung Display in Cheonan, materials company Hyosung Advanced Materials in North Jeolla Province and Doosan Machine Tools in South Gyeongsang Province.

To help small companies stay rooted in each cluster, the government will also provide subsidies. Core infrastructure facilities for electricity, roads, gas, sewage and wastewater disposal will also be provided, the ministry added.

Industry Minister Sung Yun-mo said the five industrial clusters must play a pivotal role helping Korean companies source more parts at home when industries are experiencing severe changes in the way they obtain key materials and parts.

"An industry can enhance its capability and achieve innovation when it is able to secure a stable supply chain of materials, parts and equipment. The industrial clusters will become a starting point of achieving that goal," the minister said.

Seen is a concept image of an industrial cluster for the semiconductor business, which will be located in Yongin, south of Seoul. Courtesy of Gyeonggi Province

Stating that Japan's export curbs on high-tech materials to Korea were a turning point for the domestic industry in lowering its high dependence on the neighboring country, Gyeonggi Province Governor Lee Jae-myung said the semiconductor cluster in Yongin will be a game changer in upgrading Korea's competitiveness in the chip industry.

"Our people have rose from the ashes whenever we experienced difficult times by turning crisis into opportunity. Our industry faced small setbacks due to Japan's export curbs in 2019, but we are again turning this crisis into an opportunity," Lee said. "The cluster will help local materials, parts and equipment companies in the chip industry achieve technological independence and lead the global supply chain."

"To pursue choice and concentration, we've designated the five places as industrial clusters. They will play a pivotal role in strengthening supply chains between large companies and their partners," said Lee Kyung-ho, director general for the Materials, Parts and Equipment Cooperation at the industry ministry.

The director general added the ministry will announce more detailed action plans regarding the five clusters sometime in May or June. "We need to communicate more with local governments and other governmental organizations to run the clusters smoothly," he said.

Nurturing future cars, biotech, system chips

In addition to establishing clusters for the country's material, component and equipment industries, the government is also trying to find new growth engines in the the future car, biotechnology and system semiconductor industries.

Deputy Prime Minister and Finance Minister Hong Nam-ki held a meeting on Feb. 25 for the so-called big three emerging businesses with officials from private firms such as Hyundai Motor Group and Genexine and officials from state-run research organizations.

At the meeting, Hong said the government will allow electric vehicle-recharging business operators to build fuel car recharge centers in greenbelt zones where development is restricted. The measure is part of the country's efforts to lift restrictions that limit the development of new businesses.

In the future car business, Korea was a world leader in hydrogen cars in terms of sales in 2020, and fourth in electric vehicles. The company estimates the total sales of eco-friendly cars here will reach the 300,000 mark within this year. By 2025, sales of eco-friendly future cars will account for more than half of the entire new car market in Korea.

"We urgently need to ease existing regulations to provide subsidies for purchasing eco-friendly cars and installing more recharging facilities so that we can consequently achieve our goal, which is to distribute more than 300,000 eco-friendly cars within this year," the deputy prime minister said.

For more private companies to invest in the system semiconductor sector, the government plans to create a fund worth 650 billion won.

Regarding biotechnology, the government will pursue a standardization process of cancer-related data each research institution possesses so that it can secure big data based on 3 million cancer cases.

"We will open data sources regarding cancer-related genomic information and clinical data in the second half of this year and continue making efforts to help secure more than five new anticancer drugs in the next 10 years," he said.

The detailed scenarios are in line with President Moon Jae-in's vision to make the country a leading digital powerhouse. Moon has emphasized that the government must create future growth engines by fostering three new industries ― system semiconductors, bio-health and future cars.