Korea to nurture 'platform economy'

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Korea to nurture 'platform economy'

Finance minister cautions against excessive pessimism

By Yoon Ja-young

The government will expand investment into the "platform economy," as part of efforts to attain innovative growth through bold regulatory reforms, the country's finance minister said Thursday in speech outlining economic policies and possible downside factors that could affect them.


A platform economy refers to one based on infrastructure and technology essential for the growth of multiple industries.


"Innovation is creative destruction for the market. It is an omni-directional structural reform for the national economy. For innovative growth, we need to reform all social systems including education and the labor market, on top of regulatory reform," Economy and Finance Minister Kim Dong-yeon said at a meeting with the media, Thursday.


Innovative growth, which is one of the three pillars of the Moon Jae-in administration's economic growth strategy along with income-led economic growth and economic fairness, is getting more attention recently as the administration is turning to the corporate sector for investment and jobs amid worsening economic indices.


"The platform economy is an ecosystem and infrastructure for future industries. We should become a platform powerhouse to lead the economy in the digital era. The world's top five companies in market cap last year - Apple, Google, Microsoft, Amazon and Facebook - were all platform companies. You lag behind if you don't lead in this game," the minister said.


He said the government will make strategic investments into the platform economy and eight key leading industries: hyperconnectivity, smart factories, smart farms, fintech, new energy, smart cities, drones and future cars.


The government plans to invest over 5 trillion won in these next year, a steep increase from 3 trillion won this year. It will focus on nurturing human resources as well as setting up an ecosystem.


The administration will also expand research and development investment, allocating over 20 trillion won in next year's budget.


Regarding Samsung's suggestion to support biotechnology industries made during the minister's visit to Samsung Electronics, Monday, he said the government will support human resources in the sector. However, Kim added the government will be cautious about price deregulation for biosimilars.


He also acknowledged the extreme heat could negatively affect the economy.


"Shipbuilders and steel companies are cutting work hours and crops are being damaged. Though the macroeconomic impact isn't likely to be notably huge, day laborers and the less privileged are more vulnerable to the heat."


Kim also cautioned against excessive pessimism.


"The economy is subject to sentiment. We should read the trend of economic indices over the long term instead of emotionally fluctuating on monthly ups and downs," he said, pointing to the 2.9 percent economic growth in the first half of the year and the solid increase of exports as well as consumption.


"There are internal and external risk factors such as the continuing U.S.-China trade conflict, but we are making efforts to enhance economic vitality, including funding worth nearly 4 trillion won, and a consumption tax cut on vehicles."


He added the government will make utmost efforts to follow the 3 percent economic growth track through innovative growth based on deregulation.


Kim said the government will increase fiscal spending to solve structural problems and boost the economy, on top of securing a social safety net.


"Both the OECD and the IMF have said the government budget should play a bigger role," he said.


Regarding government measures scheduled to be unveiled next week to help the self-employed, Kim said they include easing the burdens of rent and credit card fees.


In the longer term, the government is also considering measures to secure fair trade and a social safety net for the self-employed.


"They have been examples of the structural problems in our economy. We should take measures so they can stand on their own with dignity."


Finance minister cautions against excessive pessimism

By Yoon Ja-young

The government will expand investment into the "platform economy," as part of efforts to attain innovative growth through bold regulatory reforms, the country's finance minister said Thursday in speech outlining economic policies and possible downside factors that could affect them.


A platform economy refers to one based on infrastructure and technology essential for the growth of multiple industries.


"Innovation is creative destruction for the market. It is an omni-directional structural reform for the national economy. For innovative growth, we need to reform all social systems including education and the labor market, on top of regulatory reform," Economy and Finance Minister Kim Dong-yeon said at a meeting with the media, Thursday.


Innovative growth, which is one of the three pillars of the Moon Jae-in administration's economic growth strategy along with income-led economic growth and economic fairness, is getting more attention recently as the administration is turning to the corporate sector for investment and jobs amid worsening economic indices.


"The platform economy is an ecosystem and infrastructure for future industries. We should become a platform powerhouse to lead the economy in the digital era. The world's top five companies in market cap last year - Apple, Google, Microsoft, Amazon and Facebook - were all platform companies. You lag behind if you don't lead in this game," the minister said.


He said the government will make strategic investments into the platform economy and eight key leading industries: hyperconnectivity, smart factories, smart farms, fintech, new energy, smart cities, drones and future cars.


The government plans to invest over 5 trillion won in these next year, a steep increase from 3 trillion won this year. It will focus on nurturing human resources as well as setting up an ecosystem.


The administration will also expand research and development investment, allocating over 20 trillion won in next year's budget.


Regarding Samsung's suggestion to support biotechnology industries made during the minister's visit to Samsung Electronics, Monday, he said the government will support human resources in the sector. However, Kim added the government will be cautious about price deregulation for biosimilars.


He also acknowledged the extreme heat could negatively affect the economy.


"Shipbuilders and steel companies are cutting work hours and crops are being damaged. Though the macroeconomic impact isn't likely to be notably huge, day laborers and the less privileged are more vulnerable to the heat."


Kim also cautioned against excessive pessimism.


"The economy is subject to sentiment. We should read the trend of economic indices over the long term instead of emotionally fluctuating on monthly ups and downs," he said, pointing to the 2.9 percent economic growth in the first half of the year and the solid increase of exports as well as consumption.


"There are internal and external risk factors such as the continuing U.S.-China trade conflict, but we are making efforts to enhance economic vitality, including funding worth nearly 4 trillion won, and a consumption tax cut on vehicles."


He added the government will make utmost efforts to follow the 3 percent economic growth track through innovative growth based on deregulation.


Kim said the government will increase fiscal spending to solve structural problems and boost the economy, on top of securing a social safety net.


"Both the OECD and the IMF have said the government budget should play a bigger role," he said.


Regarding government measures scheduled to be unveiled next week to help the self-employed, Kim said they include easing the burdens of rent and credit card fees.


In the longer term, the government is also considering measures to secure fair trade and a social safety net for the self-employed.


"They have been examples of the structural problems in our economy. We should take measures so they can stand on their own with dignity."


Yoon Ja-young yjy@koreatimes.co.kr
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